Higher imports in May resulted in a balance between total imports and exports on a milk-equivalent basis.
The organisation said the increase in local demand and exports should absorb the expected higher production.
Southern African Development Community and Southern African Customs Union countries remain the main destination for South African exports.
Factors that may negatively affect production growth during the rest of 2012 include the increase in the price of farm requisites.
"The increase in protein prices resulted in higher feed prices in spite of slightly lower maize prices. Fuel‚ fertiliser and machinery prices also increased substantially. The MPO's weighted dairy farm production cost index increased by 15% from January 2011 to January 2012‚" it said.
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