JEDDAH – US dairy export volumes reached record highs in May, boosted by continued strong sales of cheese, milk powder and whey products, trade data released by USDA's Foreign Agricultural Service Thursday said. Total export value was $500 million, up 26 percent from May 2011. In the March-May period, US exports of dry ingredients (milk powder, whey, lactose), cheese and butterfat were 446,577 tons, up 11 percent from the previous year. Nonfat dry milk/skim milk powder exports improved in May, increasing 12 percent from April volume (on a daily-average basis). In the March-May period, sales to Mexico were up 42 percent from the prior year, and exports to the Middle East/North Africa more than tripled, but shipments to Southeast Asia were off 24 percent. Whey exports were strong in May, with total volume up 4 percent from April (daily-average basis) to finish just shy of the record reached in June 2010. Improved shipments of dry whey (+15 percent vs. April daily average) and near-record volumes of WPC drove the gains. China remains the major customer for US whey products, with March-May purchases up 17 percent vs. the prior year. In addition, exports to Mexico were up 27 percent. US cheese exports established a new record high in May, with volumes up 16 percent from April (daily average basis). In the March-May period, shipments to Mexico were up 44 percent vs. prior year, while South Korea (+23 percent), Japan (+36 percent) and Saudi Arabia (+38 percent) also posted strong gains. Butterfat export volumes continued to improve in May, reaching an 12-month high. In the March-May period, more than three-quarters of the volume went to the Middle East/North Africa region (primarily Saudi Arabia). May dairy exports were equivalent to 14.8 percent of US milk solids production, the highest percentage since October 2010, and the 26th straight month in which exports have been between 12 percent-15 percent of output. Exports were equivalent to 13.3 percent of US milk solids production in 2011 and 12.8 percent in 2010. May dairy imports were just 3.5 percent of milk solids production. Meanwhile, feed prices are expected to pressure dairy producer returns and encourage a more rapid decline in the cow herd. USDA has reduced US milk production forecasts for 2012 and 2013 from last month as higher forecasted feed prices are expected to pressure producer returns and encourage a more rapid decline in the cow herd. In a recent World Agricultural Supply and Demand Estimates, USDA also reduced milk per cow due to higher forecast feed prices this year and next. In addition, the agency said milk yields in the short term may be affected by recent high temperatures. “The dairy numbers were neutral to the market,” said dairy marketing analyst Robin Schmahl of AgDairy, LLC. “The decrease in milk production was expected.” Dairy import projects were also raised, reflecting stronger imports of cheese. Exports were projected higher on stronger sales of cheese, whey, and nonfat dry milk (NDM). USDA forecast cheese prices higher for 2012 and into early 2013 as stronger exports support prices. Butter prices are expected to rise in 2012 but weaker domestic demand is expected to offset lower production in 2013, and the price forecast is unchanged. Weaker expected domestic demand will also limit price movements for NDM and whey. USDA reduced the NDM price outlook slightly from last month, but left its 2013 unchanged. The whey price forecasts for both 2012 and 2013 are unchanged from last month. The Class III price forecasts for 2012 and 2013 are raised from last month due to the higher forecast cheese price. The Class IV price for 2012 is raised on the higher butter price. The 2012 All-Milk price is forecast at $17.05 to $17.35 per cwt., while the 2013 All-Milk price is raised to $17.35 to $18.35 per cwt. Separately, Cooperatives Working Together has accepted four requests for export assistance from DFA and Darigold to sell 2.646 million pounds of Cheddar cheese and 220,462 pounds of butter to customers in Asia and the Middle East. The product will be delivered July through December 2012. In 2012, CWT has assisted member cooperatives in making export sales of Cheddar, Monterey Jack and Gouda cheese totaling 64.1 million pounds and butter and AMF totaling 45.2 million pounds to 32 countries on four continents. On a butterfat basis, the milk equivalent of these exports is 1.577 billion pounds, or the same as the annual milk production of 75,100 cows. Assisting CWT members through the Export Assistance program positively impacts producer milk prices in the short-term by reducing inventories that overhang the market and depress cheese and butter prices. In the long-term, CWT's Export Assistance program helps member cooperatives gain and maintain market share, thus expanding the demand for US dairy products and the farm milk that produces them. CWT member cooperatives have exported the annual milk production equivalent of 75,100 cows to date this year. CWT member cooperatives have exported the annual milk production equivalent of 75,100 cows to date this year. CWT will pay export bonuses to the bidders only when delivery of the product is verified by the submission of the required documentation. The Cooperatives Working Together Export Assistance program is funded by voluntary contributions from dairy cooperatives and individual dairy farmers. – SG