As growth of Monsanto's GMO seeds outside the U.S. is expected to outpace the domestic market for the first time during the upcoming crop season, Latin America has taken on new importance for Monsanto and its rivals, including DuPont Co. (DD) and Syngenta AG (SYT).

"The next place where we expect momentum to accelerate in 2012 is in Latin America ... in particular, we expect the ramp-up of the corn opportunity in Brazil and Argentina will be one of the single largest sources of new growth in the next few years," Monsanto Chief Executive Hugh Grant said in an earnings call Dec. 7.

According to Don Carson, equity analyst with Susquehanna Financial Group LLLP, "Monsanto's strong position in the South American biotech seed market has the company poised for strong earnings growth."

While the U.S. has a finite amount of cultivatable crop lands, there are still massive amounts of land available to expand production in Brazil and Argentina. Moreover, the benefits of GMO seeds -- including increased resistance to pests and herbicides -- have won them increased usage by farmers in those nations.

The Brazilian government approved corn biotech traits for planting in 2009, and penetration already has increased to greater than 60%. Furthermore, the amount of Brazilian farmland cultivated with transgenic varieties will be 20.9% greater in the 2011/12 harvest than the previous planting, according to Celeres Agro Consulting.

Monsanto claims more than 40% of Brazil's GMO seed market and more than half of Argentina's. Last year, the company's sales to Argentina totaled just over $600 million out of Monsanto's overall global seed sales of $10.5 billion.

"In South America, Monsanto will be able to leverage technology advances it already has rolled out in the United States to improve companywide margin," Carson said.

Brazil and Argentina are primed to boost Monsanto's top line as farmers adopt biotech seeds and trade up to more advanced and higher-margin seeds.

"These second-generation traits have higher per-acre revenue growth than the first generation traits they are replacing," said Susquehanna's Carson. He noted that the next generation of traits is garnering Monsanto a revenue improvement of 20% to 30% per acre in Argentina and Brazil.

A decade ago, before Brazil approved the use of GMO seeds, many farmers there planted GMO seeds smuggled from Argentina, which had approved the planting of GMO soybeans in 1996 and GMO corn in 2004. Although GMO seeds were illegal in Brazil, the seeds were imported on a wide scale, eventually forcing that nation's government to approve their use in 2009.

Another development that paints a positive picture for Monsanto is its new seed launches. Intacta insect protected soy seed is being tested extensively in Brazil this year and should be commercial in the fall of 2012. Argentine approval and commercialization should follow within the next two to three years.