Yara International, the fertilizer giant, took a swipe at its potash peers for keeping prices high as it highlighted that demand for its core nitrogen products was "picking up".

Jorgen Ole Haslestad, the Norwegian group's chief executive, said that the nitrogen market had turned "from being temporarily over-supplied to becoming tight", saying that future earnings could jump to NKr35 a share under the right market conditions.

Analysts' currently see annual earnings per share rising from Nkr8.09 this year to NKr25.43 per share in 2013.

However, so-called NPK products - a mix of nitrogen, phosphate and potash fertilizers - remained the group's "most challenging business area, as farmers continue to delay purchases due to high potash prices".

Further farm stand-off? 

Potash prices, while down roughly 40% from 2008 peaks, "have not come down to levels reflecting today's demand situation", Mr Haslestad said in comments to an investor day.

Nitrogen and phosphate prices have fallen by 70-80% in the same period, data accompanying his presentation showed.

The group also signalled that many Western growers may have some latitude to keep potash applications low, given residual levels of the nutrient in farmland.

"European and North American soils are often relatively rich on potash," Yara market intelligence head Dag Tore Mo said.

"Both Europe and North America have professionalised farming communities where nutrient application has been good and stable over a long period."

The timetable for a revival in potash sales has been a key question for the industry, which has pushed hopes for a rebound back to spring 2010, after it failed to materialise this autumn.

'Demand driven'

Mr Haslestad added that the fertilizer sector's long-term fundamentals were "strong", given continued growth in demand for grain, which had increased even during the global recession.

Yara's prospective earnings potential ranged from Nkr15 a share, if the market remains over-supplied and Eastern Europe's oil-fed plants as the highest-cost nitrogen producer, to NKr35 a share in a "demand driven" scenario.

"Continued growth in food demand and the need for improved agricultural productivity increase the probability of a return to a demand driven market," he said.

Yara shares, which have rallied strongly on hopes for a fertilizer revival closed 1.6% higher at NKr258.70 in Oslo, 38% above an early-November low.