The prediction for dairy exports has been reduced by $700m to $4.9bn, as exporters face weak import demand, low prices, and strong competition from the EU.
In 2015, dairy exports were worth $5.562bn.
Lower prices, strong competition, and reduced demand are cited as the reasons for most of the decline.
No change for cheese
The USDA outlook states that in Asia, dairy exports are expected to decline in China, Japan, Indonesia and the Philippines.
Export values are also expected to decline for dairy to Mexico.
Imports of dairy products reached $3.488bn in 2015, and the November 2015 forecast for 2016 was $3.5bn, however, this has now been adjusted to $3.4bn. For cheese, the forecast of $1.4bn remains unchanged, up slightly from the value of cheese imported in 2015, which was $1.314bn.