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Potash Corp raises earnings forecast; shares jump
Thu Mar 11, 2010 9:04pm ESTStocks

* Sees sharp rebound in potash demand as long-term trend

* Sees Q1 EPS $1.30 to $1.50 Vs prior range of $0.70 to $1

* Sees record North American sales

* Strong offshore shipments also seen (Changes dateline, adds share price movement, details; Figures in U.S. dollars, unless noted)

By Euan Rocha

TORONTO, March 11 (Reuters) - The world's largest fertilizer maker Potash Corp of Saskatchewan (POT.TO) sharply raised its first-quarter forecast on Thursday, citing a sharp rebound in demand for potash -- a key crop nutrient.

The announcement sent its shares, which had closed Thursday at $116.93 on the New York Stock Exchange, soaring 7.5 percent to $125.72 in trade after the evening bell. The news also boosted the shares of other North American potash producers like Mosaic Co (MOS.N), Agrium Inc (AGU.TO) and Intrepid Potash (IPI.N).

In January, Potash Corp issued cautious guidance, after it was forced to repeatedly cut its 2009 outlook in the face of weak potash demand. At the time, the forecast was well below market expectations and its shares fell as much as 8 percent.

Potash -- the common name used to describe various compounds containing potassium -- emerged from obscurity a few years ago when high grain prices, tight supplies and strong demand drove the price of the nutrient to above $1,000 a tonne from below $150.

The price gradually retreated through the course of 2009, as farmers, hit by the credit crisis and falling grain prices, reined in their use of the nutrient. The price of potash recently fell as low as $350 a tonne, but producers have begun to attempt to push pricing above the $400 mark, as dealers have begun to restock potash inventories and farmers have begun to replenish soil nutrient levels.

NEW OUTLOOK

Potash Corp said it now expects first-quarter earnings to be between $1.30 and $1.50 per share, well above its prior forecast of 70 cents to $1 per share.

"The upward revision reflects a sharp rebound in potash demand that is expected to drive a record quarter for North American sales volumes and strong offshore shipments, as well as higher-than-expected margins in nitrogen and phosphate," the company said in a statement.

The company said the increased demand was the result of strong farm returns, limited supplies at distributors and the agricultural need to replace soil nutrients after a period of lower demand in 2009.

"While we know that growth does not follow a straight upward line, we believe the increase in potash sales volumes this quarter represents the beginning of a return to long-term growth in demand," Chief Executive Bill Doyle said.

Last month, Canpotex -- the potash export arm of Potash Corp, Mosaic and Agrium -- signed potash supply deals with Indian and Chinese potash buyers. [ID:nN19110956]

China, India, Brazil and the United States account for roughly 65 percent of the world's potash demand, while Canada, Russia and Belarus together account for the vast majority of global supply.

Potash Corp said it will release its first-quarter results on April 29. (Additional reporting by Allan Dowd; Editing by Phil Berlowitz, Bernard Orr) ([e-mail]; Reuters Messaging: [e-mail]; 416 941 8185))