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The recent pick-up in sales volumes signals healthy global demand for potash. But the industry profit bonanza of several years ago won’t return until the global economy gains pace and producers can secure higher prices.

The clouds are parting over the global potash market, the world's largest producer of the crop nutrient says.

After four consecutive quarters of falling profit, Potash Corp. of Saskatchewan said Thursday it's seeing higher sales to China, Latin America and India as customers are lured back by low prices after a buyers' strike last year.

"We believe we are in a recovery year this year," Bill Doyle, the ever-optimistic chief executive officer of Potash Corp. and the industry's most vocal champion, said on a conference call with analysts on Thursday. "The impact was evident in our first-quarter earnings."

Global potash demand slumped hard last year as key consumers in India and China delayed signing new contracts with producers for months, resisting high prices for the nutrient used to strengthen plant stalks against drought and disease. The impasse ended in December when Canpotex Ltd., the joint venture of Potash Corp., Agrium Inc. and Mosaic Co. that sells potash outside of North America, agreed to significantly lower-priced long-term contracts.

The recent pick-up in sales volumes signals healthy global demand for potash. But the industry profit bonanza of several years ago won't return until the global economy gains pace and producers can secure higher prices.

"A holiday in potash demand is now over and we're starting to see the consumption on the volume side pick up again," said John Hughes at Desjardins Securities in Toronto. "Those that need potash have certainly stepped back into the market in the first quarter of this year relative to the fourth quarter and certainly the first quarter of last year."

For the first quarter, Potash Corp. said it shipped 2.2 million tonnes of potash, compared to 1.2 million tonnes in the year ago period. Those figures helped drive first-quarter earnings to $556-million (U.S.) or 63 cents a share, above estimates and well above the $491-million, or 56 cents in the first quarter last year.

"The higher-than-expected earnings were mostly attributable to higher potash sales volumes and better earnings from equity investments," Adam Schatzker, an analyst with RBC Dominion Securities Inc., wrote in a report.

Potash Corp. said sales in North America nearly doubled in the first quarter and were up 70 per cent in the rest of the world. Mr. Doyle said Canpotex shipments of potash to Brazil hit an all-time monthly high in March.

"I recently returned from a trip to Latin America and found an optimism surrounding agriculture," Mr. Doyle said. "We believe this will translate into another year of strong demand and our confidence is supported by first quarter shipments and a good order book for the second quarter."

The company said that in the first quarter average prices for potash were $363 (U.S.) a tonne, compared to $435 a tonne in the year-ago period.

Potash prices have dipped sharply over the past year especially, and are down from as high as $1,000 a tonne late in the last decade, forcing Canpotex and its European counterpart, Belarus Potash Co. (BPC), to curtail production.

"I think we've reached a price level on the downside where consumption is starting to pick up," said Mr. Hughes. "But price alone is not going to drive demand."

Mr. Doyle said lower average pricing for its potash in the quarter, however, did not signal a change in focus for Potash Corp. to volume rather than price.

"Of course price is more important," he said, predicting modest price increases during the year. "We'll always sacrifice volume for price."

The sustainability of renewed demand should become evident in coming weeks, as Potash Corp. starts discussions on new supply agreements with Chinese customers in May.

Potash Corp. expects shipments to India in 2012 to outpace last year's totals, but said demand growth will remain stunted because farmers are favouring nitrogen products that are subsidized.

It is hoping that might change in coming months if the government boosts farmers' subsidies for potash in the run up to Indian elections in 2014.

"There will be a catch up in India," said Mr. Doyle. "As they get some semblance of market economy there."

To be sure, the company also said it expected to idle some output this year, suggesting the "potash holiday" is not quite over.