Dairy Farmers will still get a low price for their milk from co-operative Murray Goulburn over the 2016/17 season.
Murray Goulburn announced on Tuesday that it expects to pay dairy farmers $4.80 per kilogram of milk solids (kgms) for the 12 months ending June 30, 2017.
But the opening farmgate milk price will be just $4.31 per kgms.
Last week, dairy producer Bega Cheese announced an opening farmgate milk price of $5.00 per kgms.
In April, Murray Goulburn slashed the farmgate milk price for the remainder of the 2015/16 season to between $4.75 and $5.00 per kgms, from $5.60, blaming global oversupply and very low global dairy commodity prices.
"Global conditions have not improved, and the latest data suggests excess global inventories, including the impact of European intervention, may have surpassed the equivalent of six billion litres of milk," Murray Goulburn interim chief executive David Mallinson said on Tuesday.
Mr Mallinson said key commodity prices had been low for almost two years - much longer than historical price downturns.
Given the difficult market conditions, Murray Goulburn believed that commodity prices would continue to trade around current levels for the remainder of the 2016 calendar year.
Prices may recover by a modest six per cent across Murray Goulburn's major commodities during the second half of the 2016/17 financial year.
"We acknowledge FY17 will be a challenging year for our suppliers," Mr Mallinson said.
"We have set a robust forecast, and while there are a number of areas which may provide upside to our FY17 forecast, we do not believe it is prudent to include these in our forecast at this stage."
Meanwhile, Murray Goulburn on Tuesday forecast a net profit for 2016/17 of $42 million, an improvement on the $39 million 2015/16 profit predicted in April.
Units in Murray Goulburn's entity listed on the share market, the MG Unit Trust, were 0.5 cents higher at $1.14 at 1037 AEST.
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