June 29, 2007

 

Higher US corn sales boosts Monsanto's profits

 

 

Rising grain demand for ethanol and feed grains has prompted higher sales of grain seeds as Monsanto, the world's biggest seed producer, reported a 71-percent increase in third quarter profits.

 

Net income in the quarter ended May 31 rose to US$570 million from US$334 million a year earlier while sales gained 23 percent to US$2.84 billion from US$2.31 billion.

 

Monsanto also pulled further away from the competition, as its share of the US corn seed market expanded 5 percent, its largest gain ever. This would also be the sixth consecutive year the company has gained market share

 

Ethanol demand, which drove corn prices to their highest in a decade, boosted sales of the high-yielding strains of its genetically modified seeds.

 

Better sales has also brought about more optimism to the company. Monsanto raised the forecast of the number of hectares in the US expected to be planted with its seeds to 195 milllion acres, up from 150 million acres previously.

 

Each acre of double-stacked corn seed, which contains two technologies, counts as two acres, while an acre of triple-stacked seed counts as three acres.

 

Sales of corn seeds, including biotech traits licensed to other producers, jumped 77 percent in the third quarter to US$891 million, Monsanto said. Corn-seed profit surged 21-fold to US$530 million, from US$25 million a year earlier.

 

Monsanto said farmers have planted 120 million acres with its corn traits this year, a 60 percent jump from the 75 million acres planted last year.

 

Monsanto also announced plans to spend US$610 million over the next three years to expand its production plants and build two new ones.

 

US corn acreage is expected to expand 15 percent this year, the highest increase in more than 50 years.