December 16, 2008 7:45 AM EST

Merrill Lynch upgrades Potash Corp. of Saskatchewan (NYSE: POT), Mosaic Co. (NYSE: MOS), Intrepid Potash, Inc. (NYSE: IPI), Terra Industries Inc. (NYSE: TRA) from Neutral to Buy.

The firm also upgraded CF Industries Holdings, Inc. (NYSE: CF) from Underperform to Neutral.

The firm is keeping an Underperform rating on Agrium Inc. (NYSE: AGU).

Merrill said they believe fertilizer fundamentals are nearing a bottom, given nitrogen and phosphate prices have already plunged through breakeven margins for marginal producers, triggering significant shuttered global capacity.

Each of these ag stocks are currently higher in pre-market trading. Shares of Potash are up about 9% to $72.75, shares of are up 5.4% to $33.20, Intrepid Potash is up 6.1% to $20 even, Terra Industries is up 3.9% to $16.02, CF Industries is up just 0.4% to $48.00 and even Agrium, which will be the worst performing stock in the group, according to Merrill, is up 6% to $32.09 on the sector-wide upgrade.