Town of Monaghan has increased its milk price by 2c/l for October supplies in response to growing demand for milk from Northern Ireland.
The move sees its milk price rise from 31c/l to 33c/l for milk suppliers in the Republic of Ireland.
It follows an increase of 2p/l for its suppliers in the North, from 25p/l to 27p/l.
Glanbia has also increased its October milk price by 1c/l to 31.5c/l including VAT.
A spokesperson from the co-op said the increase was due to improved markets and the board would keep the situation under review.
"In the interest of equity, it would not have been fair to leave our southern producers behind," he added.
"This increase has nothing to do with the dairy market in general."
It is understood that Northern Ireland co-op Fane Valley is attempting to woo dairy farmers from other co-ops in the market with attractive 'introductory offers' on milk price.
Down south, October milk price decisions are expected from Connacht Gold, Lakeland, Dairygold and other co-ops later this week.
ICMSA dairy chairman Pat McCormack said that based on market returns, farmers were fully justified in demanding further milk price increases and a milk price in excess of 33c/l was now due.
"All the market indicators are positive, including the Irish Dairy Board milk price index- which increased again in October-, Dutch dairy quotations, Northern Ireland Milk Auction and the Global Dairy Trade Auction," he maintained.
"These and other indicators all point to a strong dairy market and in the context of a tight global supply situation, dairy farmers are optimistic of further milk price increases and expect their board members to deliver for them."
He added that high culling rates and falling heifer numbers in the US should add to an already tight supply.