The minimum price consumers must pay for a gallon of whole milk in Pittsburgh will drop to $3.01 in September, the third straight month prices have fallen after hitting a record peak of $3.58 in June.

"It's supply and demand," said Tracey Jackson, director of consumer affairs for the Pennsylvania Milk Marketing Board. "The market now is finally responding to higher prices."

After two years of record low prices that forced some dairy farmers to thin herds and sell cows to the butcher, the store price in Pittsburgh jumped to $3.51 in May from an April low of $2.74. After creeping up in June to $3.58, prices started to fall again in July.

The National Milk Producers Federation says the prices farmers received for milk are retreating nationwide with the number of cows in the national herd rising and farmers' input costs declining.

The U.S. average retail price for a gallon of milk was $3.47 in August, compared with the Pittsburgh minimum that month of $3.05 as set by the Milk Marketing Board.

The summer surge in milk prices coincided with dramatically rising prices for butter and cheese on the benchmark Chicago Mercantile Exchange.

In Pennsylvania, minimum retail prices are set by the Milk Marketing Board, which figures in prices received by the farmer, along with the costs of processing, packaging and delivery to retail outlets and the handling costs in the stores.