Expect to pay sharply more for milk and other dairy products at the grocery store over the next six months.

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.

"Consumers will be paying more for milk for a while," Bailey said Tuesday.

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.

The Cooperatives Working Together program could cull an additional 50,000 to 64,000 head of dairy cows, so Bailey expects a noticeable reduction in cow numbers starting in March.

Market pressures to use less production-boosting rBST hormone also will noticeably lower milk yields during the first quarter of 2007, Bailey said.

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.

Bailey said the average price processors pay farmers for their milk is forecast to rise from January's $14.50 per 100 pounds (nearly 11 gallons) to a peak of $16.62 in August.

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