Record world prices for milk powders are set to continue in 2007, thanks to tight supply and demand, economic growth and lower stock levels, officials from the European Commission said.
Their comments came in a meeting with Northern Ireland dairy industry representatives, organised by industry association Dairy UK.
The news should instil more confidence in Britain's dairy industry, which again spent last year battling to raise earnings in the sector.
Europe's dairy sector may also look to take advantage of a potential supply gap in the world market this year, brought on by one of the worst droughts Australia's dairy industry has ever witnessed.
The Commission sought to justify recent cuts to export refunds on whole milk powder on the basis that both world and EU prices were rising - in response to higher demand.
It slashed refunds by half in January, from €21 per kg to €10 per kg, claiming it acted to "ensure equal treatment of EU operators". Small cuts were also made to butter refunds in last week's Milk Management Committee meeting.
Cuts to milk powder and butterfat refunds last year were hotly contested by some in the industry, including producers in Northern Ireland who rely more heavily on commodity markets for income.
The EU has pledged to scrap export refunds completely by 2013, as part of a potential trade deal at the World Trade Organisation.
Commission representatives told UK industry leaders this week they believed the dairy industry had a sustainable future without market support. They refused to rule out an increase in export refunds should prices drop, however.
Dairy UK will host a seminar on 16 February, entitled 'CAP Reform: What Lies Ahead', to give dairy officials the chance to hear views from decision-makers in the European Commission.
Jim Begg, Director General, Dairy UK said: "The future of the Common Agricultural Policy for the dairy sector will come under intense scrutiny in 2007 and could lead to decisions within a year that would have far reaching implications for the UK dairy industry."