Firm domestic commercial use of dairy products is expected in light of continued economic recovery. Domestic commercial use, on a fats basis, is forecast at 195.6 billion lbs., unchanged from June. However, next year domestic commercial use on a fats basis is expected to climb to 200.6 billion lbs., an increase from June’s forecast as well as a 2.6 percent year-over-year rise. On a skims-solids basis, domestic commercial use is forecast to reach 169.3 billion lbs., a dropoff from June’s forecast, and then to rise to 177.2 billion lbs. in 2015.
USDA's July dairy outlook boosted dairy product price projections from a month earlier. Cheese prices are projected higher this month based on current price strength. The prices are forecast to average $2.030-$2.060/lb. this year and fall to $1.670-$1.770/lb. in 2015, based on continued increases in milk production. Butter prices are revised upward from June, to $1.965-$2.025/lb., based on strength in demand and tight supply. That condition is expected to continue into 2015, as butter prices were revised upward this month to $1.650-$1.780/lb.; however, prices will decline on a year-over-year basis. July NDM price forecasts reflect the robust export outlook for those products and will likely average $1.835-$1.865/lb. in 2014 and decline to $1.605-$1.675/lb. in 2015. July whey prices are forecast up from June to 63.5-65.5¢/lb. for the current year and to fall to 55.0-58.0¢/lb. in 2015, unchanged from June.
The price outlook for the major dairy products points to declines in 2015 in class and all milk prices. The Class III price is forecast at $21.00- $21.30/cwt. this year, falling to $16.95-$17.95/cwt. in 2015. The Class IV prices continue to lead Class III prices both this year and next, averaging $21.95-$22.35/cwt. and sliding to $18.70-$19.80/cwt. in 2014 and 2015, respectively. The all milk price is forecast to average $23.25-$23.55/cwt. in 2014 and to fall to $19.75-$20.75/cwt. in 2015.