First oil. Then copper, then lumber, and coal. And now grain.

The solid economic growth in the world's emerging markets that's caused oil / coal and commodities prices to surge is now fully hitting the grain market.

So much so, that some food producers are calling on the U.S. government to restrict exports due to soaring prices for grains they use to make cereal and other foods. Meanwhile, some farmers are asking the U.S. Government to ease restrictions to enable farmers to plant more acres, The Wall Street Journal reported Thursday [Subscription required].

For food producers, the issue involves limiting a major operating cost. During the past year, spring wheat has risen to an astounding $17.63 per bushel, up from about $4.90 a year ago. Flour, which used to cost about $15 per 100 pounds, now sells for about $45-48 per 100 pounds. Food producers say prices are increasing so fast, they can't pass along price increases quick enough to keep up.

Fast-food king McDonald's (NYSE: MCD) continues to lure people under the golden arches, with fresh items and an expanded breakfast menu. In October, same-store sales rose by 6.9%, as the restaurateur posted gains across all regions. In the U.S., comparable-store sales were 5.4% higher. Europe saw a 6.4% jump in sales gains, and sales in the Asia-Pacific region, the Middle East, and Africa surged 9.4% during the month.

An article in this morning's Wall Street Journal attributed the surging sales to new products (such as the chicken "snack wrap"), additional breakfast items (offered in an expanded block of time), and a popular value menu, perfect for consumers getting squeezed at the fuel pumps.

Across the board, total sales were 14.2% higher during the month, or up 8.2% excluding fluctuations from foreign exchange rates.

In pre-market action, MCD shares are showing a 1.4% gain. At yesterday's close, the stock was just 2.6% shy of a new 52-week high, so a strong rally today could boost the equity into new-high territory for the year.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Continuing with our defensive stock series for a choppy/consolidating market: place Kellogg (NYSE: K) in the "old reliable" category.

Product innovation, legendary brands, economies of scale, marketing prowess, and an impressive global geographic footprint spell good things for Kellogg in the years ahead. An improving snack business is another positive. But let there be no doubt -- the key drivers here are the brands the young (and young at heart) have come to know and love: Special K, Frosted Flakes, Rice Krispies, Fruit Loops, and Apple Jacks. Further, from a market standpoint, while it's always possible for the health/organic segment to overwhelm the mainline cold cereal segment, that day has not arrived.

The qualifiers: Rising commodity costs could further cut into earnings, as would more-broadbased acceptance of generic cereals. Kellogg's shares closed Wednesday up 10 cents to $54.34.

Technically, Kellogg's chart looks good. Trading around $54, the stock is currently just below its 50-day moving average of $54.85, but the stock has been above its 200-day moving average -- the toughest average to break -- for more than 18 months. Further, Kellogg's chart displays a healthy advance, minor correction pattern.

Stock Analysis: Kellogg is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 1 year should be rewarded from K's shares. Sell/Stop Loss: $43.

Starbucks Corporation (NASDAQ: SBUX) unveiled its new menu program today that includes an expanded lineup of beverages and lunch selections. It looked all too familiar. Coffee and salad, I thought? Can't I get that at McDonald's Corporation (NYSE: MCD)?

Before its foray into salads, Starbucks had aggressively been competing with McDonald's over the title of 'best coffee' ever since Canadian Business magazine's blind taste-test last year declared McDonald's the winner and champion.

Starbucks has already tried to compete for a spot in the crowded breakfast line-up. Back in October last year, they announced a plan to roll out its breakfast sandwiches. After a taste-test, The Columnist Manifesto thought them to be so bad that he compared them to airplane food.

With Starbucks' grinds slightly burnt, management decided to tackle McDonald's straight on: Salads. Customers now have the option to order the new Tomato Mozzarella Insalada, Champagne Pasta Salad or Albacore Tuna Penne, among other delights. Try that with your new Raspberry Mocha Frappuchino.

In addition to Wendy's (NYSE: WEN) management's recent hiring of JP Morgan (NYSE: JPM) and Lehman Brothers (NYSE: LEH) to help review strategic options for the company, the fast-food restaurant has decided to throw its hat into the breakfast ring by signing an exclusive deal with Proctor & Gamble (NYSE: PG). The deal allows Wendy's to be the only major fast-food restaurant chain to offer a proprietary blend of Folgers Gourmet Selections coffee and will become part of Wendy's new breakfast menu.

What's that you say, "Breakfast menu?"

Yes folks, Wendy's just isn't for lunch or dinner anymore (or dessert – mmmm Frosty's). You can now eat Wendy's for every meal of the day. By the end 2007, Wendy's expects to have 20-30% of its North American restaurants serve breakfast along with premium Folgers coffee.

Wendy's is definitely throwing its hat into a very crowded ring. The fast-food breakfast market is growing at almost three times the rate of the overall market, with Burger King (NYSE: BKC), McDonald's (NYSE: MCD), Arby's, a unit of Triarc Co. (NYSE: TRY), Carl's Jr and Hardee's, both owned by CKE Restaurants (NYSE: CKR) and even Starbucks (NASDAQ: SBUX) offering similar on-the-go breakfasts to consumers. Papa John's (NASDAQ: PZZA), Dunkin Donuts and Chick-fil-A are planning new breakfast products as well. What's going to be so different to make me go to Wendy's?

When looking at the coffee aspect, one has to recall last year's Canadian Business magazine taste test between McDonald's "Café Roast" and Starbucks coffees. I'm sure all the companies I mentioned above serve some brand of coffee. Wendy's is really walking into a competitively caffeinated situation. We also can't forget about Seattle 's "Sexpresso" baristas, but that's competition on a different level.

Where do you go to get your morning cup o' joe? And would the chance to have Folgers Gourmet change your mind?

I'm a little bit of a food snob. Usually, I avoid fast food like anything. But if you've read my posts, much, you may have heard I have a weakness for McDonald's breakfast sandwiches. My husband knows that a Sausage, Egg & Cheese McMuffin is the only way I'll get up when he comes home from his bartending job in the wee hours of the morning. And a McGriddle? Talk about the perfect food to cure what I call a "mommy hangover."

And then, there was Starbucks.

Starbucks Corporation (NASDAQ:SBUX) started serving breakfast sandwiches a little over a year ago, and surprise! They look oh-so-much exactly like the McMuffin, down to the egg + meat + cheese + English muffin combo.

But, as the New York Times points out today, they don't always taste quite as good as a McDonald Corporation (NYSE:MCD) McMuffin, or the higher art form, the McGriddle. The thing is: you're not going to go to two places for breakfast (unless you're quite the leisure queen *cough* who me? *cough*). So, the theory is, you'll to whatever place does best at the menu item you really value. Love coffee? Starbucks might be your choice. Like greasy sausage (yum)? It'll be McDonald's. (Although many believe McDonald's new-and-improved coffee is better than Starbucks -- for those, the choice is a lot easier.)

Doug Roberts wonders if it's McDonald's chasing Starbucks, or the other way around. I think that's an easy question: Starbucks has always been chasing McDonald's. After all, McDonald's is the king of the category. McDonald's invented fast-service consumables. The real question is, can Starbucks serve up a sandwich worth paying a premium?

In my opinion, the answer is "no." Not yet, anyway. Let McDonald's continue to rule the grill, Starbucks, and you, with your dry uninspiring and floppy sandwiches, can continue to reign over drippy sweet coffee drinks.

With the resurrection of McDonald's Corporation's (NYSE:MCD) same-store sales and Starbucks Corporation's (NASDAQ:SBUX) march to 40,000 stores, an ugly competition is shaping up. McDonald's has about 36,000 stores around the world, so some clash was probably inevitable between the world's largest fast food chain and the world's largest coffee shop operator.

As one expert in the food industry pointed out in the New York Times: "It's a good thing for Starbucks that coffee is a big part of the breakfast decision," said Tom Miner, a principal in Technomic, a food service industry research firm. "But most Americans spend no more than three minutes shopping for breakfast, which doesn't leave time for two stops."

The choice may come down to where you want to stop each AM. McDonald's has moved into high end coffee and Starbucks is selling McMuffin-like breakfast sandwiches.

McDonald's attributes much of its improvement is sales at stores open more than a year to premium coffee and breakfast food like its egg sandwiches. If it is going to fight to hold those gains, it cannot have those customers go around the corner to Starbucks.

What's it mean? In all probability, McDonald's will continue to improve its premium coffee selection. And Starbucks will offer more hot food for early eaters.

Then, it's two very large companies in a race to capture the same flag.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In the war for cheap eats, breakfast is about to become the front line. McDonald's Corporation (NYSE:MCD) is about to roll out a dollar menu for morning staples like the sausage muffin with cheese and a breakfast burrito with two hash browns. Burger King Holdings, Inc. (NYSE:BKC) won't be far behind and is expected to have 10 items for a dollar on its breakfast menu this spring. (No word, though, on when and whether these items will be available all day long.)

If you're a believer in fast food, believe that Wendy's International (NYSE:WEN), whose value menu is legendary for its variety, will be jumping on this bandwagon soon. Already the breakfast market seems to be the Mealtime to Be of 2007, what with Starbucks Corporation (NASDAQ:SBUX) hoping to complete its rollout of eggy cheesy breakfast sandwiches by mid-2007, and, according to the Motley Fool, the news that Yum Brands' (NYSE:YUM) Taco Bell is also exploring a breakfast menu.

Who will reign supreme? How will this effect the companies' respective bottom lines? Neither McDonald's nor Burger King breaks out revenue by mealtime or menu item, so it's hard to say what percentage breakfast is of the overall sales. It's equally hard to predict how this would affect profitability -- certainly, it could diminish franchisee profits somewhat, but it's likely to increase overall sales. Breakfast is the mealtime of the future for fast food, and although McDonald's leads the way in the consumer's mind, with so many possible entrants into the $1 breakfast, it's anybody's game.

The concept of focusing on the "meat" of a business may be both a cliche and an overly carnivorous metaphor, but that doesn't make it any less true. And Wendy's is taking the cliche very literally in today's news, announcing it will sell Baja Fresh and refocus on its core hamburger business.

The renewed focus on burgers makes sense, but Wendy's International (NYSE:WEN) bought Baja Fresh only four years ago for $275 million and will be selling for barely more than 10% of that figure, $31 million, to a consortium of investment firms. That's a pretty miserable return.

Hopefully, however, the sale will allow management to spend some time getting introspective. First, there's the sagging brand. I'd agree that, as QSR Magazine's Sherri Daye Scott says, the brand image is struggling. Wendy's used to be known for its higher quality and spicier menu options compared to other fast food restaurants, and now I can barely tell the difference. When was the last time you felt the yearning for an ice-cold Frosty? In high school (I'll admit), I'd have a few a week. I haven't tasted one for years.

Then there's the menu. Why doesn't Wendy's have breakfast? We've already determined that (yes) fast food customers -- and even many of the health nuts out there -- love breakfast. The restaurant has plans to expand its test to the rest of its outlets this year. Also, Wendy's will be adding a double-melt hamburger, along with more "indulgent" sandwiches.

A lot of this sounds very derivative, picking and choosing from the successes of its competitors' strategies. I don't have a problem with that! Wendy's stock was up $1.39 today, 4.12%, to $35.11 on anticipation of good news.

[Photo diana connolly.]

Starbucks Corporation (NASDAQ: SBUX) breakfast buzz, for what it's worth, seems to have died down for the moment, -- at least I'm no longer getting four or five news alerts daily in my email inbox. Like Portland, this offerings are not new in my hometown of Seattle, and I failed to credit the interest their introduction would generate in the mainstream media. Online, some customers posted their pictures and comments of the breakfast purchase on Flickr. Warning: these are not professional, studio produced advertising shots, but actual representations of breakfast sandwiches in all their greasy glory -- not for the faint hearted. Although outside the breakfast area, a Tokyo lunch-goer called this Starbucks tuna melt yummy, and it doesn't look quite so bad.

The Starbucks Gossip blog solicited barista reactions to the NYC rollout of warm breakfast which has turned up a responses from Starbucks employees. "NycBearista" noting that he or she was the "warming partner" (I will not be surprised if that is an actual job title) on roll out day, noted that the new task made opening duties go much slower, and since it's now store policy to "warm anything."

It was about eight months ago that a Starbucks opened on my corner here in SE Portland, Oregon. It wasn't much later that breakfast sandwiches, yummy-looking concoctions with eggs, cheese, sausage, black forest ham, spinach, and all kinds of savory goodness started appearing in the case. It was new to me, because the sandwiches were served warm, a big change from Starbucks Corporation (NASDAQ:SBUX)'s usual refrigerated deli-case fare.

Manhattan, prepare to be second in something for the first time. A wire story peaked up on my screen this morning: "Starbucks offers warm sandwiches, cookies in N.Y." I was wowed to see the menu items I've been getting in my own local 'Bucks will be rolled out in Manhattan Starbucks stores over the next several months, not arriving in all New York metro area locations until summer 2007.

I can't help but feel a bit superior as I trip back in my file photos and find a warm, toasty, delicious breakfast sandwich -- bacon, egg, and cheese -- taken back in April. Hee. Hee. Teehee.

It's an interesting peak into marketing strategy. Isn't New York always the first? And the press release about the warm sandwiches: I never saw one advertising warm sandwiches being rolled out in the Pacific Northwest. I guess we're first here in the rainy west, but Starbucks isn't bragging on us.

I love breakfast.

But I'm not a morning person. And when I happen to be out and about, garage saling or running errands or recovering from what I like to call a "mommy hangover," I find myself at a McDonald's. And all I want is breakfast. Somehow the Sausage McMuffin satisfies that need I have for protein, salt, and iron, without making me feel as if I've given my soul to the demons of empty calories.

If it's after 10:30 a.m., though, I'm sunk. And given that I (a health-conscious adult who tends to steer clear of partying 'til the wee hours) want breakfast past 10:30, I can only imagine how much the considerable teenager and, umm, hungover demographics would appreciate being able to eat Sausage McMuffins and hashbrowns and all kinds of other deliciousness at 11 a.m., or 12:30, or even four in the afternoon. I know. Shocking, right?

I've thought since my own teenage years that McDonald's and fast food restaurants of every kind were ignoring a huge consumer need by cutting off breakfast in mid-morning. Now, it seems that McDonald's finally agrees; the news from Jim Skinner's presentation at the Bank of America 36th Annual Investment Conference: breakfast, all day, will soon be here. All that's needed is a change to a new "flexible operating system."

If I were the CEO of McDonald's Corporation (NYSE:MCD), I'd be slapping myself on the forehead. Doh! Why didn't they figure this out sooner? Hello? Customers don't like to be told, "no, you can't have that which you most desire. We made a rule. Breakfast 'til 10:30, not a moment later!" Customers don't come to fast food restaurants because they're looking for discipline, limits, lessons in punctuality. They come to fast food restaurants to satisfy a desire, to indulge their longings for fat, crispy, sweet, bacony sausagey eggy...

That's why I, a health nut, a disbeliever in fast food, might now buy MCD stock. Because offering breakfast all day is an indication that management gets it. McDonald's stock was up 37 cents to $38.15, a 1% increase and a few cents from its 52-week high, on the news today.