This fertilizer stock’s diverse operations let it tap into exploding global demand

Wheat prices have almost doubled, from a low of $4.25 per bushel on June 9 of this year to a recent high of $8.15. That’s mainly because Russia banned wheat exports to preserve its stockpiles in the face of a severe drought and widespread wildfires.

Despite the jump, wheat is still well below its 2008 high of $13.34. Moreover, the U.S. and Europe expect to have large crops this year. And farmers are already planning to plant more wheat this fall to take advantage of high prices. That could lead to a glut of wheat next year.

Wheat’s recent rise illustrates the cyclical and volatile nature of commodity prices. Still, agricultural prices should move higher in the long term, mainly because rising populations in developing countries will increase demand.

The best way to profit from the long-term trend toward higher agricultural prices is by investing in well-established companies with a broad base of operations that can offset the wide swings of commodity prices.

Get Pat McKeough’s latest buy/sell/hold advice on 5 stocks in the fast-moving agricultural sector absolutely FREE. You’ll learn all about these exciting investments in Pat's special report, "Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand." All 5 stand to gain from the long-term rising trend in agricultural prices — but not all are buys. Click here to download yours today.

This fertilizer stock’s shares have soared — and it could have further gains ahead

Agrium Inc. (symbol AGU on Toronto), provides a good example. The fertilizer stock’s share price has jumped more than 36% since the beginning of July, mainly due to higher wheat prices and rising investor interest in fertilizer stocks in response to mining giant BHP Billiton’s $39-billion U.S. hostile takeover bid for Potash Corp. of Saskatchewan.

(In tonight’s Successful Investor hotline, we update our buy/sell/hold advice on both Agrium and Potash Corp. You can get this hotline free as soon as we send it out, along with one month of The Successful Investor when you subscribe online right now. Read on for further details.)

Agrium makes fertilizers at 10 plants in North America and Argentina. It also produces other fertilizers, such as potash and phosphate, from mines in Ontario, Alberta, Saskatchewan and Idaho.

The company sells its products to industrial users and individual farmers through 1,000 retail stores in Canada, the U.S., Argentina and Chile. Agrium’s retail outlets cut its reliance on bulk fertilizer sales. The retail stores supplied 30% of the fertilizer stock’s 2009 gross profits.

Agrium’s presence in Argentina and Chile puts it in a good position to profit from rising fertilizer use in South America. Plus, its expanding retail operations cut its exposure to volatile agricultural prices.

To top it off, Agrium produces most of its fertilizer from natural gas, and today’s lower natural-gas prices should continue to boost the fertilizer stock’s profit margins.

Tonight’s hotline will give you our updated buy/sell/hold advice on Agrium and Potash Corp.

As mentioned, Agrium is up 36% since the beginning of July. Plus, the company has just launched a $1.1-billion hostile takeover bid for AWB, Australia’s largest wheat exporter. Australia is the fourth-largest wheat exporter in the world, and it’s located near emerging Asian markets.

In light of recent developments surrounding Agrium, we’re updating our buy/sell/hold advice on the stock in tonight’s Successful Investor hotline. Plus we update our advice on Potash Corp. of Saskatchewan in the wake of BHP Billiton’s hostile takeover bid.

When you subscribe to The Successful Investor online right now, you can get this hotline free as soon as we send it out tonight by 7 p.m., along with one month of The Successful Investor. Don’t miss out! Click here to subscribe now.