The council stated that milk production in the top five exporters, namely Argentina, Australia, the EU, New Zealand and the US, fell some two million tonnes, or nearly 3% on-year in the March to May period due to a series of adverse weather conditions.
Northern hemisphere output was constrained by cold springs in many countries, while drought hit production in New Zealand. "Oceania suppliers have nothing to sell," the council said.
Whether prices can stay high into 2014 "may depend on the needs of China", whose 18% rise in dairy imports in the first five months of this year also played a big part in driving values at GlobalDairyTrade auction in April to a record high, which they remain within 10% of.
The cuts of some 10% by foreign dairy groups - Abbot Laboratories, Danone, Fonterra, Mead Johnson Nutrition and Nestle, as well as Hong Kong-listed Biostime International - to prices of infant formula products, amid a market investigation by Chinese authorities, could weigh on values of whole milk powder, a major ingredient.
Furthermore, Chinese buyers may already have covered much of their needs with a 56% rise in whole milk powder purchases in the January to May period.
The council expects some advanced buying toward the end of the year due to preferential tariffs from New Zealand. China has reduced import levies for purchases from New Zealand, at a set quota during the start of every year.
"But with so much early shopping, overall whole milk powder import volumes may be close to year-ago levels over the balance of the year", the council said.
Meanwhile, National Australia Bank's (NAB) forecast of prices remains firm in Australia over the recent 2013-14 season, noting successive rises of values which proccessors are prepared to pay producers for milk.
"The offering of higher farm-gate prices by processors reflects the heightened competition for milk in a tight supply environment and boosted confidence for stronger export demand this year, underpinned by a more favourable exchange rate," NAB said.
"Given this, we expect the average export dairy prices to rise by 2% in 2013-14."
