Skyrocketing global food prices is actually good news for fertilizer giants like CF Industries (CF). That’s because every time commodity prices shoot higher, so do fertilizer shares. As the largest nitrogen fertilizer producer in North America and the third-largest phosphate producer in the United States, CF has been fighting off competition and gobbling up competitors where it can.

Last year it purchased rival Terra Industries (TRA), a deal that will help CF double its nitrogen production this year. If past food crises are any indication that will mean a big payoff.

CF was a consistent dividend payer of 2 cents for years until the food crisis of 2008 set off warnings of famine and basket commodity prices soared to highs not seen in decades. It was a perfect storm of escalating oil prices — which later means higher fertilizer and transport prices — mixed with poor harvests in key grain-producing countries around the world.

Corn, wheat, and soybeans all skyrocketed, as did shares of CF. Ever since, they’ve been giving 10-cent dividends every quarter, even when the stock price fell from its highs.

Commodities on the move

This year’s harvest is getting off to a bad start, with heavy flooding in the Midwest keeping farmers from planting on time. That will mean lower yields come fall. Lower yields mean higher futures prices, which are already soaring due to demand elsewhere in the world and shortages in key markets.

Key commodities prices are expected to keep rising and oil is again taking off as OPEC countries refuse to boost production. Expect CF to follow despite trading recently near its 52-week highs of $158.42. Prices for ammonia, urea, and nitrogen are already rising, and all are key CF products.

First quarter reporting in early May showed record earnings of $1.2 billion, up 134 percent on the year, mainly thanks to the TRA purchase. J.P. Morgan currently has an overweight rating on CF Industries and a price target of $170.