Potash Corporation of Saskatchewan Inc. (TSX:POT)(NYSE:POT) is down more than 40% in the past 12 months, and investors are wondering if a recent uptick in the stock is a signal the bottom has finally been reached.

Let’s see how things look.

Earnings situation

Potash delivered nasty results for Q4 2015. The company earned US$201 million, or US$0.24 per share, in the quarter. That was far below the US$0.49 per share the company posted in the same period in 2014.

The major culprit is a plunge in global fertilizer prices, despite strong potash demand.

Worldwide potash sales are expected to be nearly 60 million tonnes in 2016, about in line with the previous two years. Unfortunately, a global battle for market share among the world’s top producers has driven potash prices down 25%, and there is little relief in sight.

Market conditions

India recently announced plans to suspend imports until the end of March and will postpone its negotiations for the next supply contract until the summer. The country usually begins talks on the annual contract in February and has the deal wrapped up by April.

What’s going on?

Drought conditions have delayed the planting of crops in the country and market observers say the 2016 year, which begins in April, will likely see potash imports drop to just 3.5 million tonnes. That’s below the already low 2015 tally that is expected to come in at about four million tonnes.

The decision to delay negotiations on the new contract could put further pressure on potash prices, which are already down to US$230 per tonne, an eight-year low.

Dividend watch

Potash just slashed its quarterly dividend by 34% to US$0.25 per share. Based on the company’s 2016 earnings guidance of US$0.90-1.20 per share, the new payout ratio is about 100%.

Potash has completed the largest part of a massive capital program, and there is adequate access to credit facilities, so the dividend should be safe at current fertilizer prices. However, if another 25% haircut is in the cards for the potash market, the distribution could get trimmed again.

Should you buy?

The market remains under pressure, and significant price relief isn’t expected in the coming months. Potash has also cut production at some of its facilities, and that is going to take a bite out of revenues, so investors could see weak Q1 2016 results.

The bright side?

Potash is a low-cost producer and the long-term outlook is positive for the fertilizer industry. The stock has sold off so much that contrarian investors might want to consider taking a small position. If the dividend survives, new shareholders can pick up a nice 5.7% yield while they wait for better days.

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Fool contributor Andrew Walker owns shares of Potash Corporation.