Strong demand for potash fertilizer is leading to record profits for three of the world’s largest fertilizer companies — Agrium Ltd., Potash Corp. of Saskatchewan and Mosaic Company. All three companies recently reported record profits and bullish outlooks as potash supply is expected to remain tight after India signed a contract for 700,000 tonnes of potash after China signed multiple deals in July. India’s purchase has significantly tightened global supplies.

 “Now that India has joined the foray, no new significant capacity is expected for several months, and potash inventories are very low, there may not be enough supply to satisfy all the demand, and [potash] prices, we expect, will rise even further,” said Richard Kelertas, an analyst at Dundee Securities Ltd., said in a research note, according to The Globe and Mail

In the United States, potash prices have risen to about $550, which is still below the record high price reached in 2008, but it is still above last year’s prices by approximately 20 percent.

Mosaic chief executive officer Jim Prokopanko reported that Mosaic had a $649.2 million quarterly profit, up 64 percent from the same period a year ago.

In July, Potash Corp. posted a 75 percent increase in second quarter profit of $840 million.

On Aug. 3, Agrium announced it had a $718 million second quarter profit, which is up 40 percent from the same period last year. Reuters recently reported that based on current projections, “Agrium expects robust demand for nitrogen, phosphate and potash-based nutrients in the latter half of 2011. It also expects nutrient markets to be tight, due to below-average inventory levels and strong demand.”

According to The Globe and Mail, “All of the company results were better than most analysts expected, in part because prices for some agricultural commodities had been falling in recent weeks. That was due largely to record planting by farmers, particularly corn farmers in the United States who were expected to produce one of the largest crops in history this year. But a wet spring and hot July have weakened those expectations and corn prices have now moved back above $7 a bushel, or roughly 70 percent higher than a year ago. Even if farmers do pull in a massive harvest, the U.S. Department of Agriculture says demand for corn is close to an all-time high and supplies will be extremely tight.”