Speculation is building as opening forecasts for the 2019-20 dairy season are due to be announced over coming weeks.
In Rabobank's latest Agribusiness Monthly, dairy analyst Emma Higgins said processors might choose to be more bullish than in previous years, given the supply and demand fundamentals at play.
Rabobank was expecting a milk price of $7.15kgms for the new season which begins on June 1.
Commodity prices remained elevated as the "supply crunch'' continued.
United States milk supplies were 0.4 per cent lower for March year-on-year.
Germany, France and the Netherlands continued to act as a handbrake on European milk production, with February milk flows lower by 0.2 per cent year-on-year.
Australian supply was expected to plummet 8 per cent year-on-year to a two-decade low.
In New Zealand, milk flows had pared back and March production was behind 8 per cent compared to the same time last year.
That pulled season-to-date milk collections lower to 3.2 per cent.
In light of the sharp decline in milk flows for March, Rabobank now expected full-season production to land closer to 2 per cent year-on-year by the close of the season, Higgins said.
Rabobank dairy analyst Emma Higgins. Photo / Supplied
New Zealand shipments of dairy products to China reached new levels for March with the highest volumes shipped for the month ever.
Rabobank expected a slowdown in import growth before mid-year as the supply chain digested the strong import activity.
In ASB's latest Commodities Weekly, economists saw upside risks to next season's $7 forecast, although cautioned again the season was not yet under way and unexpected movements could happen.
Its prediction came with "a large margin of error'' and the bank would be watching production numbers in the coming months for signals on the supply-side drivers of the milk price.
Westpac senior economist Anne Boniface also saw some upside risk to Westpac's $7 forecast for the new season, saying it looked likely it would start "on a firmer footing''.
The ANZ world commodity price index pushed up 2.5 per cent in April, following a revised 4.1 per cent rise in March. That put the index 2.1 per cent ahead of this time last year.
The NZD index lifted 4.2 per cent in March month-on-month as commodity returns in local currency terms also benefited further from the lower New Zealand dollar.
Dairy prices gained 4.4 per cent in April, having moderated from the strong lift recorded the previous month, ANZ agriculture economist Susan Kilsby said.
Markets continued to be supported by tighter global supply which should underpin milk powder and butter prices in the coming months.
Volumes traded in the next month or two would be seasonally low, but as higher volumes of new season product were offered to the market, prices typically tended to come under some pressure.
This season low global supply should help underpin the market which should see prices at least hold near current levels, she said.
