The government hiked its outlook for 2010 U.S. agricultural exports to $104.5 billion, the second-highest level ever, amid stronger-than-expected demand from China and other Asian countries.

Dairy product exports were hiked to $2.9 billion from $2.8 billion previously “due to strong global dairy prices and expected recovery in milk powder sales,” the USDA said. In fiscal 2009, dairy exports totaled $2.26 billion.

This year’s projected U.S. ag exports of $104.5 billion, revised higher by 4.5 percent from a previous estimate in February, are second only to the $115.3 billion exported in 2008, the USDA said.

Exports for fiscal 2010, which ends Sept. 30, would be up 8.2 percent from $96.6 billion in 2009.

The USDA report illustrated the expanding role of China, and the rest of Asia, as a major customer for soybeans, livestock feed, almonds and other U.S. agricultural products. This year, Asia is expected to surpass the Western Hemisphere as the largest region market for U.S. exports, the USDA said.

While U.S. and Europe struggle to recover from recession, China went largely unscathed from economic turmoil of recent years. China’s economy is expected to grow 9 percent to 10 percent this year, compared with 1 percent growth for Eurozone countries, the USDA said.

“Emerging Asia will lead the world economic turnaround,” the USDA said in the report.

U.S. ag exports to China are expected to total $14 billion in 2010, up from $11.7 billion projected in February and up from $11.2 billion in 2009, USDA said. China would be the third-biggest single-country market for U.S. farm exports behind Canada and Mexico. Last year, China ranked fourth.

Among other farm products, the USDA lowered its fiscal 2010 projection for pork and left beef exports unchanged.

Here is the full USDA Agricultural Trade report.