Analyst Predicts Gains for Biotech Seed Companies, Following USDA Report
NEW YORK (AP) -- Shares of several agricultural chemical companies rose Monday morning as an analyst said companies stand to benefit from a decision among farmers to plant less corn.
Planting less corn is likely to drive corn prices even higher, which would boost sales for companies like Monsanto that make genetically modified corn seeds, which can boost yields.
The Department of Agriculture said farmers are expected to plant 86 million acres of corn this year, 8 percent lower than in 2007.
Favorable prices for other crops, like soybeans, have many farmers cutting back on how much corn they plant because of the high expense to grow the crop. Increasing demand worldwide for both food and ethanol has lifted the price of corn, which is used to make the renewable fuel.
Goldman Sachs analyst Robert Koort said the news bodes well for biotech seed companies, such as Monsanto Co.
"While we expect Monsanto to continue gaining market share, we believe the lower acreage bodes even better for DuPont shareholders as it increases the likelihood for DuPont to hold market share this year," Koort wrote in a client note.
Koort said corn prices will climb in the near term, as demand for ethanol rises and exports remain high because of the weak dollar.
DuPont Co. rose 55 cents to $46.99, and Dow Chemical Co. advanced 36 cents to $37.01.
Monsanto retreated 65 cents to $113.64.
Fertilizer companies Potash Corp. of Saskatchewan Inc. declined $2.14 to $158.43, and Mosaic Co. rose 47 cents to $105.87.
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