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Milk Could Go Up 60 Cents a Gallon

Cow in field
A cow in a field at Raindance Farm in Westville, N.Y.Mike Groll / AP

Dairy analysts estimate store milk prices could go up 60 cents in March, reaching their highest ever.

"The cupboards are dry," said dairy economist Mary Ledman.

Blame cheese. Short supply pushed cheese to a new peak in January, going from $1.80 to $2.36 a block. That jump is driving the March increases for "fluid milk."

Moreover, in early 2013, farmers responded to higher feed costs by cutting back on herd growth. Coupled with growing international appetite, especially from China, that's led to tighter supplies and higher prices.

But not every fridge will feel the pinch. Some stores may choose to eat the 30-cent increase in farm level milk prices predicted to occur from January to March. In other areas, families could see their milk bills going up by 10 to 20 percent from their January levels, or 50 to 60 cents a gallon.

The average price for milk was $3.50 in December, according to the most recently available data from the Bureau of Labor Statistics.

Brian West, a spokesman for the Publix supermarket chain based in the Southeast, said the store expects milk prices to rise in the next few months.

The good news is that after peaking, milk prices should begin to taper, falling 20 percent through December, said dairy analyst Jerry Dryer.

The current California drought, however, is the bad news. Without relief, production of alfalfa, a key feed for cows, could be curbed, pushing up milk prices even higher in late 2014 and early 2015, said Ledman.

Dry fields now, dry cereal bowls later.