Starbucks believes that coffee will cost more in 2014 but will not raise prices.

Starbucks, the world's largest coffee chain, expects rising coffee prices to make more money than it previously thought, but stressed it would not raise prices to pay extra fees.

The news sent its shares down nearly 3%, even though the company reported profits and u.s. sales that significantly exceeded wall street's targets.

Ingredients from coffee and milk to beef and bread prices are being squeezed by restaurant operators.

Earlier this week, Starbucks' rival McDonald's said it would raise prices "where it makes sense" to offset some, but not all, increases in food costs.

Seattle-based Starbucks narrowed its earnings forecast on Wednesday to between $1.44 and $1.47 a share for fiscal 2011, compared with analysts' average expectations of $1.49 a share. The company expects goods to cost about 20 cents, and earnings cut this fiscal year, along with its last forecast in November between 8 cents and 10 cents.

"I think they are conservative," said Matt DiFrisco, an unknown Oppenheimer analyst facing the company.

At the same time, strengthening the U. S. economy could boost sales and give company rooms access and raise prices, he said. Starbucks doesn't know how much it will have to pay to expel Kraft Foods for supermarket-packaged coffee sellers.

"they will have to pay some money in Kraft this year," said Larry Miller, an analyst at RBC Capital Markets. Starbucks wants to end its 12-year-old partnership with Kraft, and on March 1, some analysts estimated that the cost could exceed $1 billion for early termination.

Starbucks removed the uncertainty of one of the investors. "the mind is locked in the fact that the price of coffee is 2011. Coffee represents 15 to 20 percent of Starbucks' cost of sales.

Trading in the ICE US Futures Exchange benchmark "C" Arabica coffee futures contract still revolves around the level of the last appearance of 13-1 gamble two years ago, after the rally began surging nearly 80 per cent in June 2010.

At the end of last year, the company raised beverage prices in the United States and China as coffee and other commodity prices soared.

Chief Financial Officer Troy Alstead told Reuters that the company had bought all the coffee it needed this year.

A Starbucks spokesman added that the company had purchased coffee "for a few months" in 2012.

"I don't think you'll see anything, I'll call a new round," said Alstead, who pointed out that previously announced menu prices have risen because the cost of coffee has not yet been shown in every market.

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The CFO told Reuters that there was no point in resisting the price hike so far.

Starbucks returned to profit growth after two years of adjustment in 2010, involving cost-cutting and the global closure of nearly 1000 Internet cafes. Since then, investors have enjoyed quarterly earnings that often exceed analysts' perceptions.

That could change, said Larry Miller, an analyst at RBC.

"Starbucks' ability to continue to fight is significantly hampered by the commodity cost of 20 cents," he said. "there are a lot of disadvantages this year."

However, Miller saw a glimmer of hope: "if they can keep the margin and there is a drop in the cost of coffee, it makes a good 2012 story."

Profit leaping

Starbucks' profit rose nearly 44% in the first quarter of the fiscal year ended Jan. 2, to $346600000, or 45 cents, from a year earlier. That could easily exceed analysts' average call earnings of 39 cents a share in the latest quarter, according to Thomson Reuters I / B / E / S.

Cost control and efficiency efforts helped increase operating margins by 800 basis points, 17.3% in the United States, and 620 basis points to 13.8% internationally.

Sales at Starbucks cafes have been better than expected 8% in the United States for at least 13 months, up 5% in the international holiday season, traditionally the largest revenue for Starbucks.

Starbucks has about 11000 people in the United States and 6000 other people in cafes around the world.

Its future development plans include increasing the number of major international markets such as Internet cafes in China and India, as well as expanding the grocery aisles where products to choose from, such as instant coffee, are sold.

Starbucks shares fell 2.8 per cent to $32.16 in after-hours trading. Shares, which fell below $8 in November 2008, when Starbucks' overconstruction crashed into the US economic slowdown, hitting a 52-week high of $33.78 on Tuesday.

Options traders expected good news from Starbucks on Wednesday and were on the wrong side of the bet.