Potash Profits Boosted by Rising Demand


"Deutsche Bank believes there is still an opportunity to make cash from potash stocks."

A revival in potash sales around the globe is helping potash miners' bottom line, a welcome relief after a dismal 2009 season. Potash sector participants are very black and white when it comes to their opinions on the sector's future. Many producers claim that the sector is bound for a steady recovery, whereas certain analysts believe that potash companies previous high was overdone, and the market will never again scale the same price hill.

If you look at the Q1 earnings of two major producers, there seems to be little to argue about in terms of claiming if the market is on the rebound or not. In last week's Q1 release, the world's largest potash producer, Potash Corporation of Saskatchewan reported the second highest first-quarter earnings in the company's history. Fertilizer maker Intrepid Potash Inc also posted Q1 earnings that surpassed analysts' projections.

The Saskatoon based fertilizer giant Potash Corp (NYSE:POT) earned $449 million, or $1.47 a share, near the top end of its most recent guidance for earnings of $1.30$1.50 a share. Potash Corp. boosted its first-quarter outlook in March on the back of a sharp rebound in potash demand.

Whether or not you believe that the rebound started last year, when it comes to investing in potash, Deutsche Bank believes that there is still an opportunity to make cash from potash stocks. Deutsche's asset management arm DWS has claimed that they are holding onto their agricultural stocks. According to analyst Mr. Huber, there is the potential for significant upside, despite how hard the market was hit by the recession. Both Mr. Huber, and Potash Corp. CEO Bill Doyle believe that demand, particularly in China, will boost the recovery and that pricing pressure will ease, a process that will take two or three years.

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