The exclusive offshore potash-marketing company for Agrium (NYSE:AGU), Mosaic (NYSE:MOS), and PotashCorp (NYSE:POT) has reached a deal with Sinochem Fertilizer Macao Commerical Offshore to supply a massive amount of potash to China. Canpotex arranged the agreement to ship 700,000 metric tons of potash to China at the beginning of this year.

Magnitude of the deal
The agreed upon 700,000 metric tons of potash is a truly big deal. By comparison, combined together the North American potash producers exported a total of only 2.7 million metric tons of potash throughout the world between January and March of last year. According to projections, China was the expected source for a large chunk of the growth in potash demand. This latest purchase agreement is another concrete reminder of how important the Asian market for fertilizers will be for potash producers like Agrium, Mosaic, and PotashCorp in the near future.

Growth abroad
There are two really big investment-related successes that are illustrated by the Canpotex-Sinochem agreement. The first takeaway that the deal exemplifies is the possible resurgence of the fertilizer market as a whole.

It was slightly more than a month ago that PotashCorp seemingly surrendered to the notion of slowing potash demand by making fairly substantial cuts to its North American workforce in response to sluggish growth. On the same note, all of the major North American potash suppliers (and most fertilizer producers in general) reported less-than-stellar third-quarter earnings. The slowed growth and the questionable earnings were consistently justified by an oversupply of potash at a time of slowing global demand.

The hope at the time was that the oversupply would be gradually consumed, which would lead to a much-awaited price increase that would lead to greater profits for PotashCorp and other producers. Even in the midst of workforce cuts, PotashCorp was witnessing 2013 nine-month potash sales volumes that were up from 2012. It seems as though some of the optimism regarding the potash supply/demand balance may have been appropriate.

The second big victory for North American potash producers that is implied in the deal comes from the fact that China chose to source its potash needs from North America. North American producers supply roughly equal amounts of potash as Eastern European producers do, and the agreement between Canpotex and Sinochem is an encouraging sign that as the Chinese demand for potash and other fertilizers increases, they may be looking abroad to North American companies to service their needs.

Expanding international sales will be a critical consideration if Agrium, Mosaic, and PotashCorp are going to reverse the trend of unimpressive earnings. By volume over the past several years, domestic sales have been roughly in-line with exports for North American potash producers. Looking forward, demand growth in North America is expected to significantly trail that of most every other region in the world. North American potash producers will need to look abroad and increase the share of their sales from exports if they are to capture a large portion of the somewhat tame 3.1% worldwide annual demand growth projected for potash.

The takeaway
Investors who have been waiting for the fertilizer market to turn around before adding major potash producers to their portfolio may have their first sign of a turnaround. While growth in North America may be tempered, the supply agreement formed between Canpotex and Sinochem Fertilizer Macao Commerical Offshore is a sign that Agrium, Mosaic, and PotashCorp all have the room and the ability to grow internationally.

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Fool contributor Shamus Funk has no position in any stocks mentioned. The Motley Fool owns shares of PotashCorp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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