In late September, we discussed all the reasons to expect 2009 to be a thoroughly dim year for potash, the fertilizer that made PotashCorp (NYSE:POT) and Mosaic (NYSE:MOS) household names in the 2007-2008 run-up. Households that keep their TVs tuned to CNBC, anyway.

I said then that next year's prospects remained bright. Let's get up to speed on the latest developments to see if that holds true.

In early October, Belarusian Potash (BPC) gave a fairly grim assessment for 2010, pegging global shipments at 45 million metric tons. PotashCorp soon cut its own outlook to 50 million tons, down from 55 million to 60 million. None of this seemed to shake investors' confidence, perhaps thanks to takeover rumors swirling in the air. I hope you're not holding your breath for that BHP Billiton (NYSE:BHP) buyout.

In November, European potash leader K+S reported a miserable quarter, and mirrored BPC's call for 45 million tons of demand in 2010. The company also granted that potash prices could fall further in 2010. Analysts speculated that K+S would soon need to raise equity, having stretched its finances thin with the purchase of Morton Salt from Dow Chemical (NYSE:DOW). Salt plus fertilizer can be a winning combination -- see Compass Minerals (NYSE:CMP) for Exhibit A -- but K+S's high cost structure is doing the company a lot of harm during this downdraft. The company raised $1 billion this month.

In early December, Mosaic and PotashCorp executives kept the tone upbeat in their public comments. Mosaic's chief financial officer said he saw a more pronounced rebound in the phosphate market, but pointed to activity on the potash side as well. That's good, because November inventories were still 89% above their five-year average.

To really get the market moving, exporters needed a Chinese agreement on 2010 prices. Goldman Sachs (NYSE:GS) wrote that such a settlement would "set off a global demand spurt" as buyers emerged to secure 2010 supply. What participants did not expect was to see Brazilian potash prices dropping ahead of the China settlement, but that's exactly what they did, falling to around $400/ton this month. This drop indicated to analysts that China would get a better price, which is exactly what happened last week. BPC signed with China at $350/ton, down from the $1,000-plus peak we saw in 2008.

If other exporters like Canpotex, the Canadian group that includes PotashCorp and Agrium (NYSE:AGU), match this rate (which includes freight), and fertilizer demand doesn't rebound as strongly as expected, 2010 could be a pretty difficult year. I'm avoiding the group at today's share prices.