Like with any other fertilizer company, Mosaic's (MOS -0.43%) fourth-quarter numbers were nothing to write home about. The fertilizer maker's net earnings were cut by more than three-quarters, though it managed to beat Street estimates on its top line by reporting just about 8% drop in revenue.

Interestingly, the market decided to overlook those somber numbers, and instead applauded the company for announcing share buybacks worth $1 billion.

But amid the euphoria, investors missed some key points from the earnings report that could play a major role in shaping up Mosaic's future. I'll list three of them here, and since they're positive, they could have a hand in propelling the company, and its shares forward. So read along.

Got the signal?
"Volume comes before price," said Mosaic, in its last earnings call. That could well sum up the way the fertilizer market functions.

Mosaic believes that shipping volumes have to increase before fertilizer prices start trending upwards. In other words, until demand for fertilizers pick up, prices will remain under pressure. And that's exactly what appears to be happening in the potash and phosphate markets now.

Even as PotashCorp (POT) and Mosaic reported greater than 20% drop in their average realized prices for phosphate during their last quarters, volumes were up double-digit percentages for both companies. The scene was strikingly similar on the potash side. And according to Mosaic, that's a sign of the business cycle turning around.

While demand for phosphate from the Latin American and Chinese markets is improving, Russian-based potash giant Uralkali's and marketing group Canpotex's recent contracts with China brought good news to the potash market. Canpotex comprises of PotashCorp, Mosaic, and Agrium. Those potash contracts could also signal the bottoming of prices.

Long story short, there are visible signs of the fertilizer markets turning around, which bodes well for Mosaic going forward. In fact, Mosaic just increased its share in Canpotex, and the timing couldn't have been better.

Perfect timing
Under an old tolling agreement with PotashCorp, Mosaic mined a part of potash reserves for the company at its Esterhazy mine and supplied it with 1.1 million tonnes of potash at cost and a fee every year. The litigation was settled in late 2012, which meant two things: Mosaic acquired the mine's productive capacity (which could be added to its share in Canpotex); and it could sell those 1.1 million tones to outside parties at prevailing market prices from 2013.

A Canpotex rail car. Image source: Canpotex website

Thanks to that settlement and Mosaic's ongoing potash expansion at the Esterhazy mine, its share in Canpotex increased to 42.5% in January from 39.9% last year. PotashCorp continues to be the largest stakeholder in Canpotex while Agrium has the smallest seat at the table.

So Mosaic will now supply 42.5% of Canpotex's total sales going forward, which is substantial, and should help the company lock in a good portion of its potash revenue in advance under running Canpotex contracts. In January, Canpotex signed a contract to supply China with 700,000 tonnes of potash through the first half of this year; and Mosaic projects India to import an additional one million tonne of potash in 2014. While that should boost Mosaic's sales volumes, improving potash prices should act as cherry on the cake.

The overlooked product
While expanding in the potash market, one of Mosaic's premium phosphate fertilizers, Microessentials is also gaining traction. Microessentials is a combination of nitrogen, phosphorus, sulfur, and zinc, which, according to the company, yields 3% to 7% higher than traditional phosphate products.

Sales for Microessentials jumped 22% in 2013, setting a new record. Shipments to North America hit the one million tonne mark, and Mosaic is already selling near-equal amounts to international markets.

Nutrient intake: Microessentials vs traditional fertilizers. Source: Microessentials Facebook page.

The question is, how important is Microessentials to Mosaic in terms of contribution to its top and bottom lines? While the company doesn't provide a detailed breakup, the following figures should give you an idea.

  • From under 2% in 2008, Microessentials' share in the North American phosphate market has grown to 11%.
  • Microessentials made up 8% of Mosaic's phosphate production in 2009. That number grew to 21% by 2013.
  • In a presentation from Mosaic's analyst day held in October last year, the company assumes Microessentials to make up 40% to 50% of its total phosphate volumes by 2018.

It's a clear picture: Mosaic is betting big on Microessentials, and is banking on it to differentiate itself from other phosphate producers. With the product hitting record shipments in the fourth quarter, and Mosaic ramping up capacity, things could only get bigger from here.

The Foolish bottom line
Mosaic investors have a lot to look forward to. If the fertilizer markets have seen too many changes in recent quarters, a lot is happening within Mosaic as well. While the points above talk about Mosaic's products and the market, a couple of the company's recent moves also signal big opportunities. I'll cover them in an upcoming post, so stay tuned.