June 26, 2008

 

Monsanto targets rebound in US corn planting and expansion abroad

Monsanto Co, the world's largest seed producer, is predicting a rebound in US corn planting next year while targeting further expansion in Europe and Asia for its seeds and herbicides.

 

The company on Wednesday (June 25, 2008) reported a 42-percent increase in fiscal third-quarter profit, forecasting that US farmers will plant around 90 million acres of corn for the 2009 harvest, responding to the continued rise in prices fueled by surging global food demand.

 

US farmers cut corn planting from 92.5 million acres in 2007 to 86 million acres this year, switching to higher-priced soy and wheat.

 

The company expects expanded corn planting in the US in 2009 said Hugh Grant, Monsanto's Chairman and Chief Executive Officer during a conference call following the release of the third-quarter results.

 

Monsanto is already the largest provider of corn seeds to US farmers, and boosted its own forecast of market share gains next year.

 

The company also plans to raise prices for corn seeds by an average of 20 percent next year.

 

While recent US flooding may have increased demand for replacement seeds, the company said it would not benefit significantly due to low margins for such seeds.

 

However, the wet conditions caused by the flooding could intensify the problem of pests.

 

Soaring sales of Monsanto's GM corn seeds offering protection against pests and bad weather contributed to record third-quarter profits, and the company raised its full-year forecast for the fourth time in six months.

 

Net income rose from US$570 million to US$811 million in the quarter ended May 31, with sales rising to US$3.6 billion.

 

The company's stock has nearly doubled over the past year, with rising commodity prices encouraging more farmers to buy its higher-yielding crop seeds.

 

Grant said Monsanto continues to seek opportunities for acquisitions and organic growth, notably in Europe and Asia, though said he was "not sure" if the large agricultural regions in Russia and Ukraine would be target markets.

 

The company has bought seed companies in Latin America and central America in recent months.

 

Grant said he would update investors later this summer on Monsanto's five-year plan to double sales by 2012, a target that had been based largely on organic growth.