Monsanto hopes to benefit from increased soybean production

03 April 2013 23:13  [Source: ICIS news]

HOUSTON (ICIS)--While the rest of the agriculture industry has its sights firmly fixed on the upcoming US corn crop and how many millions of acres will be filled with the yellow grain, US-based agricultural products major Monsanto said on Wednesday that its is keeping its eyes on the potential for soybeans.

Primarily known for its corn seed business, Monsanto said during a conference call that nearly 200m acres (81m ha) of soybeans are expected to be planted in North and South America, and the company believes that this year alone, growers will plant between 39m-41m acres of their soybean line.

“This year, we’ll touch more than 40m acres with Roundup Ready 2 Yield in the US, but only about 20% of this opportunity. That means in the next five years, we expect to see significant upgrades that have a practical fit on the remaining 160m acres,” said Brett Begemann, Monsanto president, who made the comments during the company's Q2 2013 earnings call.

“Strategically, it provides an important confirmation of the platform status of these technologies for the industry. Just as important, it immediately expands the US opportunity, and financially, it carries more than $1bn [€780m] of value that dovetails in for the US soybeans and reinforces the growth on that element over an extended period of time," he said.

The fact that both soybeans and corn crop expectations are booming is news that the fertilizer industry, especially producers and distributors of urea and ammonia, have been counting on to continue the upswing that the market has experienced over the last two years as commodity prices have climb and ending stocks have grown increasingly tighter.

Beyond just the domestic increase and resulting anticipations, one area that Monsanto is eagerly looking toward is Brazil. It is there in the country’s rapidly growing agriculture sector where extensive testing of the company's new seed lines have shown the potential for increasing production.

Monsanto believes there are presently 100m acres that are available to be dedicated to soybeans and could open the door to a steadily increased profit margin.

“Just like last year, we’re seeing the performance we expected, with a better than 4 bushel/acre advantage on more than 1,000 locations, double the number of locations that we tested last year,” Begemann said.

“With two years of data on real customer fields, it’s clear that the performance is there, and the excitement among customers is tangible. That sets up very nicely as we look to take this to the first increment of commercial scale in Brazil’s summer season," he said. "There is still some work to do, but we’re in very good shape to move on this 100m acres, $1bn-plus opportunity.”

($1 = €0.78)

By: Mark Milam
+1 713 525 2653

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