GLOBAL dairy markets are heading in the right direction, but the "stubbornly high" Australia dollar is holding up price improvements at the farmgate.
Many dairy farmers are still struggling with cash flow despite most Victorian processors passing through at least one step-up this season.
Dairy Australia industry analyst Norman Repacholi said online auction GlobalDairy Trade had been heading in the right direction, but the high Australian dollar and weakening Euro meant some EU dairy processors were now more competitive.
An online auction was after The Weekly Times's deadline yesterday, but one at the start of the month recorded a 1.1 per cent average price rise.
Mr Repacholi said dairy markets were "fairly tightly balanced" and while the market had passed the New Zealand production peak and EU production growth was slow, the level of European growth and the rate of US recovery from drought would play a big role in future prices.
"The most important take out of this is that New Zealand is mostly through its seasonal peak with a reasonable price and its only (price) going up on GlobalDairy Trade," he said.
"The markets are comfortable with New Zealand current production, the prices are a happy medium for the time being at least from a buyer's perspective."
NAB agribusiness economist Michael Creed said the dairy price outlook had improved in the past few months and the weaker production outlook for the EU and US was starting to impact.
NAB's Agribusiness quarterly survey showed labour and cost index remained higher than prices received.
Business Train Mentoring Program owner Paul Ebbels, who has 25 dairy farm clients in southern Victoria, he said cash-flow remained tight and many have returned to banks.
"The majority are looking at refinancing to get some extra cash into their business to help pay bills, particularly the first six months of the financial year," he said.
"Any that came out of last financial year (with debt) don't have the cash-flow to service that debt, creditors are putting pressure on them and it is quite stressful for them."