Milk prices have increased-impacting consumers, processors and dairy farmers. For consumers, milk prices have increased 50 cents to over $1.20 per gallon. On the east coast, milk has reached $5 a gallon, while $4 is a common milk price. However, in the last week in July, two stores in central IL were selling two gallons of milk for $5. Organic milk prices may decline as excess supply in the market due to new herds meeting federal guidelines.  Consumers can look ahead to lower milk prices with August futures forecasted at 19 cents a pound, down about 3 cents (translates in a 25 cent drop per gallon) and another 3 cent drop in the fall. But will consumers see a drop of 50 cents a gallon of milk near the holiday season?

Milk processors also feel the impact as pizza prices are increasing. Hershey and Deans report lower profits, and Starbucks has increased their milk/coffee beverage price by 9 cents.

Dairy farmers will need to monitor profit margins and costs as fertilizer, feed and fuel costs are increasing. After three solid months (June, July and August), farm gate milk values will be dropping. The impact of less rBST use (less milk), record number of replacement heifers (more milk), less culling (more milk), increased export of milk solids (higher milk prices), opening of the Canadian border to dairy heifers (more milk), price of corn lower (more milk), expensive hay (less milk) and mild weather in July (more milk) will impact future milk prices and profits.