Oil's at a record peak, transportation costs are going higher, and grocery prices are increasing. But there's a great white hope for fans of frozen yogurt, Gorgonzola, and chocolate malts, as dairy prices are supposed to stay relatively steady or even fall in 2008.
The U.S. Department of Agriculture noted that while milk prices jumped 12% in 2007, they will be under control this year thanks to a 1.1% increase in the cow population and a 1.7% boost in the average output per cow. Overall milk production is expected to rise 2.7% in 2008, faster than the 2.1% growth seen last year.
Declines in wholesale milk prices trickle down to the consumer and could shave off prices on the retail end for bottled milk. Ephraim Liebtag, an economist with the USDA's Economic Research Service, told CNN/Money that the overall price tag for dairy goods (including cheese, butter, and yogurt) is expected to rise 3% this year, slower than last year's 7.5% hike in overall dairy products. This modest advance would be relatively good news for American consumers, who are budgeting for a 4% hike in food purchased in the stores or at restaurants.
Currently, milk is holding below $4 per gallon in most cities, and is expected to stay there. Dairy purchases currently make up for 12% of the average household's grocery budget, so any moderation (or even a price drop for milk) would be a positive. The slightest slip in the price for milk could also impact businesses that require milk for its livelihood -- think Starbucks (NASDAQ: SBUX), which uses gallons upon gallons of the stuff each day for its lattes and other coffee drinks.
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Reader Comments (Page 1 of 1)
3-12-2008 @ 4:26PM
william lindblad said...
Don't get too content. Dairy herds pasture feed in the growing months, after that they have to be fed. The feed has to be harvested. The machines run on diesel. Diesel is approaching 4.00 a gal. By the way, milk is refrigerated after milking and kept that way until it's picked up by the truck that also runs on diesel. The farmer also gets a power bill, just like the rest of us.