"We've seen in Europe that the Germans haven't picked up to the volume that was expected and neither have the French.
The UK are still down year-on- year with last year," said Mr Woulfe.
This assessment is backed up by the latest EU figures which show that milk production across the Union is back 1.4pc compared to 2016 for the January to April period.
German milk production is back 4.1pc on 2016 levels, France is down 3.3pc, the UK is 2.4pc lower, Danish output is down 2.2pc, while Dutch milk supplies are back 0.5pc.
In contrast, Irish milk deliveries up to the end of April were 6.6pc higher than 2016.
Polish output increased by 3.6pc and Italian milk supplies are up 1.1pc.
Cypriot farmers recorded the highest lift in output, with production up 14.4pc compared to 2016.
Meanwhile, CSO figures confirm that Irish milk production for May was up 7.3pc compared to 2016, increasing from 930m litres to 997m litres.
Milk supplies for the five months to the end of May are up 6.8pc, rising from 2.72 billion litres to 2.9 billion litres. This is an increase of 180m litres.
"The supply globally is more balanced and the demand has picked up slightly; so from that perspective there is a more positive feel in the market," Mr Woulfe maintained.
This improvement in market sentiment has been reflected in farmers' milk cheques.
"The milk price is up 10.5c/l on this time last year, if you are looking at April-May last year compared to April-May this year. Percentage wise that is very high of course, it's up 45-47pc, so it's a much better year," said Mr Woulfe.
However, the Dairygold boss cautioned that the sharp hike in butter prices was a cause for concern.
"Butter has gone from about €2,400/t in April-May 2016, to over €6,000t at the moment - that's a bubble in any cycle," Mr Woulfe said.
The increased returns for butter has been reflected in a sharp lift in production. Irish dairies produced over 28,000t in May, up 15pc on 2016.
Mr Woulfe said it was great for the dairy sector that butter was in vogue and that this had helped lift milk prices after a difficult 24-month period.
"It's the fashionable, nutritious fat that is good for you. And from that perspective all the major national food companies are using dairy proteins and fats in their formula now," he said.
However, Mr Woulfe stressed that market upturns always come to an end at some stage.
"It's not sustainable, but it's a matter of how long the bubble will last."
Dairy analyst Kevin Bellamy said the market was in a good position, with most European players talking about raising prices. "Demand is still pretty weak but the Chinese will buy a lot more in the second half," said the Rabobank analyst.
"Nobody has got any butter at the moment and bakeries are panicking over it," he said. "Irish farmers are going to have quite a good year - I think butter prices will come down a bit. I don't think it is a bubble I think it is a lifestyle change."
Mr Bellamy said some of the heat will be taken out of the market as countries such as Germany, France and Holland will produce less.
On the question of milk proteins, Mr Woulfe welcomed the EU Commission's handling of intervention stocks.
The commission has close to 300,000t of skim milk powder in intervention stores, however, it has refused to release it at bargain basement prices with just 100t sold to Belgium.
"The European Commission are to be commended because they have handled the stock of intervention well. They haven't released it, they haven't done damage to the market. And what they have released were at prices that haven't influenced negatively on the current fresh product," he said.
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Mr Woulfe said the overhang of intervention stocks was becoming less of a threat and it was now likely to go for animal feed rather than for human consumption.