Rabobank is predicting dairy prices will ease by up to 15 percent during the next 12 months as global milk supply increases.
The bank says a strong Northern Hemisphere production season, on top of an exceptional one in the south, should see a lot more milk produced.
Rabobank senior analyst Hayley Moynihan said many factors which were limiting milk supply last year - such as the drought in New Zealand, high grain prices in the United States and a late spring in Europe - had turned around in 2014. That, coupled with the high milk prices, was stimulating milk supply.
"We do expect prices will ease over the course of the next 12 months by about 10 to 15 percent down on current levels, and that is around the additional supply," Ms Moynihan said.
However, it did not expect a dramatic drop in prices as buyers who had been squeezed out of the market were likely to come back into purchase at lower prices, she said.
