POCATELLO, Idaho (AP) -- Idaho's dairy industry increased milk production by 5.3 percent in July, a rate that enabled the state to surpass New York as the nation's third leading milk producer.

But that's not all the good news for Idaho's dairy farmers.

Industry officials say milk prices are rebounding slowly after suffering significant declines in 2009. Producers say they are fetching prices of $15 per hundredweight, closer to the break-even point and up from the $11 per hundredweight paid in 2009.

Still, state dairy officials are urging caution to producers considering production increases.

"We're getting right around break-even prices right now," Arimo dairyman Dale Evans, who owns a 400-head dairy, told the Idaho State Journal. "But if we keep producing more milk, prices will go back down."

Figures from the U.S. Department of Agriculture show July milk production in Idaho totaled 1.12 billion pounds, up 5.2 percent from July 2009 and a four percent increase compared to June 2010.

The average number of milk cows in Idaho during July was 567,000, an increase of 17,000 from July 2009 and up 5,000 from June.

Idaho's volume topped New York, which produced 1.1 billion pounds in July. Idaho still trails industry leader California, at 3.4 billion pounds for July and Wisconsin, which produced 2.2 billion pounds.

"That 5 percent increase is a huge number and I think that took a lot of people by surprise," said Bob Naerebout, executive director of the Idaho Dairymen's Association. "It's great that our dairy producers are producing a lot of milk, but we have to be very cautious."

For the last several years, Idaho and New York have frequently exchanged bragging rights as the nation's third leading milk producing state. But with production on the rise in Idaho, and the state's No. 3 ranking in cheese production, Naerebout claims Idaho is poised to keep its spot ahead of New York.

About 44 million gallons of Idaho's milk is processed into fluid milk for drinking, but the majority -- about 770 million pounds -- is used to make cheese.

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Information from: Idaho State Journal, http://www.journalnet.com

Copyright 2010 The AP.