We need to see whether today's strength in wheat prices can hold, but one thing we know is that the fertilizers are getting tons of good press. The brokerage firms are loving the Belorussian potash deal with India, and now there are expectations that Brazil will make a deal, as well—at a price 15% to 20% above current spot. Goldman Sachs has raised its forecast on potash prices through 2012 by 6% to 9%, and this actually looks a little low. And Uralkali, the Russian giant, has seen Goldman and two local brokerage firms write gushing notes over the last three days. This company sees potash at $600 a ton by the end of the year, which is extremely aggressive, but it tells you where the fertilizer players feel their market is. While there is no separate wheat ETF that trades in the United States, JJG is 15% weighted to that particular grain:
With food inflation down, the counterintuitive—or "contrarian"—view is that India, China and Brazil ramp-up their inventories of grain and fertilizer at these new higher prices because the short-term pressure is dropping on them.