Worries about this year's corn planting pushed down Monsanto (NYSE:MON - News) on Wednesday, despite strong second-quarter results.
Shares of the St. Louis-based seed and herbicide giant fell as low as 105.84, before rallying to finish down 1% at 112.
Monsanto stuck to its full-year profit forecast of $3.15-$3.25 a share, after raising the range from $2.70-$2.80 on March 25.
Wall Street expected $3.20, though investors and some analysts had hoped for more.
Second-quarter profit rose 83% to $1.79 a share excluding items, 7 cents above analyst views. But the results were a big surprise after last week's announcement.
Sales rose 45% to $3.78 billion, the best growth in several years.
Monsanto said U.S. and Brazilian corn-seed sales were particularly strong.
Sales of Roundup and other herbicides jumped 85% to $982 million.
Monsanto and other agriculture stocks also continue to react to Monday's Agriculture Department forecast, which projected an 8% drop in U.S. corn acreage next year. On the other hand, the USDA expects farmers to plant 18% more soybean acres.
Monsanto sells both corn and soybean seeds, though it typically sees higher margins from corn.
The company remains bullish in the long term. Its five-year plan calls for doubling operating profit, largely from new strains and genetically engineered corn, while gaining global market share.
In a statement, CEO Hugh Grant said that between now and 2012, Monsanto is the only agriculture company "that can point 15 consistent growth irrespective of the commodity price swings, fluctuations in planted acres or the popularity of ethanol."
Analysts also aren't worried about short-term planting cycles.
"We still think commodity prices are going to be higher than average," said Argus Research analyst Bill Selesky. "And we don't think that's going to slow down soon."
Food prices have soared to record highs on strong global demand. As Chinese and other people around the world get wealthier, they are eating more meat. It takes more grain to produce beef or pork than to feed a family.
The U.S. is subsidizing corn-based ethanol production. Global stockpiles are near longtime lows.
All those factors should spur further demand for Monsanto seeds that boost yields, resist pests or boast other desirable traits.
"Their technologies make farmers more money. It's more efficient for them to use," said UBS analyst Chris Shaw.
Shaw says the company has a strong research and development pipeline.
"The long-term story is that Monsanto doesn't depend on shorter-term shifts on acres and commodity prices," he said.
Separately, Monsanto said it would spend $196 million over the next 18 months to expand its Luling, La., plant, which makes Roundup and other glyphosate-based herbicides.
Shares of chemical fertilizer firms were mixed.
Fertilizer maker Mosaic (NYSE:MOS - News) sold off initially but, like Monsanto, closed down just 1%. Potash Corp. of Saskatchewan (NYSE:POT - News) rallied to close up 1%. Dow Chemical (NYSE:DOW - News) also rose 1%, while DuPont (NYSE:DD - News) climbed 2%.
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