April 8, 2011

 

Monsanto worries about limited corn supplies

 

 

According to Monsanto Chairman, Hugh Grant, like the agricultural markets, he was also concerned about US farmers' ability to restock domestic corn supplies that are at 15-year lows which have caused corn prices to double since last June.

 

"A prediction of 92 million acres for corn can easily turn into 90 million with wet, cold weather during spring planting," Grant said on Wednesday (Apr 6).

 

"There are predictions that to replenish corn stocks, the US will have to achieve a yield of 165 bushels per acre," he added. "That is a heck of an increase above the 153 bushels we had last year."

 

Monsanto posted a profit of slightly more than US$1 billion for its fiscal quarter that ended February 28, compared with net income of US$887 million in the second quarter of last year.

 

Per share earnings rose from US$1.70 to US$1.87 during last year's quarter.

 

Even so, Monsanto's shares dropped US$4.16 per share to US$69.16 on the New York Stock Exchange, primarily because the company did not increase its earlier forecast of earnings per share of US$2.72 to US$2.82 for the year.

 

Monsanto has acknowledged difficulties with the rollouts of its newest Roundup Ready to Yield soybeans and Acremax corn seeds because farmers balked at paying up to US$400/bag for seeds.

 

The company cut prices for some of its new seed lines last year.

 

Monsanto said sales of Roundup Ready to Yield soybean lines would rise from six million acres last year to 13-17 million of the estimated 76 million acres of soy expected to be planted in the US this year.

 

The new Smartstax and Triple-Pro corn traits will rise in acreage share from three million acres last year to about 11 million of the 92 million acres of corn expected to be planted this year. The traits allow farmers to reduce the amount of non-biotech refuge they must plant to prevent insect resistance to pesticide.

 

Grant also said that Monsanto would continue to be what he called the pricing leader among seed companies, but that the company would not be overly aggressive in pricing for the 2012 sales season that begins September 1.

 

"It would be foolish for us to create opportunities for lower-priced competitors," Grant said.

 

An analyst said, "Farmers have incentives to maximise yields, and I would have thought they would be buying more of the elite categories of seeds."

 

Monsanto said that in the second quarter, sales of seeds and biotech traits rose slightly, from US$3.3 billion to US$3.4 billion. Sales of corn seeds and genomics were the largest share of seed sales, US$2.4 billion, up slightly from the previous year.

 

Monsanto said it had stopped the bleeding from its troubled Roundup herbicide business, which was hit by generic competition from foreign suppliers and was restructured in 2010.