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Rising Food Price Pushing Up Potash Stocks

|Includes:Potash Corporation of Saskatchewan Inc. (POT)

Agriculture prices have been going up since the beginning of 2014 and I think that if this trend continues, we will see demand going up for potash, which is used for agriculture.

The chart below monitors the food prices. You can see the recent surge in 2014. Many foods went up like coffee, sugar, even wheat.

RJA agriculture

If we chart the agriculture index RJA against the largest potash producer Potash Corp., then we get this.

Food (NYSEARCA:RJA) Vs. Potash (NYSE:POT)

We see a correlation here between food prices and potash prices. Food prices are obviously a leading indicator for potash sales and as a consequence we can say that higher food prices will push up potash prices.

So if you want to bet on higher potash prices (because of the recent surge in food prices), then you should buy the potash companies like Yara International, Potash Corp. or Allana Potash.

Stocks: POT