UPDATE 2-Dean Foods lowers profit view, to cut 600-700 jobs

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By Brad Dorfman

CHICAGO, Oct 2 (Reuters) - Dean Foods Co (DF.N), the largest U.S. milk and dairy products company, lowered its earnings forecast on Tuesday as soaring milk prices refused to abate.

Dean also said it will cut 600 to 700 jobs to further reduce costs.

Dean, which makes Land O'Lakes creamers and Silk soy milk, said sales have been hurt as consumers shift to private-label brands in the wake of record-high dairy costs.

In October, the minimum USDA price for raw milk was $21.59 per hundred pounds, up from $12.42 a year earlier, a Dean spokesman said.

"While we had expected strong growth in milk supply to lead to lower conventional dairy commodity prices toward the end of the year, it now appears that prices will likely remain high for the balance of the year, due in part to continued strong demand for nonfat dry milk powder," Jack Callahan, Dean chief financial officer, said in a statement.

Dean shares slipped 19 cents at $26.10 on Tuesday on the New York Stock Exchange. The stock is down more than 17 percent since the end of the second quarter, well below the 2 percent decline in the Standard & Poor's packaged foods index .15GSPFOOD.

"While the reduced guidance is obviously disappointing, it was not entirely unexpected," Sanford Bernstein's Robert van Brugge said in a research note. "The stock has sold off considerably in the past several months in anticipation of a potential miss."