WARRNAMBOOL Cheese and Butter has today announced a price step up for its dairy farmer suppliers.

According to its supplier letter, seen by The Weekly Times, the step up equalled 6c/kg butterfat and 15c/kg protein.

Warrnambool Cheese and Butter said this brought its average weighted annual milk price to $5.35/kg of milk solids.

Murray Goulburn increased its milk price to $5.35/kg of milk solids earlier this week.

Warrnambool Cheese and Butter chief executive David Lord said the payment was retrospective and applied to milk supplied from July 1 last year.

"It is pleasing to again deliver this price increase in line with our income estimations,'' Mr Lord said.

"We remain committed to the quarterly review process to provide you with certainty of the timing of reviews and delivering any price increases as soon as our business performance allows.

"As you may be aware, since the January review there has been some softening of dairy prices and the Australian dollar has remained strong and reasonably stable against the US dollar.

"These conditions are likely to impact our final quarter performance. As a consequence of the softening conditions and the potential impact on our last quarter performance, we are taking a cautious approach to the remainder of the year.

"We will again review the milk price in June 2012 where we will review our business performance for the last quarter and update you at this time."