The way I look, POT is overvalued based on almost everything. But I'd like to hear your valuation for POT and its comparison to CF.

Analyst Note by Jeffrey Stafford, CFA, 02/07/13
After an extended break from the market, India has signed a new potash contract with Canpotex, the offshore potash marketing arm of Potash Corporation of Saskatchewan POT, Mosaic MOS, and Agrium AGU. The agreement will deliver about 1.1 million metric tons of potash to India at a price of $427 per metric ton (including freight) through January 2014. India coming back to the potash market is a positive development for potash producers and coupled with the recent China contract should bring a more certain demand picture for 2013. Potash inventories have built up at the producer level over the last year with China and India sitting on the sidelines. Potash Corp. and other producers implemented lengthy mine shutdowns during 2012 to better match supply with demand and support prices. While the potash oligopoly hasn't been able to keep prices from dropping, prices remain well above marginal costs of production, allowing producers with low-cost mines, such as Potash Corp., to generate attractive returns per ton sold.

Potash Corp. is the world's largest independent potash producer and a leading phosphate and nitrogen producer. We think the company has a wide economic moat thanks to its low-cost potash assets, high barriers to entry in the potash fertilizer industry, and its oligopolistic position in the market. However, the potash market will exhibit intense price volatility in the intermediate term, driven by short-term farm economics.

The long-term trend for potash demand is positive. Driven by wealth accumulation and population growth, potash demand is growing rapidly with dietary changes--higher demand for animal proteins, fruits, and vegetables--and products requiring 2-4 times the amount of fertilizer as corn and soybeans. The increase is fueled by urbanization, lack of arable land, higher yield demand, and modern farming techniques that call for substantially higher and more sophisticated fertilizer applications in India, China, and Brazil, among others. Against this backdrop of elevated demand, the expansion of potash supply is somewhat placid, which will play greatly to Potash Corp.'s advantage.