Potash Corporation of Saskatchewan (Toronto: POT; NYSE: POT) announced after the close of trading yesterday that it’s raising its earnings guidance for the first quarter from a range of $0.70 to $1.00 per share to $1.30 to $1.50.

The company noted that a “sharp” rebound in potash demand is expected to drive a record quarter for North American sales volumes and that it’s also seeing strong offshore demand. The company went on to say that it believes the recent upturn in sales volumes represents a return to long-term demand growth in the potash market.

Potash Corporation is the 800-pound gorilla of the potash market; it’s trading up around 7 percent this morning on the news, lifting the entire agricultural sector higher.

The positive implications for our February recommendation, Intrepid Potash (NYSE: IPI), are clear. Intrepid is a US-focused pure play on potash and will benefit directly from the strong North American volumes cited by Potash. In addition,  because Intrepid is a smaller and more leveraged play on potash demand, it’s up even more than Potash Corporation in percentage terms.

Intrepid Potash rates a buy under 31 for those that do not yet have a position. Raise your stop on Intrepid from 23.25 to 25.75 to further limit downside risk.