Yep! What JL5-(what are those numbers again?) said!
Milk is a commodity--it is priced like any other commodity. There are ups and downs in the prices, and this is what we see in the store. (Oh, by the way, my hubby is a mechanic at a dairy, LOL.)
Basically, there's a break-even point with milk at around $11 per hundred weight. When the price goes below that (which it does frequently) all the dairies lose money. If it stays too long, they (as mentioned before) sometimes end up going out of business. The last milk price I heard was $15 per hundred weight, which means a huge increase in prices in the store. When the milk's like this, the dairy farmers can basically afford anything they want--this is when they buy new equipment, get major repairs done, buy themselves brand new diesel trucks, etc., etc.
$10 per hundred weight equals butter $1.50 a pound. $15 per hundred weight equals butter $3.00 a pound, and many of the other milk product prices see the same kind of increase. One thing I have been happy for is that while butter is sky high, I'm just now seeing an increase in cheese prices. I'm sure it'll go higher eventually, and I guess if it keeps going, hubby can start carting home milk for cheese-making.
I only wish the boss was generous enough to give hubby a raise while he's so darned flush!