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Two Ways To Play: Getting Krafty With Food Prices


Strengthen your portfolio in good times and bad.


Consumers to Pay More for Mac n' Cheese

According to the Financial Times, food companies in the U.S. are preparing for another round of price increases. Companies like Kraft Foods (KFT) and Sara Lee (SLE) may increase prices on certain products by double-digit figures as they cope with soaring commodity costs.

SLE said prices on protein products will jump as much as 20% after meat prices surged to a record 22-year high. Kraft said it will push up prices by 12-13% with some of its cheese categories rising as much as 25%. For the month of June, food costs rose 0.8% compared with a 0.3% increase in May. See Professor Andrew Jeffery's Feast During Famine.

From the Bull Pen: Those bullish in the consumer staples sector might consider ConAgra (CAG) for an upside play; sell-stops can be set below $19.80.

From the Bear Cave: Bears might look to Kraft (KFT) for a quick trade. Buy-stops can be set above $30.20.

Economy Likely Headed Lower

Bloomberg reports the Conference Board's index of U.S. leading economic indicators is expected to fall for the first time in four months. Leading economic indicators, which points to the direction of the economy over the next three to six months, is expected to drop 0.1% as consumers continue to struggle with record food and energy costs. This compares with a 0.1% increase in May. The New York-based research group will issue the report at 10:00 AM EST. For more context on the economy, see Professor Kevin Depew's Five Things You Need To Know: The Modern Stealth Depression.

From the Bull Pen: Should the numbers come out better than expected, bulls could look to the Retail ETF (RTH) for an upside play, sell-stops in the near term could be set below $86.

From the Bear Cave: One option for bears is to fade (read:sell) the rally in General Motors (GM) to the $15 level; buy-stops can be set above.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng +0.64%, Nikkei -0.65%, Sensex +3.99%, Taiwan -2.28% and Shanghai +3.49%.

Looking at Europe we see the CAC +0.99%, DAX +1.05%, FTSE +0.66%.

As of 8:35 AM EST, S&P futures are up +6 points to 1266, and Nasdaq futures are higher +8 points to 1837.

A Look At Commodities

Crude oil is higher +2.81 to 131.69. Gold is higher +7.5 points to 965.50. Silver is up +0.100 to 18.235, and copper is up +1.35 to 370.00.

The dollar index is down -0.053 to 72.137.

On the Radar


10:00 Leading Indicators: -0.1% cons, 0.1% prior

Click here for the full trading radar.

Happy Monday! Good luck!

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No positions in stocks mentioned.

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