"As incomes around the world rise, so does demand for food; and the explosive growth in population is aggravating the situation even further," note Yiannis Mostrous and Roger Conrad.

The co-editors of Vital Resource Investor explain, "The big cycle in food demand has begun, and long-term-oriented investors will be rewarded handsomely." What's the best play? Among their favorites is Monsanto (NYSE: MON).

"Monsanto is the undisputed leader in the genetically modified (GM) seed industry. Its business consists of two segments: Seeds/Genomics and Agricultural Productivity.

"The Seeds/Genomics segment consists of the company's global seeds and traits business, and genetic technology platforms, including biotechnology, breeding and genomics.

"The Agricultural Productivity segment consists primarily of crop protection products, residential lawn-and-garden herbicide products, and the company's animal agricultural businesses.

"Monsanto shares have been affected by the market's shorter-term gyrations, but the underlying business is extremely healthy. In fact, the seed business is currently in a sweet spot as global food demand changes dramatically.

Kudos to my colleague Elizabeth Harrow for pointing out that shares of Deere & Company (NYSE: DE) may be heading for a fall. As today's earnings report shows, her post was on the money.

Net income rose to $575.2 million, or $1.32 per share. Revenue soared 17% to $7.74 billion. Analysts had expected profit of $1.36 per share on revenue of $7.23 billion. Shares of the largest farm equipment maker had their biggest drop in two decades, according to Bloomberg.

What's killing Deere is rising raw material costs. The company's overall business is doing fine. Agricultural sales rose 35% in the quarter. Not surprisingly Commercial and Consumer revenue fell 1% and Construction and Forestry declined 7%.

I'll alert Minyanville.com readers when Congressional hearings are scheduled to address this other form of speculation, which includes windfall losses.

As for the market, it would seem the largest institutions are equally hopeful -- for the sake of their relative performance -- that this simply can't be: According to some reports I've seen, they're roughly 500 basis points underweight energy.

I'd imagine both will continue to be long shaking heads.

Positions in Energy, Futures and Equities.

"Potash (NYSE: POT) scored a technical breakout by rising above $210," says technical expert Leo Fasciocco. In his Ticker Tape Digest, he says, "With earnings set to soar the stock now targets a move to $265."

"Postash, based in Canada, produces fertilizer. It produces phosphate and nitrogen from 12 facilities in the United States and South America. Fertilizer stocks have been strong due to rising profits reflecting strong demand for their products and rising prices.

"A long term chart shows an extraordinary bull market advance with the rising 170% the past 12 months versus an 8% decline in the S&P 500 index. Now, the stock has broken out from a seven-week flat base. The move carries POT to a new high on expanding volume.

Resource industry specialists Roger Conrad and Yiannis Mostrous are bullish on the agriculture and water sectors; in their model portfolio they already hold 6 stocks in these sectors.

The co-editors of Vital Resource Investor explain, "We see strong underpinnings for continued higher agricultural prices for many years to come." Here's their latest agrculture play: EI du Pont de Nemours (NYSE: DD).

"Recently the United Nations Food Agency warned of civil war in some countries because of global food shortages. With the rapid urbanization of Asian countries, we see a growing global dependence on a shrinking number of food producing nations, particularly with the world adding 78.5 million people each year.

"There will be ups and downs for prices along the way. A throttling back of America's efforts to develop ethanol so extensively or a move to use something besides corn to brew ethanol could take some of the upward pressure off corn prices.

"A real global recession could also cause food prices to back off for a time and it's also possible we'll see some form of US government intervention to curb food prices, particularly as the presidential election develops.