UPDATE 1-Potash Corp stock hits record as Goldman ups target

(Adds analyst's comment about U.S. corn prices in paragraph 11, updates stock prices)

WINNIPEG, Manitoba, June 9 (Reuters) - Shares of Potash Corp (POT.TO), the world's largest fertilizer company, surged to a record high on Monday after Goldman Sachs said prices for potash and phosphate should continue to rise.

Potash stock rose as high as 5 percent to C$232.60 on the Toronto Stock Exchange on Monday, and was up C$8.92 to $229.72 at midday.

The stock has climbed 195 percent during the past year as world grain prices rallied to historic highs, giving farmers the ability and the incentive to apply more fertilizer.

Meanwhile, world supplies of potash and phosphate are tight, propelling fertilizer prices to new peaks, which prompted Goldman Sachs to raise its targets for Potash Corp and competitor Mosaic Co (MOS.N).

Mosaic shares were up 6 percent or $8.07 at $141.43 in New York on Monday.

"We find the risk/reward still compelling and would be aggressive buyers of (Mosaic) and (Potash)," wrote analyst Edlain Rodriguez in a report.

Rodriguez raised his price target by $50 to $285 for Potash Corp's New York-listed stock, which was up $7.58 at $224.43 on Monday, and raised his 2008 earnings estimates to $11.50 per share from $11.15.

He raised Mosaic's target by $30 to $195.

Another analyst, who declined to be named, said confidence in biofuel production was a bigger factor in the climb in fertilizer makers' shares.

Potash stock has risen more than 9 percent since Thursday, when a U.N. summit on high food prices focused on trade barriers and aid rather than on cutting the use of food crops for ethanol production.

A third analyst, who also declined attribution, said flooding in the U.S. Midwest, which sent U.S. spot corn futures to a record high on Monday, propelled fertilizer shares higher.

In his report, Rodriguez said it was a "matter of time" before Canpotex, which exports for Potash Corp, Mosaic and Agrium Inc (AGU.TO), raised potash prices to $1,000 per tonne, a level already being charged by Russian competitors.

Canpotex has already raised prices to Brazil and Southeast Asia to $750 per tonne, and has contracts with major consumers China and India for $650 and $625 a tonne, respectively.

"In our view, once global prices reach the $1,000, prices in China and India will eventually reach that level once their contracts are up for renewals," he said.

But Rodriguez said he expects potash producers would give customers time to absorb the change before more price hikes.

($1=$1.02 Canadian) (Reporting by Roberta Rampton; editing by Peter Galloway)