CORRECTED-UPDATE 2-Monsanto sees higher corn prices as boost to business
(Corrects fiscal year in 5th paragraph, corrects 7th paragraph to show $4 is additional earnings per share)
By P.J. Huffstutter
ST. LOUIS Nov 18 (Reuters) - Monsanto Co expects corn prices to rise next year, which will help the seeds and agrochemical company reach its earnings forecast, executives said on Wednesday.
But they added that the majority of its growth will come from new products and expanding its reach to new markets.
Monsanto made its forecasts for corn amid a steep downturn in commodities markets that have dragged crop prices to multi-year lows, triggered belt-tightening among farmers and unleashed a flurry of talk about consolidation in the agricultural sector.
Monsanto expects corn prices will recover to $4.50 a bushel in the next 8 to 12 months from less than $4 currently, sticking to its forecast just a week after the U.S. Department of Agriculture cut its price outlook for the marketing year to Aug. 31 by 15 cents a bushel to a range of $3.35 to $3.95 a bushel.
The company is maintaining its forecast for EPS of $5.10 to $5.60 by fiscal year 2016, said Mike Frank, vice president of Global Commercial.
Eighty percent of Monsanto's earnings over the next three to four years are expected to be from innovation such as newly developed products, according to presentations made on Wednesday. The remaining 20 percent is tied to the price of commodities like corn and soybeans.
The non-commodities part of Monsanto's business would be expected to yield roughly an additional $4 in earnings per share on top of current earnings by fiscal 2019, Frank said. "If the 20 percent doesn't happen, then we can grow about $4," he said. Continuación...