The prospect of "high" prices for 2010 crops, coupled with the need to replenish nutrients diminished by farmers' scrimping, will drive "strong" demand for phosphate and potash next year, Mosaic has said.

The fertilizer group said that with grain and oilseed use rising despite the global recession, and economic recovery in sight, conditions were "favourable" for agricultural investment.

Phosphate sales had, by volume, already recovered near typical levels, with the potash market "evolving", following a year in which sliding crop prices coupled with tight credit prompted deep cut to farmers' fertilizer use.

"Farmers will increase application rates in response to... the need to replenish the large amount of nutrients withdrawn by the record crop this year," Jim Propanko, the Mosaic chief executive, said.

"High 2010 new crop prices" were also an incentive.

In Chicago, corn for delivery late next year was trading above $3.90 a bushel on Tuesday, a 14% premium to the near-term December contract, with the comparative premium for wheat at 16%. For soybeans, prices were in line.

'Low selling volumes'

The comments came as Mosaic, which is controlled by Cargill, the commodities trading giant, unveiled a 92% slump to $100.6m in earnings for the June-to-August quarter on revenues down 66% at $1.46bn.

Operating profits from phosphates slumped by 94% to $61.2m, reflecting in the main a cut of 73% in prices.

Potash profits dropped 79% to $99.3m. While prices were more resilient, down 22%, sales volumes more than halved.

"Even at current low selling volumes, the potash segment generated a healthy gross margin and is poised to generate substantially improved profits when demand fully returns," Mr Propanko said.

Market reaction 

The results were below Wall Street forecasts, a miss analysts at Sterne Agee blamed on the decline in potash.

However, while the US broker said it disagreed with forecasts of a strong potash outlook, adding that it expected farmers to keep applications "on the light side", other investors took heart in the bullish forecast.

Mosaic shares stood 5.3% higher at $48.39 in lunchtime trade in a strong New York market, with other fertilizer stocks also stronger.

In Toronto, potash giant PotashCorp was 4.5% higher at Can$95.73, while Germany's K+S ended up 3.2% in Frankfurt.