Milk Rally Causing Higher Prices At Wal-Mart Also Spurring Gains In Output

U.S. dairies are generating record production as farmers seek to benefit from a rally in milk prices that is boosting costs for shoppers at Wal-Mart Stores Inc. (WMT) and eroding profit for Starbucks Corp.

Milk output probably totaled 16.744 billion pounds in April, up 2 percent from a year earlier and the highest ever for that month, said Bill Brooks, a Dearborn, Missouri-based economist at INTL FCStone. The U.S. Department of Agriculture, which last week forecast record domestic output through next year, will release its April estimate at 3 p.m. in Washington.

Milk futures are up 24 percent this year in Chicago as exports surged to Asia and domestic demand increased. The retail price of dairy products will rise as much as 5.5 percent this year, faster than overall food costs, the government has forecast. To profit from the increase, farmers are expanding herds and boosting productivity per cow, USDA data show.

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