TORONTO (Reuters) - Early-stage Canadian potash companies may have room to extend their healthy rally this year, given the prospect of takeovers by established miners or emerging market players hungry for supply.

But investors will need to cherry-pick those juniors that are most willing and able to strike a deal with potential partners or buyers.

Analysts see the companies with the most viable projects attracting the first deals and securing the best terms.

"It's like going to a dance, if you don't partner up with the pretty girls, then there might not be any pretty girls left," said Wellington West analyst Robert Winslow.

Still, analysts said any concrete deal with one of the juniors is likely to boost valuations across the group.

Small Canadian potash plays are typically overshadowed by industry giants Potash Corp, Mosaic Co and Agrium Inc. The big three producers of the crop nutrient have plenty of reserves and argue that greenfield mines are not economically viable at this time, as new mines costs billions of dollars to build.

But those prohibitive development costs give smaller potash explorers a strong incentive to seek alliances and engage in deals that can produce a big pay-off for investors.

These include deals with potash producers with ageing mines, such as Germany's K+S, or with established miners looking to enter the potash sector, such as BHP Billiton or Vale.

Other possible buyers include customers in emerging economies like India and China, who are looking to sidestep the market dominance currently enjoyed by a small clutch of major potash producers.

US Awasthi the head of India's largest fertilizer distributor, IFFCO, has said his company is looking at setting up potash joint ventures overseas.

Two other Indian companies, MMTC and Rashtriya Chemicals & Fertilisers, have also been engaged in talks with Athabasca Potash.