Higher soybean plantings in the U.S. this spring boosted biotech seed giant Monsanto Co.'s quarterly profit, despite the broader slump in agricultural commodity prices.
Farmers this year have dedicated more acres to soybeans after a string of record-breaking harvests have eroded the price of widely grown crops like corn and wheat. Soybean prices had fared better due to strong demand from China and elsewhere, though prices have declined as farmers ramped up planting. Heavy rain this spring also forced some farmers to switch some corn fields to soybeans, which typically can be planted later.
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That trend coincided with Monsanto's introduction of new soybean varieties that are genetically engineered to resist a more powerful combination of herbicides. About 20 million U.S. acres were sown with the new seeds, executives said Wednesday.
"For soybeans, the momentum continues to be tremendous," Monsanto President Brett Begemann said, as the St. Louis-based company reported better-than-expected profit for the period.
Chief Executive Hugh Grant said Monsanto's sale to German chemical conglomerate Bayer AG was progressing through antitrust reviews around the world. The $57 billion deal to create the world's largest supplier of pesticides, seeds and crop genes is expected to close this year, he said.
Some jurisdictions already have cleared the deal. South Africa required Bayer to sell a herbicide and crop gene franchise that competes with Monsanto's "Roundup Ready" suite of crops and weed killers as a condition of the deal.
A 29% increase in quarterly sales for soybean seeds and crop genes prompted Monsanto on Wednesday to maintain its forecast earnings of $4.09 to $4.55 a share for its fiscal year, which wraps up Aug. 31. Shares climbed 0.9% to $118.36.
Monsanto's new soybean variety, engineered to resist the herbicide dicamba as well as glyphosate, has also been linked to crop damage across some portions of the southern U.S. A growing number of farmers in Arkansas, Missouri, Mississippi and Tennessee have reported crop damage allegedly caused by dicamba drifting from neighboring fields. Some farmers have sued Monsanto.
The company has said it advises farmers on how to use the spray safely and will fight the lawsuits.
For the quarter Monsanto reported income of $843 million, or $1.90 a share, up from $717 million, or $1.63 a share, a year ago. Revenue from seeds and genomics, Monsanto's biggest business, fell 2.3% to $3.1 billion despite strong results from the soybean seed segment.
Ezequiel Minaya contributed to this article.
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(END) Dow Jones Newswires
June 28, 2017 12:11 ET (16:11 GMT)