The USDA offered its first look into 2016 on May 12 in its latest World Agricultural Supply and Demand Estimates report. It also lowered its 2015 milk production forecast for the seventh time in a row.

2015 production and marketings were reported at 208.6 billion pounds and 207.6 billion pounds, respectively. Both are down 1.4 billion pounds from last month’s report. If realized, 2015 production would be up 1.3 percent from 2014. 

2016 production and marketings were projected at 213.6 billion and 212.6 billion pounds respectively. If realized, 2016 production and marketings would be up 5 billion pounds or about 2.4 percent from 2014. 

Milk production for 2016 was forecast higher as improved forage availability and moderate feed costs are expected to support gains in milk per cow. Cow numbers were forecast slightly higher. Commercial exports on a fat and skim-solids basis were forecast higher with a resumption of normal trade patterns. 

Imports were forecast lower as domestic production increases and demand from competing importers is higher. With stronger domestic demand and export, cheese, nonfat dry milk (NDM) and whey prices were forecast higher, but butter prices were forecast lower as strong NDM demand is expected to support relatively high levels of butter production. 

Class III and Class IV milk prices were forecast higher. Look for the 2016 Class III price to average around $16.70 per cwt. and the Class IV around $16.15.

Forecast milk production for 2015 is lower than last month as drought in the West impacts milk per cow and growth in the cow herd is expected to be slower. Fat and skim-solids imports were raised on strong cheese demand. Fat basis exports were raised on better-than-expected March exports. Skim solids exports were higher based on higher NDM and lactose shipments. Cheese, NDM, and whey prices are forecast lower on weaker demand, but the butter price forecast was raised on strong demand.

The Class III price was lowered on weaker cheese and whey prices. Look for a 2015 average of about $16.30, down from the $16.45 expected last month and compares to $22.34 in 2014 and $17.99 in 2013. 

The Class IV price is lower as the stronger butter price is more than offset by the reduced prices for NDM. The 2015 average is put at $14.65, down from the $14.75 projected a month ago and compares to $22.09 in 2014 and $19.05 in 2013.