Dr. Ken Bailey from Penn State is predicting milk prices to rise from January’s $14.50 to a peak of $16.62 in August. But, along with that, Bailey is also predicting higher retail prices for consumers.
Ken Bailey, a milk-marketing expert in Penn State’s College of Agricultural Sciences, projects the average retail price of whole milk to rise to about $3.35 by October, up from $3.07 in January. Butter, yogurt, ice cream and cheese prices also will rise, and it’s not known when prices will subside.
But that doesn’t mean a windfall for dairy farmers, still squeezed from last year’s low milk prices. Dairy farmers are paying more for cow feed, since corn and soybean prices have risen rapidly.
Bailey blames that rise on increasing demand for these feedstocks for ethanol production. The associate professor of agricultural economics said international demand for milk protein is very high, and global supplies are limited. Also, a strong export demand for dry proteins — skim milk powder, dry whey and whey protein concentrates — is leaving very low inventories for nonfat dry milk and dry whey.
The result is that domestic supplies of these milk protein products are limited and global market prices are rising. Consumers may also have to pay more for food items that depend on dairy products such as candy bars, bakery goods, and sports and nutrition bars.