On Jun 15, 6:29 am, "Gregory Morrow" > wrote:
> [Looks like the prices for a gallon of gas and a gallon of milk might
> eventually equal each other...]
>
> http://www.chicagotribune.com/busine...,5301338.story...
>
> Milk chugs toward record high
>
> Demand for ethanol drives up dairy costs
>
> By John Schmeltzer
> Chicago Tribune staff reporter
>
> June 14, 2007, 9:29 PM CDT
>
> "Milk, already hovering around $4 a gallon in the Chicago area, could cost
> as much as $4.25 a gallon to $4.50 a gallon by September.
>
> In Florida, milk is likely to rise to more than $5 a gallon, Bill Brooks, a
> dairy economist with Downes-O'Neill, one of the nation's largest dairy
> product brokerage firms, said Thursday.
>
> "We have a new competitor," Brooks told more than 100 people at a conference
> of producers and processors in Chicago. He said dairy farmers are paying
> higher prices to feed their cows as a result of ethanol production that
> depends on corn and other rough grains. "And the government is subsidizing
> this competitor."
>
> Brooks was referring to the 51 cents-per-gallon subsidy that is paid to
> ethanol producers by the government. The payment is designed to keep the
> costs low for ethanol and encourage its increased use as a fuel alternative
> to gasoline.
>
> Corn prices have surged 73 percent in the past year on higher ethanol
> demand, reaching a 10-year high of $4.5025 a bushel on Feb. 26. On Thursday,
> corn rose to a three-month high on the Chicago Board of Trade, closing at
> $4.095 per bushel.
>
> Earlier this week, Dean Foods Co., the country's largest milk processor,
> predicted that raw-milk prices will set a record later this year.
>
> Despite soaring milk prices, the U.S. Department of Agriculture said
> Thursday that farmers are reluctant to increase the size of their herds when
> prices for feed are rising faster than the price of milk. That means
> production is expected to be limited.
>
> Prices for other foods are also rising.
>
> The American Meat Institute, which represents the nation's beef, pork and
> chicken producers, said that corn previously used to feed animals is
> increasingly being diverted to ethanol production.
>
> "Saying rising feed prices don't have a direct impact on the cost of food is
> as ridiculous as saying that rising gasoline prices will not result in
> people paying more to fill up their cars," said David Ray, an institute
> spokesman.
>
> Already, consumers are paying 8 percent to 10 percent more for breakfast
> foods than a year ago because of the rising prices for corn, wheat, milk and
> other commodities, according to the Department of Agriculture.
>
> Retail prices for orange juice have risen 20 percent to 25 percent from a
> year ago, while eggs have climbed 15 percent to 20 percent. Overall, food
> prices are expected to rise 3.5 percent to 4.5 percent, about 1 percentage
> point higher than in 2006, the USDA estimates.
>
> Carl Weinberg, chief economist for High Frequency Economics, has warned that
> higher food prices could spell trouble for the U.S. economy.
>
> "The trend in food prices did not go well in the 1970s, and we fear that a
> repeat of that squeeze is in progress now," he wrote in a note last week.
>
> The USDA estimated this week global grain stockpiles could drop more than 5
> percent this year as a result of increased demand and droughts.
>
> Weinberg said the new estimate means there might only be a 53-day supply at
> the end of the year compared to the 69.9-day supply just two years ago.
>
> "These stockpiles estimates are as low as they have been since the early
> 1970s, and that is not good news," he said Thursday. "If food prices jump,
> then inflation measures will jump."
>
> An Iowa State University study of the impact ethanol consumption is having
> on food prices appears to confirm many of Weinberg's concerns.
>
> The study projects that consumers could wind up spending $47 more per person
> annually on food if oil prices remain above $65 a barrel and grain prices
> keep rising. Oil closed Thursday at $67.65 a barrel, up $1.39, on the New
> York Mercantile Exchange.
>
> On Thursday, Brian Hoops, an analyst with Midwest Market Solutions in
> Yankton, S.D., told Bloomberg News that farmers may liquidate hog herds to
> avoid paying higher feed costs. Hog prices are up 22 percent this year on
> export demand for pork and higher corn costs. Beef prices are only a little
> behind; they have risen 16 percent in the past year, reaching a record
> $1.02925 a pound on March 12.
>
> Congress is considering legislation that would require a 36 billion-gallon
> renewable-fuel standard, nearly four times higher than 7.5 billion-gallon
> standard required to be met by 2012. Most experts say that the standard will
> be met mainly with increased production of ethanol and biodiesel fuel.
>
> "The problem with government mandates is that they are not responsive to
> market signals or problems like drought," said Ray from the meat institute.
> "In terms of food prices, near term, we see the problem getting worse, not
> better."
>
> </>

Maybe the price rise is because of the price of gas going down!