Starbucks And Why You Pay More For The Soy


Soybeans hit a record high on Wednesday--$13.07 a bushel for July contracts. Soy prices jumped 75 percent in 2007, that's more than corn, oil, gold. MORE THAN GOLD!

Why? Because farmers decided to plant a bunch of corn to chase the ethanol dream, leaving less soy for the other hot new fuel--biodiesel, or to feed livestock, or to provide protein for the world's emerging middle class, or to satisfy health-conscious Americans who are increasingly choosing soy over diary. Now you know why Starbucks charges extra for soy.

This morning soybean prices pulled back because the USDA reported lower than expected export numbers. Now, I'm not saying we're in a bean bubble. We won't know that until farmers make their decisions this spring on what to plant. But I wouldn't be surprised if all those farmers being told by struggling ethanol producers, "Thank, but no thanks," start to think, "You know, those folks in China want my soybeans."

Just as Cramer always says "There's always a bull market somewhere," there's also always a bubble somewhere.



The company actually beat the street, even though same store sales growth in the U.S. was down a tad. Dan Geiman at McAdams Wright Ragen (based in "Buckies" home town of Seattle) has an aggressive price target of $34 on shares (wow! that would mean better growth this year than soybean prices!).

He is a firm believer in returning CEO Howard Schultz. However, Geiman says that on the call, "With a few exceptions, management failed to fully explain SBUX' turnaround strategy--it promised to do so at its annual meeting in March. However, based on the few details we're aware of, we believe that management has and will move decisively and aggressively to return the company to its core."

On my Countrywide blog suggesting that the company may have repossessed about 1,900 homes, Curtis S writes:
"It is hard to tell from Countrywide's web site exactly how many homes they own or the sales status of the homes listed on their web site but it appears that they own many thousands of homes. Check out the number of listings for California alone over 4,200."

On yesterday's "Fake Jane" makeover, John K. writes:
"Heather Locklear called. She wants her hair back. And Pamela Anderson says those breasts look suspiciously familiar too."

(FJ responds: they'll have to pry them from my cold, dead...well, you know).