Potash Corp
, the world's biggest fertilizer maker, forecast one of its most profitable years ever, and its shares rose on Thursday even as it dampened expectations for the current quarter because of slipping demand for its namesake product.

The company, which owns one fifth of the world's potash production capacity, forecast 2012 earnings per share of $3.40 to $4.00 per share, compared with Wall Street expectations of $3.96. Most of that range exceeds its earnings of $3.51 per share in 2011, which ranks as the second most profitable in its history.

After the first quarter, demand should push Potash Corp to another strong year, said CEO Bill Doyle, who noted that prices remain high of corn, cotton and other crops that need fertilizer to produce abundant harvests.

Across the board, the returns for farmers are so exceptional, and many of them had record income coming off 2011, Doyle told analysts on a conference call. We think this market is going to get going all at once and turn on a dime again.

Potash shares rose 0.9 percent and 0.5 percent in New York and Toronto respectively by mid-afternoon, while shares of the company's main North American rivals slid. Potash's gains reversed an early selloff on disappointment with the company's fourth-quarter results and first-quarter outlook.

Long term, expectations are running high for a company with a dominant position in a market, as improving diets in developing countries such as China and India boost demand for grain, meat and fertilizer.

TEMPORARY ISSUE

Even so, Potash Corp's first-quarter earnings guidance of 55 to 75 cents per share fell short of analysts' expectations of 84 cents, as economic turbulence rattles farmers and fertilizer dealers.

But the outlook shouldn't shock investors given similar signals earlier this month from Mosaic, a rival fertilizer producer, said analyst Edlain Rodriguez of Lazard Capital Markets.

Clearly this is a temporary issue in Q1 and as long as crop prices remain supportive, farmers will come back to the market, Rodriguez said.

Softer demand already has led Potash Corp to shut down potash production temporarily at three of its Saskatchewan mines this winter. The production cuts amount to 1.2 million tonnes, or 10 percent of Potash Corp's operational capacity.

Despite the temporary shutdowns, there are no plans to pause a broad expansion of the company's potash mines to 17.1 million tonnes by 2015, nearly double 2003 levels, Doyle said.

This is a product the world can't live without - (potash) is an essential nutrient for all human life, for animal life, for crop life, he said. It has been historically under-applied (to soil), so we know that the trend line of growth ... is going to maintain itself.

Minnesota-based Mosaic reported higher quarterly profit than expected earlier this month, but said volumes may remain sluggish into the spring, as distributors and farming customers remained cautious.

Potash Corp backed up its bullishness about the year ahead by doubling its dividend on Wednesday.

GLOBAL PICTURE

Global shipments of potash from all producers in 2012 are expected to range from 55 million tonnes to a record 58 million tonnes, the company said, with North American demand picking up later in the year and Brazilian farmers buying aggressively to boost large crops of soybeans, corn and sugar cane.

Talks have started on supplying China for the first half of the year. But higher retail potash prices and port congestion could hold back demand in India, Potash Corp said.

The company's fourth-quarter earnings rose to $683 million, or 78 cents a share, from $508 million, or 56 cents a share, a year earlier. Analysts had on average expected a profit of 88 cents per share, according to Thomson Reuters I/B/E/S.

Sales volume for all three crop nutrients - potash, phosphate and nitrogen - tailed off in the fourth quarter.

Some see the company's near-term prospects fading, and two analysts downgraded Potash Corp ahead of its earnings report.

U.S. farmers are likely to plant a big crop of corn this spring, an intensive user of fertilizer. But greater supplies are likely to dampen grain prices and pressure fertilizer values, said Charles Neivert of Dahlman Rose & Co, in a note to clients on Wednesday.

We see the best times for fertilizer moving into the rear-view mirror as high crop prices bring on the expected response from farmers - strong planting, Neivert wrote.

Potash - the common name for widely used crop nutrient potassium chloride - is only mined in a handful of countries. Canada, Belarus and Russia account for the vast majority of the world's production and exports.

Within the coming decade Potash Corp, Mosaic and Agrium , which market overseas potash sales from Saskatchewan mines through a single joint venture, will account for more than 50 percent of the world's current production capacity.

German potash miner K+S and global mining giant BHP Billiton are also investing billions developing potash mines in Saskatchewan.

(Reporting by Rod Nickel in Winnipeg; Editing by Lisa Von Ahn and Janet Guttsman)