Rosy outlook for top fertilizer maker

The rising demand for biofuels is expected to be a windfall this spring for seed and fertilizer companies.

Canada's PotashCorp (TSE: POT), the world's largest fertilizer maker, says demand for renewable fuel sources is generating a need for increased crop production – and, therefore, more potash.

According to the Earth Policy Institute and Renewable Fuels Association, world production of ethanol doubled over the last four years to more than 12 billion gallons per year. About one billion gallons of biodiesel, the second most popular alternative fuel made from plant sources, were also produced. This tremendous growth in biofuels is projected to increase demand for grain, leading to a strong market for fertilizer and seed.

World ethanol & biodiesel production chart >>

With the expectation that large percentages of crops like corn, oil palm and sugar cane will be directed to biofuel production, it will be even more important for farmers to maximize the yields that can be achieved on existing agricultural land.

"Fertilizers will be an integral part of that story. Many of these crops are significant potash consumers, which will mean farmers must increase application rates to keep their land fertile and yields high," says the company in a newsletter.

PotashCorp produces the three primary plant nutrients used in agriculture: potash, phosphate and nitrogen.

Shares of the company were up 4% at the end of the day's trading.

For more information:

www.potashcorp.com