South Australian Dairy Association (SADA) South East regional president Ruben Zandman said farmers would not be "buying the new tractor yet, but are cautiously optimistic".

"The rise in prices is good news for us; it is a big jump on last year," he said.

Murray Goulburn's opening price is more than 25% up on last year, which the company attributed to commodity prices stabilising in recent months and strong demand.

Murray Goulburn set its opening price at AUD4.75 (US$4.16) per kg for milk solids or about 36 cents a litre, which is higher than what competitors Fonterra or Bega cheese were offering to suppliers, while Warrnambool Cheese and Butter opened at 35 cents per litre or AUD4.72 (US$4.13) per kg milk solids for the 2010-11 season.

Dairy farmer Graham Hamilton said these announcements offered relief for dairy farmers as they had endured an extremely tough period.

"The last 18 months have been tough, which has left many of us carrying significant debt," he said. "Driven by the global financial crisis, we have seen our buyers turn to cheaper lower-quality product from imports instead of us sometimes."

The shift by some buyers to the low cost commodity producers, such as Latin America, China and Eastern Europe, has been seen by many to be a threat to Australia's Dairy industry in recent times.

SADA chief executive officer Ken Lyons said the industry in Australia should invest heavily in research and development, technology and infrastructure to gain an advantage in servicing premium markets.

However, strong demand from major buyers represents signs of a positive season ahead.

"Indications from major players are that they are sourcing for more milk," said  Zandman.

"However, up-coming auctions will give us a clearer indication on how the markets in Europe stand which we rely heavily on."

Hamilton cautioned the prospective success to be expected from this season will rely heavily on many other variables.

"The exchange rate is the biggest variable for us and makes a great difference as 60pc of our goods are exported-it also depends on each farm's individual situation," he said.

"It is a positive sign though," Hamilton added.