FARMGATE milk prices should sit somewhere between $4.50 and $5.50 a kilogram of milk solids during the next five years.

That is according to a report by Rabobank.

While the report has highlighted that demand growth for Australia's largest dairy export - cheese - will slow, there are positive signs for its by-product whey.

Rabobank Global Dairy Outlook report Show me the money has forecast world dairy demand to grow at 2.5 per cent a year - something the bank described as the envy of the food world.

Rabobank senior dairy analyst Michael Harvey said Australia and New Zealand were well placed to take advantage of growing demand for dairy from the Asia-Pacific region.

"If you have got the global market growing at 2.5 per cent every year, that's enormous growth with plenty of opportunity ... there is a question about whether the market will deliver that percentage, but there is no doubt there is a market there," Mr Harvey said.

"Globally there is strong demand and plenty of opportunity for the industry to grow again."

Mr Harvey's farmgate milk price prediction was based on whole milk powder trading on international markets from $US3300 to $US3800 a tonne and an Australian dollar at parity with the US greenback.

He said $4.50/kg of milk solids was the floor in the market and the "absolute worst-case scenario" while the level of the Australian dollar would have an impact on this range.

The report said the position of dairy farmers had generally improved, because of the unprecedented leap in farmgate milk prices, but in essence money flowing throughout the dairy supply chain in recent years had been eaten-up by input costs for farmers or capitalised into the value of farmland.

Meanwhile, Gippsland processor Longwarry Food Park on Monday announced its second milk price step-up for the season of 7c/kg of butterfat and 17c/kg of protein.

Dairy giant Murray Goulburn also announced a boost to its suppliers' milk cheques last week with a rise of 8c/kg butterfat and 20c/kg protein.

It will be paid this month and in the supplier letter Murray Goulburn managing director Gary Helou said the rise took the co-operative's weighted average price to $5.22/kg of milk solids.