WASDE: Raised dairy expectations

The milk production forecasts for 2016 and 2017 are raised from last month as the cow inventory has grown more rapidly than previously expected. The higher cow inventories appear to reflect growth in herds supplying expanding dairy product facilities.

Import forecasts for 2016 and 2017 are raised on higher expected imports of butter and several other dairy products. Exports are forecast higher as increases in Oceania prices and relatively low U.S. prices are expected to make the United States more competitive in world markets. Ending stocks are reduced as lower prices encourage increased demand from both export and domestic markets.

Cheese and butter price forecasts for 2016 and 2017 have been lowered due to higher expected milk supplies. However, nonfat dry milk (NDM) and whey will likely benefit from increased competitiveness in export markets, and stronger exports will help support prices of those products. Thus, price forecasts for NDM and whey are raised from last month.

Class III and Class IV prices are lowered from last month as lower cheese prices more than offset the higher whey price in the Class III calculation and the lower butter price outweighs the NDM price increase in the calculation of the Class IV price. All milk prices are forecast lower at $15.80 to $15.90 per cwt for 2016 and $15.55 to $16.45 per cwt for 2017.