The forecast was published in its latest WASDE (World Agricultural Supply and Demand Estimates) report this week.
Prices for class 111 (milk for cheese manufacture) and class 1V (milk for butter and skim) were also lowered because of the extra tonnage going into storage both domestically and internationally.
The report has also lowered its milk production forecast for 2017 because they expect reductions in milk per cow to offset any increases in cow numbers.
USDA’s import expectations for dairy products were lowered, as were fat-based exports. However, exports of products containing skim solids are expected to increase as weaker whole milk powder is offset by other skim-based products.