Global potash shipments are poised to double over the next two years as the "unabated" growth in demand for crops prompts farmers to replenish depleted soil nutrient levels, PotashCorp said.

Deliveries from potash producers, which slumped by about 60% to 30m million tonnes this year, will hit 50m tonnes in 2010 and 60m tonnes in 2011.

The revival will be driven by a jump in demand as potash traders rebuild stocks, and farmers restore nutrients sapped by a bumper harvest in a year when tight credit and sagging grain prices prompted sharp cuts in application rates.

At stake is meeting annual demand for fruits, grains, oilseeds and vegetables set to jump by about 600,000 tonnes to nearly 5bn tonnes over the next decade.

'Multi-year rebound'

"The unprecedented decline in potash consumption over the past 12 months does not match the record quantity of nutrients removed from the soil," PotashCorp, the world's biggest fertilizer group, said.

"We believe this is a temporary disconnect.

"The sharp reduction in potash use over the past year and significant destocking of the distributor system have created the need for a multi-year rebound in potash shipments, starting in 2010."

The rebound in shipments could be even more pronounced with "continued strong crop economics".

Fertilizer costs, as a percentage of corn prices have fallen to 15%, below the long-term average of 18%, and last year's high of about 23%.

Capacity squeeze 

The report added that supplies of potash remained constrained by a lack of investment, with the last major potash mine on a greenfield site completed 25 years ago.

A new mine would take at least seven years to develop and, in Canada, cost Can$2.8bn excluding transport links and acquiring mineral rights.

"Over the past six years, the potash industry shifted from one defined by excess capacity to one that is likely to remain supply- challenged for years to come," the group said.

"We believe this will drive the need for reinvestment in new capacity to meet projected demand."