Potash Pops on Surprise Profit Outlook

(Potash item updated for analyst commentary and Potash stock-price movement.)

NEW YORK (TheStreet) -- Investors bid up shares of Potash Corp. of Saskatchewan(POT) Friday, after the company shocked the market by hiking its profit outlook for the first quarter.

Potash, which had spent the better part of 2009 issuing profit warnings and tamping down expectations as prices for its core product cratered, appeared to validate feelings among agricultural watchers that demand from farmers for potash fertilizer has started to recover in earnest.

"It's a huge positive. It just tells you that the [potash] market is much stronger than people expected," said Edlain Rodriguez, a fertilizer-stock analyst at Broadpoint Gleacher.

Shares of Potash Corp., North America's largest producer of the nutrient, were changing hands Friday morning at $124.50, up $7.57, or 6.5% -- which would be close to the stock's 52-week high, set in January. Potash Corp. volume was a torrid 8.5 million shares, already surpassing the stock's daily average turnover of 6.9 million.

Said Potash boss Bill Doyle in a statement, "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."

Some investors had worried that farmers would continue to hold off on buying potash fertilizers again in the 2010 planting season, and that prices for the potassium-based plant-growth booster would remain weak.

But firm corn prices -- the December 2010 corn-futures contract, the most widely watched, was approaching $4 a bushel Friday -- will likely give farmers enough fiscal confidence to replenish their potash supplies this year, Rodriguez said. Any price above $3.50 a bushel is thought to be "very constructive" for North American farmers.