According to the July USDA World Agricultural Supply and Demand Estimate (WASDE) report, 2014 U.S. milk production projections were lowered from 206.1 billion lbs to 205.9 billion lbs as slower growth in output per cow more than offset a more rapid expansion in cow numbers. 2014 projected production of 205.9 billion lbs equates to a 2.3% YOY increase from 2013 production of 201.2 billion lbs and would be a record high production level on an absolute basis. The projected 2.3% 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-May) milk production is up 1.1% YOY; implying YOY milk production growth is expected to accelerate in future months. 2015 U.S. milk production projections were raised from 212.1 billion lbs to 212.4 billion pounds as higher milk prices and lower feed costs are expected to support more rapid growth in cow numbers and output per cow. 2015 projected production equates to a 3.2% YOY increase over 2014 projected production of 205.9 billion lbs. The projected 3.2% YOY increase in production would be the largest in ten years. Product prices were forecasted higher for 2014 as robust domestic demand and stronger powder exports are expected to support prices despite recent increases in production. Class III and Class IV prices for 2014 were raised on stronger component product prices with forecasted butter prices showing particular strength. As shown in the chart below, the forecasted all-milk price range of $23.25-$23.55 per cwt reached new highs. The 2015 all-milk price is expected to be well below the 2014 price, and remained unchanged from last month at $19.75-$20.75 per cwt.