Fonterra has increased its forecast payout to farmers.
The dairy processor and exporter lifted the milk price for the season just ended from $6.55 a kilo of milk solids to $6.75 a kilo.
It also gave its first forecast for next season of $7 a kilo.
Fonterra chair John Wilson said the expected payouts were good news for dairy farmers.
"We're seeing good demand, particularly in China, but also generally across the global dairy market. We've also seen of course the New Zealand Dollar come back slightly.
"We're looking out over 15 months, so our farmers always have to take a degree of caution, but our best estimate at the moment is $7 for the year ahead."