USDA expects the dairy herd to decline more rapidly from its Q2 peak, and growth in milk per cow has been slower than expected. Imports have been reduced on both a fat and skim-solids basis, for 2015 and 2016, as imports of milk protein concentrates and casein are expected to be lower. 2015 exports are also expected to be reduced on weaker butter, cheese and whey sales. Uncompetitive prices are likely to limit growth in export sales of butter and cheese in 2016. Fat-based exports are likely to be reduced in 2016.
Demand for butter in the US domestic market has remained strong, and is expected to continue to support high prices for the remainder of 2015. Prices are likely to come back post-Christmas, when demand wanes. Supplies are likely to stay high and therefore keep prices depressed through to 2016, the USDA said. Butter is expected to achieve US$4420-US$4480/t in 2015, and sinking to US$4045-US$4310/t in 2016. Similarly, cheese supplies are high and prices are lowered for 2015 and 2016. Cheese is forecast to achieve US$3628-US$3649/t in 2015, moving to US$3516-US$3715/t for 2016. The price for non-fat dry milk is reduced for both 2015 and 2016 as prices come closer to international levels. Non-fat dry milk is likely to achieve US$1984-US$2028/t for 2015. Prices for skim milk powder are currently sitting around this level in international markets.