* Monsanto seen at breakeven, Mosaic at 35 cts/share
* Seen focusing on coming rebound
NEW YORK Jan 4 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
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
"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)