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Monsanto jumps on early seed sales

04/03/2013 @ 1:46pm

Monsanto Co. (MON) Wednesday cautioned cool spring weather would likely leave U.S. farmers with a shorter window to plant corn this year, though strong early seed sales helped the company boost its full-year profit guidance.

Corn accounts for three-quarters of Monsanto's seed sales and the company is engaged in a fierce market share battle buoyed by a U.S. government forecast last week that farmers would plant the largest crop in more than 75 years.

"We'll feel better when we get some seed in the ground," said Monsanto Chief Executive Hugh Grant on a call after the world's largest seed maker by revenue beat expectations for fiscal second-quarter earnings.

Monsanto expects record sales of corn seeds this year, and said its U.S. business was off to a strong start despite the weather, building on a surge in sales to farmers in South America, where the crop is now being harvested.

U.S. farmers typically plant corn in April and May, once soils have warmed enough to allow seeds to germinate. But early spring weather has been unseasonably chilly in the Midwest. If farmers wait too long to plant, the crop is at greater risk of suffering from extreme summer heat or an early autumn frost.

Monsanto executives said they expect U.S. farmers to plant slightly less than the 97.3 million acres of corn forecast by the Department of Agriculture, but its financial guidance is based on farmers here and in South America buying more high-margin seeds that have been genetically modified to boost yields and protect against pests.

The St. Louis company's corn sales rose 16.5% in the quarter to Feb. 28 from a year earlier, offsetting declines in its soybean, vegetable and cotton business.

In the latest quarter, the company also benefited from the recovery of its herbicide business, which has been weighed down in recent years by production from Chinese producers and is now benefiting from higher and more stable global prices.

Monsanto said it didn't plan to drop its existing plan to sell a fixed volume of herbicide this year at prices just above those of generic rivals.

Profit rose to $1.48 billion in the quarter from $1.21 billion a year earlier, with per-share earnings rising to $2.74 from $2.24 a year earlier. Sales jumped 15% to $5.47 billion.

The company boosted its per-share earnings for the fiscal year by 10 cents to $4.40 to $4.50.

The new guidance didn't include the impact of last month's resolution of its long-running patent dispute with DuPont Co. (DD), which agreed to pay Monsanto $1.75 billion as part of a series of licensing agreements for genetically modified seed technology.

The two companies also agreed to dismiss a $1 billion jury award against DuPont last year for infringing Monsanto's patents. DuPont's payments will enable it to use Monsanto-developed traits in its own corn and soybean seeds.

Monsanto shares were recently up 0.2% at $103.82.

--Melodie Warner contributed to this article.
Write to Ian Berry at Ian.Berry@dowjones.com
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(END) Dow Jones Newswires
April 03, 2013 14:39 ET (18:39 GMT)
DJ 2nd UPDATE: Monsanto Outlook Raised by Corn->copyright

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