Hi Saracen,Totally agree with you. There are multiple factors...

Hi Saracen,

Totally agree with you. There are multiple factors driving grain prices up at present, and fert will follow it up. The unfortunate unrest in Nth Africa & Middle East is very fortunate for MAK.

Came across the following article & thought I'd post it as it supports your arguement nicely:

Forget copper. Buy wheat, SocGen says
11:00 UK, 2 Feb 2011

Wheat is more valuable than copper ? at least as an investment opportunity, Societe Generale gurus have said, even as prices of the metal jumped to a record high.

The bank's global asset allocation team introduced as its key commodity call a trade of taking a long position in wheat futures and short position in copper futures, ditching a recommendation to stay long in gold.

The suggestion came even as copper hit a record $9,988.25 a tonne in London, spurred by expectations that global economic recovery will further boost demand for the metal.

Goldman Sachs analysts have rated copper as the metal with the "greatest upside" potential, thanks to weak inventories, robust demand delivery driven by emerging market urbanisation, and a constrained supply outlook".

However, Societe Generale questioned whether supplies were as tight as some investors appear to believe, with exchange warehouse stocks up by some 10% since late November.

Prices in Shanghai and London markets continued to fail to present arbitrage opportunities, "suggesting there is no tightness in the Chinese copper market at present", the bank said.

"Copper within commodities appears to us particularly vulnerable to a correction as [prices] are back to pre-crisis levels."

'Keen to stockpile'

Wheat, meanwhile, was "likely to trade higher near-term" as investors factored in a "significant" tightening in supplies.

"The most recent US export data show a large increase in non-US demand as importing countries are keen to stockpile on fears of shortages later this year," Societe Generale said.

For two weeks running, US wheat export sales have topped 1m tonnes, an unusually high total for the January-to-May period, when many buyers typically switch to southern hemisphere supplies.

Meanwhile, demand expectations have been stoked by the unrest in the Middle East and North Africa, which is deemed likely to prompt governments to stock up on crops, and attempt to avoid food inflation adding to protesters' complaints.

'Spikes possible'

Separately, Barclays Capital analyst Sudakshina Unnikrishnan also forecast wheat prices rises, thanks to tighter supplies, with wheat demand rising in India, Pakistan and Russia besides a recent jump in orders from Middle Eastern and North African nations.

"Fears that other countries may follow in Russia's footsteps by stepping up export bans have, in addition to the pick-up in prices, added to importer concerns," Ms Unnikrishnan.

"Amid these supply concerns, we expect prices to climb further in the near term, and spikes cannot be ruled out if countries slap on export bans or if importers pre-empt export restrictions by making large purchases."


http://www.agrimoney.com/news/forget-copper.-buy-wheat-socgen-says--2775.html

Cheers