Investing in commodity companies is largely about timing: Earnings are driven by global supply and demand, leading to boom and bust cycles. For Minnesota-based Mosaic Co (NYSE: MOS), a maker of fertilizer components, we think the timing is right.

First, the short-term appeal: There was a devastating drought this past summer in the world’s major grain-producing regions—including the US and Russia— and demand for fertilizer is expected to rise, as farmers increase production next year.

Longer term, demand for fertilizer is being driven by population growth. Recently at 7 billion, the global population has been growing by 75 million people a year since 2000. Also, people in developing countries are eating more meat, which is grain intensive. It is therefore estimated that the world will need to produce 50 percent to 70 percent more food by 2050. Given the limited supply of arable land, an increase in output will likely mean more use of fertilizers.

Enter Mosaic, with two key fertilizer components (phosphate and potash), and a large global distribution network—close to 70 percent of its sales are outside North America. Mosaic was created in 2004, when Cargill’s crop-nutrition division merged with IMC Global. The company’s phosphate mines, mostly in Florida, produce 13 percent of the world’s output, making it the leader by far in this subsector.

The company’s potash mines (mostly in Canada), produce about 12 percent of the world’s potash output, second only to Potash of Saskatchewan (NYSE: POT).

The global food shortage drove up the pricing of potash and phosphate to record levels in 2008. Subsequent overproduction of grains triggered less demand for fertilizer, and Mosaic’s prices—and earnings—fell by nearly 50 percent in fiscal 2010.

Since then, prices for potash and phosphate have rebounded. Along with higher volumes, this has led to a 29 percent increase in Mosaic’s revenue during the past two years, to a record $11.1 billion for fiscal 2012 (ended in June).

In the near term, Mosaic’s goal is to significantly boost its potash production, and this should greatly benefit earnings growth. Consider that the profit margin on potash in fiscal 2012 was 44 percent vs. 15 percent for phosphate production, which requires the use of sulfur and ammonia; higher prices for these inputs eat into profit margins. A lower margin on phosphate was a key reason why fiscal 2012 earnings were essentially flat (down 1 cent per share).

Mosaic already owns the world’s largest potash mine—the Esterhazy in Saskatchewan. In fiscal 2012, the company spent $860 million to increase its potash-production capacity, with the goal of adding 5 million more tons by 2021 (vs. some 7.7 million tons recently).

Based on strong cash flow, Mosaic boosted its dividend fivefold in fiscal 2012, to 25 cents annually (recently yielding 1.8 percent). Still, the company is paying out only 20 percent of its earnings as dividends, so there is room for more increases. Even after all dividend payments and investments, Mosaic had $3.8 billion in cash at the end of June 2012, and only $1 billion in debt.

Despite the positive outlook, Mosaic’s stock is not for the faint-hearted. Consider that the share price hit a record high of $153 in mid-2008 and a record low of $38 in 2010. At a recent price of around $62, Mosaic is trading at 12.6 times fiscal 2013 earnings, a level that’s attractive given its growth prospects.