Potash Corporation of Saskatchewan (POT), the world’s largest fertilizer manufacturer, has recently raised its first quarter 2010 forecast. Potash Corp now expects its first quarter earnings to be in the range of $1.30 to $1.50 per share, above its prior forecast of 70 cents to $1 per share.
The upward revision reflects a sharp rebound in potash demand, which 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 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.
In January this year, Potash Corporation had issued a cautious guidance after it was forced to repeatedly revise down 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%.
Last month, Canpotex, the potash export arm of Potash Corporation, Mosaic (MOS) and Agrium (AGU), signed potash supply deals with Indian and Chinese buyers. China, India, Brazil and the U.S. account for roughly 65% of the world’s potash demand, while Canada, Russia and Belarus together account for the vast majority of global supply.
Indicating that both distributors and growers are reverting to their traditional buying habits, prices of potash in the U.S. have edged up in the recent days to $425−$450 per ton. Potash Corporation reiterated its positive long-term view on the potash market and remains committed to its plans to increase capacity from the current 11.5 million tons level to 18 million tons by 2015.
Potash Corporation is scheduled to release its first-quarter results on April 29.
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