The Wall Street Journal-20080213-For Monsanto- Yearly Forecast Rises Again

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For Monsanto, Yearly Forecast Rises Again

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Riding a global boom in agriculture, Monsanto Co. told investors it is raising its outlook for yearly earnings for the second time in as many months.

Grain prices are at or near record levels as world demand for food and grain-based biofuels increases. As a result, agriculture companies nearly across the board have been performing strongly despite a slowing U.S. economy.

For Monsanto, of St. Louis, the higher commodity prices mean farmers are willing to spend more money on biotechnology seeds and agricultural chemicals since their crops are worth more money.

The seed and agricultural chemical company said it increased its 2008 fiscal-year per-share earnings guidance to a range of $2.70 to $2.80, up from an earlier forecast of $2.50 to $2.60. Fiscal 2008 ends Aug. 31.

Brett Begemann, executive vice president of global commercial business, said Monsanto's glyphosate herbicide business could deliver $1.3 billion to $1.4 billion in gross profit in fiscal 2008. The company's seed and traits business is expected to contribute about $3.5 billion in gross profit.

Farmers are enjoying the high grain prices, but the cost to plant their crops has risen substantially as prices of seed, fertilizer and land have jumped. In the U.S., Monsanto says it has increased prices on some of its biotechnology traits by up to 25% over the past year or so. Mr. Begemann said Monsanto's prices arguably are low, based on today's commodity prices.

While the agriculture economy is bullish now and commodity prices seem destined to continue rising, prices could fall if the global economy slows substantially or if the world produces enough crops to meet demand. For farmers, that situation could be potentially dangerous because they would be stuck with higher input costs if the commodity prices bottom out.

Monsanto shares rose $1.02, or 0.9%, to $115.05 in New York Stock Exchange 4 p.m. composite trading. The shares have more than doubled over the past year.