Back to top

Analyst Blog

World’s largest seed company, Monsanto Co. (MON - Analyst Report), announced to raise prices for its DeKalb brand of corn seeds in 2012 by an average of 5% to 10% amid the present worldwide food crisis. 

 

The price rise reflects higher cost of production for the high-yielding corn genes. These insecticide- producing biotechnology seeds have been depicting improved performance and higher sales of crops for the growers over time. The company anticipates that more and more farmers will shift to the new, higher-yielding seeds rapidly.

 

Higher prices of corn seeds are anticipated to help Monsanto achieve its target of boosting earnings by 13% to 17% a year. In 2011, Monsanto lowered corn seed prices, especially Smartax, after the farmers increased purchases from DuPont Co.’s lower-priced Pioneer Brand. Added to the peril was the bad weather condition, which came as a backlash for Monsanto’s earnings after the customer loyalty shift.

 

Hence, the company now needs to recoup losses through contracts with the growers in a wide geographic area by raising corn seed prices, after overcoming drought and other weather issues. The company also plans to raise seeds in Latin America.

 

Price increase, however, seems risky, given the intensifying competition and global food crisis. However, Monsanto is confident about its product line and expect the price increase to show continued momentum with customers while facilitating the company to meet its growth projections

 

Of late, Monsanto’s genetically altered corn seeds were reported of getting infected with some sort of seed resistant bugs. These seeds are produced by combining seed and pesticides, developed by Monsanto. Reports suspected, as the resistant insects breed with other unaffected plants nearby, there is a chance of contamination with non-resistant offsprings with widespread effect. The company, however, pointed out that the seeds are giving good results and at the same time, affirmed that they are ready with potential safeguards in place, for any such adverse situation.

 

Missouri-based Monsanto Company, together with its subsidiaries, is a leading global provider of agricultural products for farmers in the United States and internationally. Monsanto's biotechnology research and rich product pipeline provides strong competition to its peers, such as The Dow Chemical Company (DOW), Syngenta AG (SYT - Analyst Report), The Scotts Miracle-Gro Co (SMG - Snapshot Report), BASF ([url=http://www.zacks.com/stock/quote/basfy]BASFY[/url]).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%