Jan. 3 (Bloomberg) -- Monsanto Co., the world's largest seed producer, more than doubled first-quarter profit and raised this year's earnings forecast after demand for food and biofuels boosted corn plantings in South America.

Net income rose to $256 million, or 46 cents a share, in the three months ended Nov. 30, from $90 million, or 16 cents, a year earlier, St. Louis-based Monsanto said today in a statement. The performance topped the 35-cent average estimate of 10 analysts surveyed by Bloomberg.

Monsanto gained the most in 18 months and reached a record in New York Stock Exchange trading after corn-seed sales doubled to farmers in Brazil and Argentina and prices for Roundup weed killer surged. Chief Executive Officer Hugh Grant said rising biofuels production and food demand from China will continue to bolster crop prices.

``Operating margins just exploded,'' Mark Demos, who helps manage $21.9 billion at Fifth Third Asset Management, including 442,000 Monsanto shares, said in a phone interview from Minneapolis. ``When you are in a strong up-cycle, it can be stronger than even the executives think.''

Monsanto raised its full-year forecast to $2.50 to $2.60 a share from a November range of $2.20 to $2.40. Twelve analysts in the survey had estimated $2.59, on average. The forecast excludes a potential per-share gain of 22 to 24 cents in the second quarter should Solutia Inc., a chemical maker spun off from Monsanto in 1997, emerge from bankruptcy.

Rising Crop Prices

Corn, soybean and wheat stockpiles all are near 30-year lows, and U.S. grain exports to China this year will exceed shipments to Europe for the first time, Grant said on a call with analysts and investors. Soybean futures are at the highest since June 1973 and corn is trading near the highest in a decade.

``The shift to a demand-driven ag economy I think is real and here to stay,'' Grant said on the call. ``We are the only ag company that's made a big bet in this non-cyclical portion of the farmer's expenditures.''

Monsanto rose $9.45, or 8.5 percent, to $120.92 at 4:26 p.m. in New York composite trading. That's the highest closing price ever and the biggest gain since June 29, 2006. The shares more than doubled in 2007, the ninth-biggest gain among members of the Standard & Poor's 500 Index.

The U.S. company's improved outlook helped lift the shares of its Swiss rival Syngenta AG, whose American depositary receipts rose $4.32, or 8.5 percent, to $54.95. Each ADR represents one-fifth of a Syngenta share traded in Zurich.

`Exciting Alternative'

``In an equity market struggling with the implications of slowing economic activity in the U.S. and the possible recoupling abroad, we believe the ag sector offers an exciting alternative, and once again Monsanto has set the bar high for execution,'' Goldman Sachs Group Inc. analyst Robert Koort said today in a report. Koort, the top-rated specialty-chemicals analyst in an Institutional Investor survey, recommends buying the shares.

Latin American seed sales, higher prices for Roundup and early 2008 orders from U.S. farmers helped boost first-quarter sales 36 percent to $2.1 billion, Monsanto said. Gross profit rose to 50 percent of sales from 44 percent a year earlier, the company said.

Gross profit from farm chemicals more than doubled to $560 million as Roundup demand rose 20 percent and prices exceeded the historical range of $11 to $13 a gallon, Chief Financial Officer Terry Crews said on the conference call. Roundup gross profit will exceed $1 billion this year, up from an earlier forecast of $950 million, he said.

Seed Sales

Gross profit from seeds and genetic-technology licenses rose 19 percent to $495 million, led by corn, Monsanto said. The bulk of seed sales will occur in the company's second and third quarters when warm weather permits plantings by farmers in the Northern Hemisphere.

The company's Dekalb corn-seed brand may grab as much as an additional 3 percentage points of U.S. market share for a seventh straight annual gain, Monsanto said. U.S. farmers may plant 88 million acres of corn this year and 67 million acres of soybeans, Grant said.

Domestic sales of so-called triple-stack corn seeds, which have three genetic modifications to protect against insects and weed killer, may rise to as much as 27 million acres, or 60 percent of Monsanto's U.S. total, from 17.6 million acres last year, CFO Crews said.

Each additional 1 million acres of triple-stack seed sales adds 2.5 cents to per-share earnings, Morgan Stanley & Co. analyst Vincent Andrews said today in a report. He rates the shares ``overweight.'' Monsanto previously predicted half of sales would be triple-stack seeds, its most profitable product.

Global Demand

Monsanto, which doubled gross profit in three years, expects to double earnings again in five years because of rising global demand for genetically modified seeds that boost yields of corn, soybeans and cotton, Grant said, repeating a November forecast.

Ten experimental biotech seeds were added to or advanced in the company's four-step research pipeline, Monsanto said. Drought-resistant corn and soybeans with a nutritional profile similar to olive oil each entered the regulatory-approval stage and could be sold to farmers in two to five years, according to Monsanto projections.

``We are right at the edge of some of the most revolutionary technology this industry has ever seen,'' Chief Technology Officer Robb Fraley said on the call. ``We are looking to accelerate and extend our lead at every turn.''

Jason Dahl, a portfolio manager who helps manage $1.4 billion at Victory Capital Management in New York, said Monsanto's research pipeline is advancing as rapidly as any he has seen in his years covering the biotechnology drug industry.

Argentina Sales

First-quarter sales in Argentina benefited from sales of double-stack corn seed, which combines Roundup tolerance with resistance to the corn borer insect, Crews said. Argentina approved the technology last year.

Brazil doesn't allow genetically modified corn seeds to be planted, and Monsanto's sales fell to 30 percent of the market last year, a drop of 3 percentage points, the company said in November. Monsanto acquired 10 percent of the market in September with the $100 million purchase of Brazil's Agroeste Sementes.

Brazil is the second-biggest soybean producer after the U.S. and the third-largest corn producer behind the U.S. and China.

To contact the reporter on this story: Jack Kaskey in New York at jkaskey@bloomberg.net.

Last Updated: January 3, 2008 16:39 EST