Food prices have been fluctuating, but they follow a pattern.
Each time food prices drop, the new low is higher than the previous low, says Benjamin Tal, managing director and deputy chief economist, CIBC World Markets.
"This means there's a very clear upward trend in food prices," he adds. "The main reason is emerging markets, like China, where people are moving from villages to cities and are starting to consume beef" and other meat products.
It takes seven pounds of grain to raise one pound of beef, so grain consumption is rising at an unprecedented rate.
"China is already consuming twice as much beef as the U.S., but per capita it's still only 10%," says Tal. "This demand for beef products is going to increase [upward] pressure on commodity prices — grain prices in particular."
There isn't enough awareness about this trend, however. Investors seem to be focused on weather factors, like drought, pushing prices up or down — but that's all noise, says Tal.
"The real story is the trend in emerging markets of changing diets and demand for beef; one way to play this game [is] by exposing yourself to the possibility of rising grain prices."
The other trend investors should watch is the recovery in the U.S. housing market and its impact on the economy.
"[Investors] say the housing market isn't a normally functioning market; therefore, [they] don't worry about it," says Tal. But "that's exactly when you want to be in the market."
And, buyer activity is outpacing seller activity for the first time in a while.
"This is a clear reflection of a market that's turning a corner. This is not only good for the U.S. housing market, banks and builders, but also for lumber prices."
There is a strong correlation between lumber prices and the demand for Canadian lumber in the U.S. housing market.
Winter is a good time to invest because lumber prices tend to soften. Those who do so "will be riding the wave of housing starts in the U.S. for the next 2-3 years."