Dean Foods Inc. may be feeling some pressure this week from far higher corn costs and a U.S. Department of Agriculture report that boosted the price dairy processors pay farmers for milk by 14 percent.

In the report, released Friday, the USDA set the base price for Class 1 milk at $20.78 per counterweight for July. In June, the price was $18.18. The base price represents the minimum price processors can pay farmers for fluid milk. The price is largely determined by production levels.

Higher milk prices usually turn into squeezed margins and lower profit for companies that need dairy to make their products. Milk prices have risen due to the high cost of grain, which is used to make animal feed, growing demand overseas and supply issues.

Grain costs have risen even more in the past week as the price of corn has gone up to near $8 a bushel. The price dropped somewhat by week's end, with corn for July settling at $7.21 a bushel on the Chicago Board of Trade Friday.

Morgan Stanley analyst William Pecoriello said in a note to investors that the Class 1 price would need to drop back down to the upper-teens range for Dean Foods to remain comfortable with its guidance of at least $1.20 per share in profit for 2008.

Analysts polled by Thomson Financial expect profit of $1.28 per share.

Dean Foods could not immediately be reached for comment.

Dean Foods shares rose/fell 6.7 percent during the week to close at $18.75 Friday

Guess I will stick with the powdered milk.

A lot of people are going to be complaining to my Husband, he is the Dairy Manager at our local grocery store.

I don't doubt that the price of milk and beef will go up tremendously, too.  Considering the fact of all that unexpected flooding (due to the rise in rivers  and broken levees) resulting in loss of crops, the price of grain will rise even higher-making the price of beef and milk even more expensive than projected.