Monsanto reports 5.2% drop in corn seeds profits in Sep-Nov

Publish time: 9th January, 2014      Source:
Information collection and data processing:  CCM     For more information, please contact us

January 9, 2014


Monsanto reports 5.2% drop in corn seeds profits in Sep-Nov






Due to South American growers'' switch from corn to soy, Monsanto revealed that profits from corn seeds, its biggest earner, fell 5.2% to US$650 million in the September-to-November quarter, on revenues down 7.5% at US$1.05 billion.



The decline reflected the "expected decrease in corn acres in Latin America", where farmers - for whom soy is typically the default row crop compared with corn, in contrast to the US- have extended the trend this season thanks to price signals.



In Brazil, corn prices did not match the 40% tumble in Chicago futures over 2013, they still fell 22% to BRL26.74 (US$11.20) per 60-kilogramme bag, according to the Cepea research centre.



And demand for corn seed is expected to remain weak for now, with many Brazilian farmers expected this year to eschew a safrinha corn crop, planted on ground vacated by the newly-started soy harvest, or sow a second soy crop instead.



However, Monsanto''s profits on soy seed for the quarter soared 42% to US$168 million, on revenues up 15.6% to US$168 million, brought about by the increased popularity of the oilseed in Latin America, enhanced by the release of a cutting-edge genetically modified seed, Intacta RR2 Pro.



This brand offers protection against many insect pests, including the Helicoverpa caterpillar which has become an increasing problem in Brazil, besides being tolerant to glyphosate herbicides, so allowing for the spray off of weeds.



Brett Bergemann, the Monsanto chief operating officer, told investors: "This is a year where some heavy insect pressure actually showcases the benefits of Intacta more visibly. Across Brazil, there are common reports of growers already spreading normal soy fields four to five times to deal with heavy pressure. When you can reduce two to three sprays with Intacta, it speaks to the direct value in savings that gets combined with the improved yield."



Monsanto said that, with an expected three million acres of the variety to be planted worldwide, Intacta RR2 Pro was on track to deliver the company''s "largest soy launch".



In Brazil, farmers are expected to sow 29.3 million hectares overall with soy, up more than 1.5 million hectares on-year, according to estimates by the USDA''s Brasilia bureau.



While Monsanto''s profits from cotton and vegetable seeds fell too, the former dented by "timing effects" in Australia, the company saw its profits from agrichemicals soar 50% to US$558 million, "reflecting the continued benefit of a favourable marketplace environment".



Group earnings for the quarter rose 9% to US$368 million, on revenues up 7% at US$3.14 billion. The earnings were equivalent to US$0.67/share, narrowly ahead of Wall Street forecasts for a US$0.64-a-share result.