Blog > Hot Stock Pick of the Week > Food Prices: Short Whole Foods (WFMI) as disposable incomes deflate alongside the health food craze
 | Email This Article Email This Article  | 

Food Prices: Short Whole Foods (WFMI) as disposable incomes deflate alongside the health food craze

Posted April 24, 2008

Baltimore — (TFN): A year ago, Fidel Castro warned that the West’s newfound obsession with burning food instead of fossil fuels was putting at risk poor people all over the world. Food prices would increase because of increased demand for corn and soy. And farmland used to grow food and feed would be converted to grow fuel crops.

Watch the financial video!

Leave it to a man who managed his nation’s hunger for a living to put things in perspective!

Food riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to the attention of even the green fuel pushers — be it only because rising resource prices have again raised the cost of alternative fuels into and beyond profit margins.

Of course, it’s not just the demand for fuel crops that’s been driving up prices, but the increased cost of transportation and the soaring demand for luxury foods generated by the swelling middle class of Chinese, Arab, and Indian consumers.

In the U.S., high food prices are already taking a bite out of school lunch budgets. Even ambitious lawyers and board members with seven-figure incomes are taking notice. Democrat Barack Obama was recently overheard talking shop with Iowa farmers: “Anybody gone into Whole Foods lately and see what they charge for arugula? I mean, they’re charging a lot of money for this stuff.”

When milk costs twice as much as soda and junk food not only is more appealing but a quarter the cost of healthy foods, it is only a matter of time before the publicly funded health food craze runs out of steam.

If you don’t believe me, look at a price chart of Whole Foods Market Inc. (WFMI:Nasdaq). This worthy proprietor of organic kohlrabi and broccoli to wealthy stay-at-home suburban mothers has fallen by almost 50% since its bio-dynamic highs in October.

And as disposable income is sucked up by higher taxes and higher fuel bills for the Range Rover, frozen Birdseye peas may have to substitute more and more for the organic hand-shucked stuff.

Watch the organic food bubble deflate alongside middle class prosperity: Short Whole Foods and the health food sector in expectation of a further 50% drop by year-end.
****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. Sign up through your favorite reader here. Or, if you prefer, have the feed delivered to your email.

Related Articles


Posted by J. Christoph Amberger · Filed Under Hot Stock Pick of the Week 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus