CROESUS/AN INSIDER'S VIEW: SOARING COMMODITY prices, a weak dollar and a deteriorating US economy are the news items that have continued to dominate the financial headlines over the past week.

The oil price almost breached $110 a barrel, the gold price is not far off $1,000 an ounce and the dollar's relentless decline in the foreign exchange markets brought the rate against the euro to $1.54.

Non-farm payrolls in the US fell in February by 63,000, which was interpreted by many analysts as confirming that the US economy is in recession.

On top of the gloomy news flow from the real economy were growing fears that conditions in the credit markets were again deteriorating. Interbank interest rates have been rising, which indicates that banks are again becoming less willing to extend credit to one another.

On Tuesday, the US Federal Reserve joined other central banks to provide further substantial injections of short-term liquidity to the money markets. In its newest programme, the Fed will lend up to $200 billion (€128.5 billion) of Treasury Securities for 28 days to primary dealers in the bond market. Up to now, assistance was limited to overnight money and the move to 28-day assistance was seen as particularly beneficial.

In Europe, the Bank of England said it would extend its current £10 billion (€13 billion) programme and the European Central Bank said it would offer another $15 billion in loans.

Not surprisingly, equity investors have had to endure ongoing torrid trading conditions with weak trading days continuing to outnumber the positive days.

The Irish market did not escape this bearish tone although the level of the Iseq by Wednesday of this week was actually slightly above that of a week earlier.

At the stock-specific level, there continues to be a steady flow of company results.

In most cases, a positive outcome for 2007 tended to be overwhelmed by concerns over the 2008 outlook.

This was most evident in the case of Anglo Irish Bank, which said it expected earnings growth of 15 per cent in the half-year to March 2008.

The share price fell sharply on the day of the announcement as the market focused on a slightly more cautious statement from management concerning future prospects. This reaction continued a theme whereby the share prices of stocks in the financial and property-related sectors seem to suffer irrespective of the actual reported financial performance.

One sector that has shown signs of bucking this trend is the food sector. This week Iaws and its 70 per cent-owned offshoot, Origin Enterprises, announced results that were much better than market estimates.

More importantly, the respective management teams were upbeat about 2008 prospects and the share prices of both companies responded positively.

Iaws reported a 30 per cent increase in its interim earnings to the end of January 2008, driven by growing sales volumes and improving profit margins.

Iaws focuses on niche high-quality growth segments of the bakery and convenience food markets. Cuisine de France is one of its better-known brands. Iaws is well spread geographically with a profit split of Ireland 20 per cent; Britain 25 per cent; Europe 25 per cent; and the US 20 per cent.

Origin Enterprises, which was only spun out last year, also had an exceptionally good year.

Origin consists of the older Iaws businesses of flour milling and agri-trading and up to this year it would have been viewed as the poor relation of the faster-growing convenience food businesses. Booming commodity and food prices have radically changed the environment.

Brokers have rushed to upgrade their forecasts for 2008 and 2009 as the company benefited from strong volume gains in its British fertiliser business and strong sales growth in its food operations. Origin also has some significant property redevelopment opportunities in the Cork docklands.

The food sector is rightly attracting greater investor interest. However, investors need to tread carefully as booming food prices are a double-edged sword as input costs for many food companies are rising faster than sales prices.

As the table shows, the share-price performance of Irish food stocks has varied considerably over the past year and prices can be quite volatile, even on a monthly basis. All of these stocks suffered absolute price declines over the past year with the exception of Greencore and a stand-out performance from Glanbia.

However, in the context of a decline of more than one-third in the overall market, the sector has proved its defensive characteristics and is likely to continue to attract growing investor interest.