As grain prices continue to rise, fueled in part by increasing demand worldwide, as well as farmers turning over their fields to grow corn for ethanol, earnings out from General Mills, Inc. (NYSE: GIS), while good, were weighed down by those soaring grain prices.
According to an AP report: "The cost of grain has affected a number of companies, especially those that make cereals. Grain prices have skyrocketed largely due to demand for corn used to make the alternative fuel ethanol."
So now my Cheerios and Wheaties cost substantially more, partly in order to produce ethanol, which is a suspect alternative fuel that's being used to fight a suspect phenomenon, global warming. Legislators, together with environmentalists, have created global inflation, to fight a problem that some scientists don't think exists. Does that make sense?
Grain costs not withstanding, General Mills had a very strong quarter. Sales were up across the board and international sales grew by more than 20%. Could it be that the weak dollar, is starting to help the bottom line of U.S. multinationals?
Look for other consumer staples companies to potentially post strong earnings in upcoming quarters as they profit from the sagging greenback.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/19/08.
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Reader Comments (Page 1 of 1)
3-19-2008 @ 7:57PM
David said...
It would seem to me that meat would come down in price as there must be a lot more mash that would be used for animal feed.
3-19-2008 @ 7:59PM
jo said...
ethanol is bullshit its only purpose is for the greedy, you get less GAS MILEAGE and burn more.It is only for the GREEDY and BUSH!!How come the farmers moved out of Montgomery NY they could have grown all that corn but had to move way upstate NY to make a living all that propert went for HOMES!! For what now good planning for the GREEDY!
3-19-2008 @ 8:06PM
smkd trky chitlins said...
SO DON'T BUY CHEERIOS.BUY THE STORE BRAND.STICK IT TO THE MAN.
3-19-2008 @ 9:05PM
Ned Ron said...
Please check out www.ethanolfacts.com before you decide on this issue. Instead of paying foreignors for the oil. American Companies and American Farmers spend our money here on cars,trucks, equipment ect.taxes. That you make.We also pay higher cost's as you do. Ever wonder if the ceral box doesn't cost more than what is inside? Take a trip abroad and see what you are missing. Energy demand worldwide is driving this as well as the developing countries can aford what you have had all along,now they have the money to get it. They no longer are happy with our scraps they want the good stuff. You and I still have the Safest, cheapest food in the world.
3-19-2008 @ 9:13PM
Darryl L. said...
This is propaganda, plain and simple. They could at least tell the truth. Ethanol is not being used to fight global warming, it is being used to fight oil prices. Since those that own the oil industry, food industry, and drug industry, also own the media, you will not be told the truth.
Cereal has been rising steadily, even before ethanol. I hope and pray for an alternative fuel that will force the oil industry to drastically reduce prices in order to compete.
Ethanol must be pissing on someone's Corn Flakes, since they are lying to you about it !!
Ahhhh.... the power of CORN!!
3-19-2008 @ 9:56PM
Ned Ron said...
What about the box, and that damn plastic it comes in, can't hardly tear it apart, whats wrong with wax paper anyway. The cost to produce it. Haul it. fuel,chemicals to make it,comes from oil. Ink. wages ,health care for workers. Now the cost of the corn. You will find is very small. corn ,whole corn is about 9 cents a pound. I have no idea how much corn it takes to make a pound of corn flakes, But think about it. It has to be small. The media allways turn everything around no mater what. Pick a subject you know everything about then read the news, compare what you read with what you know to be true.
3-19-2008 @ 11:01PM
moonie said...
Don't cheerios Americans eat too much sugar and carbs anyway over 35% are overweight and killing themselves..eat fresh fruit and veggies its much much more HEalthier and you.ll live much longer its TRUE!
3-22-2008 @ 8:35PM
marc said...
FUD, your article is pure FUD. Cheerios are oats. Wheaties are wheat. Corn is not used in these products. Oil is freight, fuel, packaging, transport, fertilizer, energy etc etc and that accounts for more of the cost than corn or ethanol in any of your darling breakfast cereals.