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Milk Price Increase in 2014: What the Expected Rise is in March This Year

Feb 21, 2014 02:32 PM EST | By John Nassivera

The price of milk is expected to rise by as much as 60 cents in March as a result of issues with supply and demand.

Cheese production has played a part in the price increase, according to ABC News. Because of a short supply of cheese, the cost of a block rose from $1.80 to $2.36, which is leading to a price increase in "fluid milk."

Great global demand and lacking production in other countries is also having an effect on the price on dairy products in the U.S., Reuters reported. While dairy farmers have been earning more money, prices will most likely go up by 10 to 20 percent in retail for some markets.

U.S. dairy analyst Jerry Dryer stated the current farm price for milk is about $23 per hundredweight, as opposed to between $17 and $18 per hundredweight last year.

"Demand has been greater than supply for the last several months," Dryer said. "Prices are peaking."

Dairy economist Mary Ledman said milk prices have been increasing since the middle of 2013 because of global demand for milk powders, according to Reuters. Ledman also said the increase is resulting from the increase in domestic cheese to $2.36 at the end of January.

"This spike in the cheese market will result in the highest fluid milk price on record in March," Ledman said.

The state of California is expected to be extremely effected due to the current drought in the state, according to NBC News. Ledman said a lack of relief for the drought can result in a lack of production of alfalfa, an important source of food for cows, which can lead to an even greater price jump in late 2014 and early 2015.

Dryer said the price of milk has a chance to go back down, NBC News reported. Dryer said after its peak, the price of milk should begin to decrease by as much as 20 percent through December.

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