UPDATE—OCTOBER 2: Stocks of Potash Corp. of Saskatchewan Inc. plunged 26 percent—its worst drop since the company went public in 1989—closing the day at $101. The company’s blamed “overreactions” during a tough financial time and said the sector is well-placed for the long-term. In August, however, we ran a piece on the inflated value of the company’s stock and wondered how long potash mania would last. Take a read.

For a simple fertilizer company, Potash Corp. has found itself the subject of some lofty comparisons over the last year. "The Google of fertilizer" was how one financial blogger described it. Financial analysts dubbed Saskatchewan the "Saudi Arabia of potash" for its abundant reserves of the coveted, pinkish mineral, an essential ingredient in chemical fertilizers. And as the suits on Bay Street suddenly discovered their inner Old Mcdonalds, potash was hailed as the "new oil" and "pink gold." But lately, another analogy has been making the rounds, and it's not nearly as flattering. "A technical and quantitative analysis shows the trend for Potash Corp. as being very similar to that of Nortel," wrote Mark Deriet, an analyst at Cormark Securities in a recent column. Nortel, he continued — as if anybody really wanted to be reminded — was the "former stock darling during the tech boom . . . that ended in the tech wreck."

There's no question the past few years have been a wild ride for Potash Corp. and its investors, not to mention everyone else saddled with a rising grocery bill. Potash has quickly become one of the hottest commodities amid fears the world's agricultural land can't produce enough crops to feed a growing, hungry planet. And as the world's largest producer, investors couldn't get enough of Potash Corp. shares. By the time the stock hit $244 in June, it had soared a whopping 1,600 per cent in just four years. What's more, its market value of $63 billion easily made it the largest company in the country — ahead of titans like the Royal Bank, Manulife Financial, and Research in Motion.

But lately, storm clouds have begun to gather. In recent weeks, Potash Corp., along with other fertilizer and agriculture companies, shed a quarter of their value before rebounding late last week. For some, the dramatic rise of the company's shares and euphoria for all things agricultural is reminiscent of the mania that surrounded Internet stocks during the late 1990s, when tech-euphoria briefly made Nortel Canada's largest company by far. Last week, Citigroup's chief equity strategist, Tobias Levkovich, warned a "dot-corn" bubble has formed. "Excess excitement in the farming sector seems reminiscent of days past," Levkovich wrote in a note. "The refrain of 'everyone has to eat,' while catchy, can also lead to sentiment-based investing and not more rational, fact-driven constructs." To put it bluntly, investors who stampeded into agricultural stocks seem to have left their brains behind.

While potash retains a loyal legion of believers who argue the stock is seriously underpriced given the food crisis, the fact is potash, like almost every agricultural commodity, has a long history of booms and busts. The question now is whether Potash Corp. will continue one of the greatest bull runs in Canadian history, or wither on the vine like so many stock market darlings before it?

What's made the Potash Corp. story so compelling is its apparent simplicity. Not only is the world's population growing, so too is its appetite. Hundreds of millions of people have been lifted out of poverty in countries like China, India and South America. Thanks to their fatter wallets many have developed a taste for meat — a fact Potash Corp. promotes heavily. In its 2006 annual report, the company said China's meat consumption "more than tripled" over the past 20 years. By the 2007 annual report, the term being used was "almost quadrupled." (The company didn't make anyone available to comment for this story.) Whatever the multiple, it takes seven grams of grain to produce one gram of meat. At the same time governments have pushed for the use of biofuels made from corn and other food crops, to lessen the world's reliance on oil. Many analysts believe surging demand for biofuels has put enormous added pressure on food supplies. Compounding matters, the amount of arable land is dwindling due to urban sprawl. Add it all up, potash proponents say, and the only way to squeeze more crops from less farmland is to use fertilizer, which boosts yields and helps plants grow faster.

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