There's a raging bull market for cow magnets across the countryside in Minnesota and other middle and far western states.

It's driven by motorists who stick the magnets to their cars' gas lines in the hope they'll induce more miles per gallon.

That's right. Cow magnets.

They're three-inch magnetized metal cylinders resembling lipstick cases. Farmers store them in the first of a cow's two stomachs. A plunger device inserts them into the cow's throat whereupon the cow dutifully swallows the magnet.

That may sound bizarre to city folks, but grazing cows ingest with bovine indifference stray nails, bits of barbed wire and other metal objects. This prickly fare sticks to the magnet rather than wandering around the rest of the digestive track and ripping it up en route to daylight.

Although cow magnets have been sold in farming areas for half a century, the market has been limited until recently. Now it's booming as never before since word got around that somehow the magnetic field can boost a car's gas mileage by improving combustion if a pair of cow magnets is fastened to a car's gas line close to the carburetor.

Typical hearabouts is the Four County Ag Services Coop in Morristown, Minn., where sales in the last month jumped from an average of two to 240. At the wholesale level, the Burnsville branch of Anchor Laboratories, a pharmaceutical company, has unfilled orders for 5,000. The big Midland Cooperatives Inc. doesn't expect another shipment for nine months to meet the demands of its distributors. Meantime, the magnets, which normally retail for about $5 each, fetch up to $30 on the black market.

One supply source is slaughterhouses, where workers retrieve them from carcasses. At the Madison, Wis., Oscar Mayer plant, the primary market for secondhand magnets inside the plant opened at $10 on Oct. 16, according to word received in Minneapolis. And agribusiness sources report the cow magnet boom and consequent shortage exists not only in the Midwest but also in states stretching from Montana to Washington and California.

But does it really work? The answer according to some users, is: yes, sort of. The answer, according to the Environmental Protection Agency is, in effect, no way.

In suburban Burnsville, Neil Johnson, a floor covering contractor who drives his 1977 van up to 100 miles a day, figures that the two cow magnets he's installed give him up to 1 1/2 extra miles per gallon. "It isn't earthshattering, but every little bit helps," he said.

In Morristown, Darrell Haag, the farm supply store manager, said he had mixed emotions about the fad. "Had a fella come in with a van who said he got eight extra miles to the gallon. But just as many say they don't get any increase as say they do."

In St. Paul, at the University of Minnesota College of Agriculture, a combustion expert, Professor Ed Fletcher said: "There's no conceivable thing that the magnets could do that would improve gasoline mileage." He speculated that magnet fans were subconsciously improving their driving habits. s

The professor's skepticism was echoed in Ann Arbor, Mich., at the EPA Motor Vehicle Fuel Emission Laboratory. There an expert, Peter Hitchins, said, "We are not aware of any technical basis to associate fuel economy with a magnetic field."