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Monsanto Whisper

Monsanto Whisper
 

Research Question: Will Monsanto’s next generation soybean technologies propel growth despite a soft corn market and increasing noise about GMO health issues?

Companies Covered: Monsanto (MON), Syngenta AG (SYT), Du Pont (DD), The Dow Chemical Company (DOW)

Report Available: March 18, 2015

 

Blueshift’s initial research shows MON’s soybean technology exceeding revenue expectations and holding a very bright future in South America, but GMO safety concerns raised by increasingly noisy protesters still plague the company.

 

Observations

  1. MON’sQ1 2015 earnings statement reported decreasing revenue in five of its six business units, but still came in ahead of guidance. Strong sales of MON’s Intacta soybean designed to resist pests in South America led to a 48% increase in its soybean sales, offsetting the decline in corn seed sales. Perhaps a victim of its own success, MON’s high yielding genetically modified corn crop performed so well that it led to an oversupply, which in turn lowered market prices. MON maintained its full-year forecast and discussed anticipated future growth from branded products and itsclimate platform.
  2. MON’s “Decade of the Soybean”has lived up to its namesake thus far. The company’s Intacta sales covered three million acres in 2014, and are forecasted to quadruple to 12 million acres in 2015. Piper Jaffray analysts now believe MON will actually exceed the 12 million acre forecast after interviewing South American farmers, grain traders, and dealers earlier in the year. MON envisions 100 million acres of Intacta will eventually be planted in South America. The company has also received USDA approval for its next gen soybean seed, Xtend, scheduled for commercial sales in 2016 pending Chinese import approval. MON’s competitor DOW anticipates bringing its Enlist seeds to market in 2016.Unfortunately for DOW, its two biggest potential customers DD and SYT announced that they do not plan to sell Enlist, and instead are considering MON’s Xtend seed.
  3. Protesters at MON’s annual shareholders meeting put the company on the defensive. Acting as a proxy for Harrington Investments, the protestors presented 500 testimonials that documented how MON’s Roundup had damaged people’s health. Researchfrom scientists at Harvard and Yale may help the GMO safety debate by putting GMOs “on a leash.” The new technique inserts a built-in self-destruct mechanism into bacteria that is dependent on an artificial nutrient not found in nature. Once separated from the nutrient, the GMO self-destructs. Although the research theoretically would help GMO’s cause if self-destruct mechanisms were coded in, it also adds credence to the theory that GMOs could uncontrollably spread in the wild with unintended consequences.
  4. Blueshift’s Feb 20, 2014 reportfound that MON’s Integrated Farming Systems (IFS) climate platform, including the FieldScripts prescription planting product, would emerge as an industry-leading high-tech data driven farming system. Farmers expect the system to offer improved operating efficiencies and yields, however their lack of trust in MON and concerns over high price may slow adoption rates.

 

To determine if MON’s new soybean technology and climate platform will drive growth Blueshift will gather data and issue a market research report from independent sources in the following areas: farmers, seed sales companies, agricultural researchers, competitors, and industry specialists. ​

 

To see other ideas Blueshift Research is currently working on, please click here.