Although the value of U.S. dairy exports grew by 15 percent in 2017 to reach $5.4 billion, shipments of skimmed milk powder (SMP) were disappointing posting a volume gain of only 12,000 tons.

In contrast, EU exports of SMP expanded by 201,000 tons. This year, the competitive situation has swung in favor of the United States and shipments of SMP through May are now up 25 percent year-over-year (YOY) which equates to a gain of about 65,000 tons. Significant gains were registered in shipments to Mexico and key Asian markets such as Indonesia, Philippines, and Vietnam. Moreover, this success is also being experienced by other products such as lactose, cheese, whey products, and butter.

The European Union milk production forecast for 2018 is revised up by 2 percent to 155.6 million tons due to strong domestic and export demand for dairy products as well as a 1 percent rise in the 2017 production estimate. EU milk output during the early months of 2018 has been strong with milk production in the January to April period running 2 percent ahead of last year. However, the average (weighed) price of milk paid to farmers has been trending down since January.

In April and May, the estimated average milk price received by farmers was about 2 percent below last year’s comparable prices. For this reason, milk production is expected to moderate during the second half of the year. Consequently, YOY 2018 annual milk output is forecast to grow by slightly over 1 percent.