The jump in corn-seed sales followed a busy spring in which farmers, encouraged by high grain prices, planted the most corn acres since 1937, according to government estimates. Monsanto Chief Executive Hugh Grant also said the company has seen strong farmer adoption of its premium corn and soybean seeds, which have higher profit margins.
The results extend recent strength in the seed business, which has grown in importance as Monsanto reduces its focus on weed-killer offerings amid competition from generic products, especially those from China.
"With our most-significant selling seasons wrapped up, the third quarter gives us a near-complete view of our business for the fiscal year, and I feel very good about where we stand," Mr. Grant said.
Earlier this month, the company said it plans to invest $355 million in Argentina, including construction of a new corn-seed-production plant. The company is looking to the South American country, along with Brazil and Central and Eastern Europe, to drive growth during the next several years.
The company isn't expecting this year's rise in corn acreage to extend to 2013, but Mr. Grant said Monsanto is planning to produce enough corn seed to meet the same demand. This is a challenge, given the drought gripping much of the Midwest, which threatens to curtail seed production for the second year in a row.
Although most of Monsanto's corn-seed production is irrigated, "it would be real nice to see a splash of rain at some point," Mr. Grant said.
Mr. Grant added that the company plans to see a 5% to 10% increase in prices for its corn seed as farmers switch to higher-end seeds. The company is trying to provide a consistent approach to farmers following a backlash in 2010, when farmers balked at high prices for its new premium corn seed, SmartStax. Mr. Grant said seed pricing for next year is "largely decoupled" from commodity prices, and won't fluctuate substantially based on the price of corn.
For the quarter ended May 31, Monsanto reported a profit of $937 million, or $1.74 a share, up from a year-earlier profit of $692 million, or $1.28 a share. Excluding the resolution of a legacy-tax matter, per-share earnings rose to $1.63 from $1.28 a year earlier. In May, the company forecast a per-share profit of $1.57 to $1.62.
Net sales rose 17% to $4.22 billion, while analysts surveyed by Thomson Reuters predicted earnings of $767 million on revenue of $4 billion.
Monsanto's seed business--the company's biggest top-line contributor--saw an 18% increase in sales to $3.13 billion. The segment's growth was led by its corn and soybean portfolios, which offset weaker earnings in its vegetable-seed business. Cotton sales were up slightly.
