Finance Junkie

Kraft Foods: Buffett's Commodity Prediction

I think the argument is not that Buffett is calling a top in soft commodities. I think that he realizes the economies of scale that Kraft has in the food sector. The same holds true for Wal-Mart’s stock performance in the retail sector versus others like Sears Holdings.

It's my opinion that the soft commodity costs will hit the restaurants harder than Kraft; diners will see escalating costs at their restaurants and choose to dine more frequently at home... If that holds true, people would buy more from Kraft… Restaurants would buy less from Sysco and other food vendors. My bottom line: Kraft - Relatively positive outlook; Sysco - Negative Outlook.