UPDATE 2-Monsanto shares fall as new corn seed disappoints

* Shares fall more than 9 pct

* Corn seed fails to meet yield expectations (adds Monsanto comment, updates share fall)

KANSAS CITY, Sept 28 (Reuters) - Shares in Monsanto Co MON.N fell sharply on Tuesday amid mounting reports about disappointing harvest results of the company's new highly touted corn seed.

Shares were off more than 9 percent in afternoon trading at $48.01, more than 44 percent off the year high of $87.06 seen in January. The losses added to a drop of 4 percent on Monday and marked Monsanto shares as one of the largest decliners by percentage on Tuesday.

The declines came as harvesting of the new U.S. corn crop accelerated and reports that Monsanto’s new SmartStax corn seed failed to meet expectations.

SmartStax offers farmers combined insect protection technology along with weed and grass control traits, and Monsanto had high hopes that the product would help it win back customers and compete against rival DuPont DD.N, which has gained market share.

Though harvesting of the new U.S. corn crop is still ongoing, SmartStax appears to be lagging other corn seed products in yield, according to analysts monitoring this fall’s harvest results.

“While it is still early to assess the field data... the initial data is weaker than we expected,” Jefferies & Co. analyst Laurence Alexander said in a note to investors.

Early analysis indicated that in the top U.S. corn-growing state of Iowa SmartStax corn yields were lagging competing products with an overall underperformance estimated at 3-5 percent, Alexander said in his report.

Alexander and other analysts have started speculating that Monsanto may need to start following through on a “satisfaction promise” to farmers.

In launching SmartStax, Monsanto said it would provide farmers who are not satisfied with the performance of SmartStax on their farm with an account credit for their 2011 seed purchase.

Monsanto spokeswoman Kelli Powers said it was “still early,” with only about 10 percent of planted SmartStax harvested to date.

She did not address how making good on the satisfaction promise could impact the company.

Monsanto is the world’s largest seed company, but has struggled with a range of competitive and customer concerns in recent months, and has recently revamped its pricing and product mix. (Reporting by Carey Gillam; Editing by Alden Bentley)