Friday, May 28, 2010

Things that are more expensive...

Than glyphosate.
Here's why.

In its fiscal year ended Aug. 31, 2009, Monsanto's glyphosate-based herbicide business generated $1.8 billion in gross profit on sales of $3.5 billion. But with the influx of generic glyphosate, Monsanto, whose patent on the molecule expired in 2000, expects Roundup's contribution to its gross profit to tumble to between $250 million and $300 million annually.
Its pullback on Roundup increases pressure on Monsanto's seed-and-crop biotechnology business to make good on Mr. Grant's April guidance to investors that the company will be able to generate earnings growth at a mid-teens percentage rate.
On Thursday, Monsanto cut its earnings target for its fiscal year ending in August by 70 cents to between $2.40 and $2.60 a share.
The company also projected profit for the quarter ending Monday of 75 cents to 80 cents a share, well below the $1.32-a-share average predicted by analysts polled by Thomson Reuters.
In 4 p.m. composite trading on the New York Stock Exchange, Monsanto's shares, which have lost nearly 40% of their market value since the start of the year, were down $2.39, or 4.5%, on Thursday at $50.27.
Prices for glyphosate have been hurt by a sustained glut, fueled by China, which has the capacity to make twice as much of the herbicide as the world needs. Mr. Grant said "antidumping actions" might be needed to preserve the industry in the U.S., Argentina and Brazil. Dumping is exporting goods at below the cost of production.
According to Monsanto, the retail price of a gallon of generic glyphosate has dropped to the $10 to $12 range, as much as $4 below what farmers had been paying for nearly a decade. Monsanto said it expects glyphosate prices to settle at between $8 and $10 a gallon. [More]
Well, this helps pay for the residual I have to use now.


Anonymous said...

John,,as I am sure you are aware , Monsanto is going too grab there profits on the patent seed side of there business...We are planting a couple of hundred acres of non-gmo soys this week so that we have a seed supply if prices get really more stupid(2001-top RR soy seed $26 a unit--this year with maximum discounts $50+) and trying too solve question where all our beans in the 1990's where 50+ bu. and now we struggle for 40's and then they want a residual spray,,regards-kevin

Anonymous said...

I have some Stine Corn Planted on a few farms. Always lery of a price way below the market. They were the only ones who didn't jump on the big price increase. I met Harry and the other one about 20 years ago. It doesn't surprise me they would not toe the line so much and follow the big dog. I hope the corn does well, but in any event, hats off to Harry (if he's still around)!