Monsanto Kicks Off Another Blowout Quarter

Agricultural giant Monsanto (MON) kicked off the year with a stunning rally.

The firm produces corn and other seeds, and biotech products. Monsanto’s key businesses are Roundup agricultural herbicides and corn seed sales in Brazil and Argentina. However, its U.S. corn business showed significant growth.

Monsanto implements corn seed biotech traits — weed control and insect protection — into single-seed offerings, catering to farmers who prefer to get more benefits out of a single seed.

The seeds and herbicides dynamo earned 46 cents a share, up 188% vs. a year earlier. Sales grew 36% to $2.1 billion, the fastest growth in four years. Quarterly sales from Monsanto’s corn seed and traits business rose 30% vs. a year ago.

Monsanto is totally benefiting from all-time-high corn, wheat and soy prices.In addition, the renewable fuels energy policy (ethanol subsidy) in the U.S. created a supply squeeze for all crops (agflation). The firm is in the second inning in terms of trait penetration, and seems to be a leader in the Ag wave globally. Currently Goldman has a target price of $112 for the firm, while I am looking at $130 by mid- June.