The United States Department of Agriculture also bases the revised milk production forecast upon a slightly more rapid growth in cow productivity.
The milk production forecast for 2015 has been raised to 208.9 billion pounds of milk, up slightly from the previous month's forecast of 208.8 billion pounds.
The forecast for 2016 remains unchanged expecting milk production to rise from the 2015 level to 213 billion pounds.
Fat-basis imports are increased and exports are reduced for 2015 and 2016. Domestic demand for butter, and to a lesser extent cheese, encourages imports and limits export potential. Fat-basis ending stocks are raised. Skim-solids imports are unchanged for 2015 and 2016. Exports are reduced on lower expected sales of nonfat dry milk and whey.
The report said domestic demand for butter is expected to support relatively high prices in the United States. As a result, the butter price forecast is increased for both 2015 and 2016. For 2015 the butter price is expected to be in a range of US$1.915-US$1.955/lb and for 2016 the price is expected to fall back to between US$1.785-US$1.915/lb. These prices show a retreat from the 2014 butter price of US$2.1361/lb.
Cheese prices are raised for 2015 to US$1.645-US$1.665/lb. But increased production in 2016 may put pressure on prices despite growing domestic demand. The 2016 cheese price has been revised down from the previous forecast – it is now expected to fall to US$1.590-US$1.690/lb.
Nonfat dry milk prices are forecast higher in 2015 to US$0.880-US$0.900/lb, reflecting the recent rebound in prices. The forecast is unchanged for 2016 with the expectation that prices will rise to US$0.950-US$1.020.
Whey prices are lowered for both 2015 and 2016. Earlier projections for 2015 of US$0.415-US$0.435 have been dropped to US$0.380-US$0.400/lb. Earlier projections for 2016 prices of US$0.410-US$0.440/lb were also dropped to levels below 2015 at US$0.345-US$0.375/lb.
Class III prices are reduced for 2015 and 2016, largely reflecting lower whey prices. Class IV prices are raised primarily due to the higher butter price. The all milk price has been raised to US$16.80-$17.00/cwt for 2015, but lowered to $16.10-$17.10/cwt for 2016.
*2015 and 2016 forecasts are a simple average of the low and high forecast.
