Monsanto still milking the food crisis
NOTE: Thanks to the Bush- subsidised corn-ethanol boom they lobbied for, Monsanto is laughing all the way to the bank.
USDA data shows that the claim in this article that "a growing middle class in Asia... demanding more grain-fed meat" is driving the demand for corn is a complete myth. The relevant countries are net exporters of grain!!
Monsanto Posts 42% Jump in Net
By Scott Kilman
Wall Street Journal, June 26 2008
Companies Featured in This Article: Monsanto, DuPont
Crop biotechnology giant Monsanto Co., benefiting from the historic grain rally, reported a 42% jump in third-quarter profit and is raising seed prices to capitalize on the planting boom it expects next year.
Monsanto executives in St. Louis are seeing strong demand for their genetically modified corn and soybean seeds due to pressure on farmers around the world to rapidly increase production.
Corn and soybean prices have doubled over the past 12 months in part because a growing middle class in Asia is demanding more grain-fed meat at a time when high gasoline prices are creating demand for alternative fuels
made from these commodities. Crop damage caused by June flooding across the Midwest farm belt also has helped to lift prices.
Monsanto reported net income for the third quarter ended May 31 of $811 million, or $1.45 a diluted share, which exceeded the consensus of estimates of Wall Street analysts by about a dime. Third-quarter sales rose 26% from the year-ago period to $3.59 billion.
Monsanto raised its 2008 earnings estimate by about 20 cents a share to $3.40 a share, excluding unusual items. Monsanto shares fell, however, because the company's pattern of raising its full-year earnings estimate five times since November had helped fuel anticipation for an even bigger rise. In New York Stock Exchange composite trading Wednesday, Monsanto closed at $131.52, down $4.27, or 3.1%.
Hugh Grant, Monsanto chief executive and chairman, said during a conference call with analysts that he expects U.S. corn farmers to plant 90 million acres in 2009, up from the 86 million acres that the U.S. Agriculture Department predicted in March would be planted this year.
While Mr. Grant warned his forecast is hazy, it would be good news for Monsanto and its rivals because corn generates the most profit of any seed. Corn acreage fell this year because many farmers figured they could make more money growing wheat and soybeans, crops also hit by short supplies. [after other farmers switched away to grow corn to cash in on the ethanol boom]
Monsanto said it's raising by an average of 20% the prices of its varieties of seed equipped with three genetically modified traits: the ability to resist two insects and to tolerate exposure to Monsanto's popular Roundup herbicide. Prices of the so-called triple-stack corn seed that farmers planted this year climbed between 15% and 20%. Monsanto said about 65% of the corn seed it sells in the U.S. next year will be a triple-stack variety.
But there are signs that competition between Monsanto and DuPont Co.'s Pioneer Hi-Bred unit is growing more intense, which could make it harder to raise seed prices. Monsanto has lured customers from Pioneer for several years by getting to market first with more genetically modified seeds. As a result, Pioneer's share of U.S. seed-corn sales has dropped to about 30% from 38% in 2000. The market share of Monsanto's DeKalb corn brand has climbed to about 25% this year from 10% in 2000.
While Monsanto executives said Wednesday they will continue to gain corn-seed market share, Pioneer officials say it isn't coming from their company anymore. Pioneer, which is offering its own triple-stack varieties and beefing up its sales force, said its corn-seed market share has stopped falling, and is expected to grow next year.