According to the May USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2014 U.S. milk production is projected at 206.1 billion lbs, unchanged from last month’s report. 2014 projected production of 206.1 billion lbs equates to a 2.4% YOY increase from 2013 production of 201.2 billion lbs and would be a record high production level on an absolute basis. The projected 2.4% YOY increase in milk production is over triple the 2013 YOY milk production increase. 2013 milk production of 201.2 billion lbs resulted in a 0.4% YOY increase and a 0.7% YOY increase when adjusting for leap year. 2014 YTD (Jan-Mar) milk production is up 1.0% YOY; implying YOY milk production growth is expected to accelerate in future months. 2015 U.S. milk production projections were released for the first time in the May report, with estimated production coming in at 212.1 billion lbs. 2015 projected production equates to a 2.9% YOY increase over 2014 projected production of 206.1 billion lbs. Milk production for 2015 is forecasted higher as lower feed costs and strong milk prices are expected to support both herd expansion and gains in milk per cow. The projected 2.9% YOY increase in production would be the largest in ten years. The forecasted Class III price was raised from last month on higher whey prices and the forecasted Class IV price was raised higher as prices for butter more than offset reduced prices for NFDM. Forecasted cheese prices were unchanged but the price range was narrowed. As shown in the chart below, the forecasted all-milk price range of $22.70-$23.00 per cwt continues to narrow, with the lower price estimate up slightly from last month and the high price estimated down slightly from last month. The 2015 all-milk price is expected to be well below 2014 prices, at $19.70-$20.70 per cwt.