January 4, 2010 / 10:49 PM / 8 years ago

PREVIEW-Monsanto, Mosaic seen looking ahead for profits

* Monsanto seen at breakeven, Mosaic at 35 cts/share

* Seen focusing on coming rebound

NEW YORK, Jan 4 (Reuters) - Seed company Monsanto Co (MON.N) and fertilizer maker Mosaic Co (MOS.N) will be looking to steer investors' gaze to the rebound in agricultural markets and away from the dismal previous quarter when the two companies report results this week.

Markets for corn and wheat have strengthened, and with the global economy returning to sound footing, both companies are likely to highlight the opportunities they have to grow over the coming year.

Still, Wall Street expects Monsanto's latest fiscal quarter to show further further erosion at its herbicide business, which has seen prices cut in half as competition in that market increases.

Analysts are expecting Monsanto to post breakeven results on Wednesday morning for the quarter ended Nov. 30, with a range between a profit of 11 cents per share to a loss of 10 cents, according to Thomson Reuters I/B/E/S. The company earned 98 cents per share a year before.

Farmers in North America will not provide much help yet for the leading producer of genetically modified seeds, but the demand in countries like Brazil is likely to be robust.

"The (U.S.) harvest was late this year, so many farmers haven't made their purchasing decisions yet," said Chris Shaw, analyst at Ticonderoga Securities.

"The Latin American markets have been pretty good for all the seeds guys," he added.

Monsanto has said it would hike seed prices as much as 10 percent overall in 2010 but keep some of its hybrid seed prices flat for customers unwilling to buy the more expensive genetically modified seeds.

Farmers have long complained about Monsanto's price hikes, and the company is the subject of a U.S. Justice Department probe about allegations it illegally dominates the market. The company has said its price hikes were needed to continue its research and innovations for the agriculture markets.

For Mosaic, rebounding prices for potash and phosphates are an indication that demand was returning to the sector, a welcome relief to the company that saw its sales tumble 66 percent for the quarter ended Aug. 31.

"It's a bad year coming to an end. (The market) will probably pay a lot more attention to their outlook," said Edlain Rodriguez, an analyst at Broadpoint Amtech.

Mosaic, which is likely to record charges for shutting two phosphate plants, is expected to post earnings of 35 cents for its fiscal second quarter, according to Thomson Reuters I/B/E/S, with a range between 20 and 47 cents. That is far below the $1.12 it earned a year earlier.

Potash prices had suffered in 2009 as global demand slumped by 50 percent, and North American farmers are likely to be big buyers this year to try to take advantage of corn and soybean prices.

"Grain prices are still very supportive so the incentives are there," Rodriguez said.

But the recent contract signed by Belarusian Potash Co with Chinese buyers for prices at $350 per metric ton set a floor in the market that should give some support to the market, even if those levels were low historically.

Reporting by Matt Daily; Editing by Phil Berlowitz

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