Rabobank is holding its farm-gate milk price forecast of $7.15 for the 2019-20 season amid strong global market fundamentals.
In its latest quarterly global dairy report, the bank said those fundamentals had remained well-balanced through the first half of 2019, with stagnant milk supply growth, reduced stocks and price stability continuing to be the key themes permeating across the sector.
Milk production across the "big seven" exporters - the EU, United States, New Zealand, Australia, Uruguay, Argentina and Brazil - in 2019 was below the prior year, allowing markets to find support.
A sharp finish to the milk production seasons in both New Zealand and Australia, coupled with robust China imports, supported Oceania-origin dairy product prices, Rabobank dairy analyst Emma Higgins said.
The outlook through the second half of 2019 pointed to an ongoing challenge to "turn the milk production tap on" across key exporting regions.
"Milk production across the export engine has stuttered along in the first half of 2019 with negative growth of 0.3 per cent and this has created tension in the global market.
"However, the milk supply tap is slowly being turned on, and in quarter three we expect to see the return of milk supply growth for the big seven exporters, with this led by the northern hemisphere producers."
Importantly for New Zealand producers, the bank's forecast suggested less milk volumes would be available from the southern hemisphere export countries over the second half of 2019.
On the demand side, the report said the landscape in import markets remained a "mixed bag".
Chinese import appetite was stronger than expected through the first four months of 2019 and some buyers were likely to have adequate coverage.
Chinese demand was expected to remain firm but lower than in the first half of 2019 which might "place a ceiling" on price increases, Ms Higgins said.
The US economy was heading for a sizeable slowdown in 2020 while the Eurozone economy had been underperforming since 2018, she said.
Trade tensions and the worsening African swine fever outbreak shaped as key watch factors in the second half of 2019, the report said.