Du Pont reported better-than-expected Q2 earnings, but the report nevertheless did not overwhelm institutional investors, who've granted the company only a modest P/E of 14.

Even so, I'm Reiterating my Buy rating for E.I. du Pont de Nemours & Company (NYSE: DD), first recommended on April 22, 2009 at a price of $27.74. Here's why:

According to a statement from the Department of Agriculture, soybean planting is expected to increase 18% this year as higher corn costs made farmers focus on more favorable crops, such as soybeans.

The USDA expects farmers to plant 74.793 million acres with soybeans, up from 63.631 million last year. For the past year, soybeans prices saw a surge of 67% as supplies were not able to offset increased demand. The effects resulted in farmers' decision to boost soybean production. Soybeans produce their own nitrogen fertilizer, resulting in lower growing expenses.

As soybean output is expected to rise, the Department of Agriculture expects to see the amount of corn planted falling 8.1% to 86.014 million. Surging oil prices over the past months lifted ethanol demand. People focused on ethanol as a main form for alternative energy as it turns the crop into fuel, which resulted in higher corn prices.

With corn planting declining, consumers will have to take more money from their wallet when paying bills at the grocery store; food producers will compensate their costs by higher food prices. Drivers will also have to pay more as higher ethanol prices will be passed on their bills for filling cars up with the renewable fuel.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

A big crop report released this morning is once again bringing a lot of attention to corn and the global demand for ethanol. It all makes sense. With democracy and capitalism flourishing around the world, the demand for energy will boom and ethanol is a viable way to provide lower emissions fuel.

Even President Bush in his State of the Union address called for the United States to become less dependent on foreign oil. His solution: corn-based Ethanol?

However, as a reminder, investing is about "skating where the puck is going to be" as hockey great Wayne Gretsky used to say. Or as legendary John Templeton would say, look for points of "maximum pessimism."

There is little that is pessimistic about the outlook for corn today. Farmers throughout the U.S. are going to be planting it this season. Why? Because corn prices are approaching 10-year highs and the wide-spread belief is there is money to be made.

Conversely, the argument to invest in cotton might be more compelling. In a Barron's interview (subscription required) in January, Art Samberg of Pequot Capital said while cotton consumption in the US has been in decline, China's consumption, which has been growing nicely, is picking up more steam. Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year due to the growth of polyester and other materials. However, Textile spending is on a big upswing in China -- up 27% in '06, after jumping 36% in '05. Chinese consumption, which had been growing 4% to 6% per year, is now growing 15% per year.

Samberg said go long the December '07 cotton contract. Strong corn and soybean prices means U.S. farmers are going to remove acreage from cotton to earn better profits in corn and soybeans.

Supposedly, there have only been four times since 1913 when cotton was this cheap relative to grains like corn and wheat, with the last time being 1974. From 1974 to 1976, cotton tripled in price.