The rally in crop prices is to fuel a faster-than-expected rebound in world potash sales, which will double in five years, Europe's biggest producer of the nutrient said.

K+S lifted its estimate for industry potash volumes this year to a straight 50m tonnes, the upper end of its previous forecast range, and representing a 56% jump from 2009, when low crop prices and tight credit sapped farm demand.

The revision puts the German-based group in line with sector giant PotashCorp, but above the 46m-48m tonne estimate outlined by America's Mosaic last month.

And Norbert Steiner, the K+S chief executive, added in comments to analysts that further growth was expected next year, when world potash sales would hit 53m-57m tonnes, with volumes hitting a record 60m-64m tonnes in 2014.

Farmers prosper 

The forecasts reflected hopes that the increase in crop prices, and "the resultant improved future income situation of farmers", would increase demand for fertilizers.

"Most of the volumes demanded by the trade sector in the first quarter in Europe were consumed by farmers, so that the stocks are again at a relatively low level before the upcoming autumn application [season]," K+S said.

The group had already noted a return to "normal" levels of spring potash applications by northern hemisphere farmers, while "demand recovered visibly" in Brazil and Asia too.

'Below consensus'

For the group itself, the improvement would see potash sales reach up to 7.0m tonnes this year, compared with a previous forecast of "a good" 6.5m tonnes. Volumes slumped to 4.3m tonnes in 2009.

Underlying earnings for the group, which also sells nitrogen products and salt, would more than treble to E330m-370m, on revenues up at least 28% to E4.6bn-5.0bn.

However, the forecasts fell shy of the recovery that investors had already factored in, with analysts expecting earnings of nearly E415m according to a Reuters poll.

This shortfall stole the limelight from second-quarter operating profits which, at an underlying E155.5m, rose eightfold year on year, and beat expectations of a E123m result.

"Guidance came below consensus forecasts, despite a more optimistic view on potash volumes," Morgan Stanley analyst Paul Walsh said.

Equinet analysts said: "Strong results may be diluted by the outlook, which may disappoint some overly optimistic [investors]."

K+S shares stood 1.7% lower at E41.28 in afternoon trade in Frankfurt.