DOWNWARD pressure on world milk prices is expected later this year after international values dropped up to 8pc in recent months.
According to the Rabobank Dairy Quarterly unusually good weather across most global dairy regions exacerbated the impact of high farmgate milk prices recently, driving supply growth too fast for "battered western consumers to soak up''.
More milk was processed into "storable'' commodities, stocks started to rise in some export regions and dairy commodities were forced downwards, it said.
The rural bank said international dairy prices softened in the opening months of this year and the US dollar increased 2 per cent during the same period - contributing "marginally'' to downward pressure.
"Current commodity pricing suggests that farmers in many regions will face 10-15 per cent reductions in milk prices, but these will come too late to impact supply much until the back half of the year,'' the report said.
"Similarly, consumers will see only moderate price relief in the near term.''
Looking at Australia, Rabobank said milk supply was up 5.6 per cent year-on-year in January, but this rise in supply is yet to hit the world market with export volumes still down 2.3 per cent year-on-year in the three months until January.
Meanwhile, ANZ bank said today that Gippsland dairy farmers were "well placed to experience another solid year with a profitable end to the 2011-12 season''.
ANZ head of agribusiness Mark Bennett commented on the outlook in the lead up to the Farm World Field Days later this week.
"The 2011-12 season has been a particularly good one for the local dairy industry with farmers benefiting from low feed prices, good early rains and reasonable milk prices at just over $5,'' Mr Bennett said.
He said the strong finish to the season would also help set-up a sound start to next season.