Improved sales of nonfat dry milk/skim milk powder (NDM/SMP) to Southeast Asia, whey to China, cheese to South Korea and butter to Canada, plus a recovery in world commodity prices, led U.S exports to their highest value in 16 months. Overall export value was $426 million in October, up 5 percent from the depressed levels of a year ago. U.S. dairy exporters shipped 172,245 tons of milk powders, cheese, butterfat, whey and lactose in October, topping year-ago levels for the fifth straight month.

Milk powder exports were up 13 percent from last year. Official USDA data continues to show an increase in WMP exports to Mexico. However, Mexican import data and trade sources don't corroborate this, and we believe this volume represents SMP sales that were misclassified at the port. Therefore, we've adjusted NDM/SMP and WMP trade data for April-October to account for this misclassification.  

Adjusted total NDM/SMP exports in October were 57,937 tons. Sales to Southeast Asia were nearly double year-ago levels, paced by record sales (11,160 tons) to the Philippines. Exports to Pakistan also were higher, but shipments to Mexico lagged for the second straight month. Meanwhile, adjusted WMP exports in October were down 55 percent from a year ago.  

Whey exports continued their resurgence, led by heavy buying from China and Southeast Asia. In the August-October period, U.S. exports of whey products to China were up 63 percent, year-over-year, and sweet whey shipments alone were up 257 percent. Whey exports to Southeast Asia were up 68 percent in September-October. Most other customers bought less.  

Exports of whey protein concentrate continued at a record pace in October; in the first 10 months of the year exports were up 19 percent from 2015 levels.  

Cheese exports were 24,795 tons, the best month since March, though year-to-date volumes are still 13 percent below 2015 levels and 2016 volume is still 7,400 tons/month less than two years ago. Sales to South Korea were up 43 percent in October, Mexico was up slightly, but Japan and the Middle East/North Africa (MENA) region were off from prior-year levels.  

U.S. butterfat exports were 2,833 tons, more than triple year-ago volume. More than 80 percent of October shipments went to Canada, previously a relatively minor customer.  

Among other products, lactose exports were up 26 percent, but shipments of fluid milk (-16 percent), food preps/blends (-26 percent) and MPC (-48 percent) were well below a year ago.  

Total dairy export value to Southeast Asia, China and South Korea hit their highest marks in more than a year; combined sales were up 27 percent. Sales to Canada reached a record high in October. In contrast, exports to the MENA region were just $12 million, the lowest since July 2009.  

On a total milk solids basis, U.S. exports were equivalent to 15.7 percent of U.S. milk production in October, bringing the year-to-date proportion to 14.0 percent. Imports were equivalent to 3.4 percent of production, the lowest since April.