Mid Canterbury dairy processor Synlait Milk has announced a $5.50 forecast milk price for the 2015-16 season, 25c better than Fonterra.
But the bad news for its suppliers is it has also downgraded its forecast for this season from a range of $4.50-$4.70 to $4.40-$4.60.
The market had not delivered the stability that Synlait had hoped for, despite the small recovery in commodity prices earlier this year, managing director John Penno said.
The company was very aware of how ''financially tough'' this season was for its suppliers but it was confident commodity prices would recover over time.
''Our 2015-16 forecast milk price assumes we will see the beginning of this recovery from the current low prices,'' he said in a statement.
Fonterra has an opening forecast of $5.25 for the new season, while Open Country Dairy, the country's second-largest processor, is at $4.75-$4.95, and Westland Milk Products, the second- largest dairy co-operative is at $5.60-$6 before retentions.
Synlait had deliberately started advance rates higher than usual to assist farmers with cash flows through the early spring. They would return to normal levels based on the forecast milk price soon after, Mr Penno said.
The company expected to announce the final milk price for 2014-15 in late September, along with an update to the 2015-16 forecast and advance rates.
In the latest ASB commodity price report, Prof William Bailey, from the Department of Agriculture, Western Illinois University, said it had become increasingly difficult to be ''just a little bullish'' on dairy prices, at least in the near term.
The last GlobalDairyTrade auction was down 4.3%, while the most recent bi-weekly report on world dairy prices from the United States Department of Agriculture showed all seven prices in the report, for both Europe and Oceania origins, were lower than the previous report.
Prices for Oceania butter and cheese plus European butter, skim milk powder, whole milk powder, butter oil and whey had all dropped to their lowest level of the year.
Adding to that negative tone was the possibly positive impact on California dairy production of a wet autumn, after four dry years, courtesy of the developing El Nino weather pattern.
Arla Foods, the northern European co-operative, also dropped the price it would pay for milk from its United Kingdom suppliers by 3%.
