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Citi Lowers Monsanto Target; Horse Manure's Star Rises
October 7, 2010 02:02 PM
THE CROP YIELD CURVE
In a research report this morning, Citi analysts wrote of Monsanto, “Pricing adjustments and a focus on working with farmers will support adoption of the refuge-reduction corn platform next year. We maintain our Buy on the stock, as it is attractive on a long-term basis after the massive decline this year. However, we acknowledge that the path toward the realization of our thesis has lengthened and we are removing the stock from Top Picks Live. We have lowered our 2011 EPS by 5¢ to $2.80; target price unchanged at $62.”
It hasn't been a good quarter for Monsanto. Farmers are upset about rising seed costs (corn seed up 32%; soybean seed up 24%).
Craig Griffieon, an Iowa farmer, told the
Christian Science Monitor
, "There just isn't competition out there."
Which is, appropriately, behind the federal government's current investigation of the industry for anti-competitive practices. Which, in turn, is why one boutique money manager I spoke with yesterday says was behind his firm's decision to sell its position in Monsanto a while back.
Monsanto's Roundup Ready seeds, which are genetically modified to, essentially, allow crops to grow their own herbicide, thus lowering farmers' costs of doing business, are thought to be behind the new "superweeds" that are resistant to Roundup.
Farmers like Quincy, Illinois' John Schmitt, who had to sell a third of his conventional corn at lower prices last year because of contamination, say, "If you've got your conventional seed right next to your neighbor's [biotech] seeds, the pollen flies. It's nature."
And the percentage of US farm acres planted with biotech crops rose only 1% last year, the smallest increase since 2001.
On top of it all, Monsanto's SmartStax corn yields are coming in at lower levels than expected.
However, Akele Hi, a recreational farmer in Hefei, China who has likely never seen a Monsanto GM seed, used nothing but water and horse manure to capture the record for the world's largest cucumber.
It's unlikely that farmers charged with feeding entire populations could go the same route.
But Hi's cucumber, which weighs 154 lbs. and is 5' 7"--only two inches shorter than Nate Robinson of the New York Knicks--was indeed grown 100% naturally, shattering the previous record of 3' 5", formerly held by Oxfordshire, England's Frank Dimmock.
"All the other cucumbers from the same packet grew to a normal size. But right in the middle of them this monster wouldn't stop growing," Hi said.
And as far as I can tell, none of the multinational agribusiness companies have successfully patented horse s**t yet.
No positions in stocks mentioned.
A CUCUMBER THE SIZE OF AN NBA PLAYER
Christian Science Monitor
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