April 2 (Bloomberg) -- Monsanto Co., the world's largest seed producer, said fiscal second-quarter profit more than doubled as U.S. farmers bought more Roundup weed killer and genetically modified corn seed.

Chief Executive Officer Hugh Grant is taking market share from rivals such as DuPont Co. by spending more to develop new varieties of corn, soybean and cotton seeds. Higher prices will help double gross profit from Roundup this year, Grant said on a conference call.

``They are executing flawlessly,'' said Mark Demos, who manages about $590 million in the Quality Growth Fund, including 150,000 Monsanto shares, at Fifth Third Asset Management in Minneapolis. ``With high crop prices, people are going to spend money on what can give them better yields, and Monsanto is that company.''

Net income in the three months through February rose to $1.13 billion, or $2.02 a share, from $543 million, or 98 cents, a year earlier, St. Louis-based Monsanto said today in a statement. Profit excluding some items was $1.79 a share, topping the $1.75 average estimate of 13 analysts surveyed by Bloomberg.

Net income includes a 23-cent gain from the settlement of Monsanto's claims related to Solutia Inc.'s emergence from bankruptcy.

Monsanto last week raised its 2008 profit forecast for the third time and today repeated that earnings in the year ending Aug. 31 will be $3.15 to $3.25 a share, excluding the Solutia- related gain. The average analyst estimate was $3.30 a share.

Monsanto fell 96 cents to $112 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have more than doubled in the past year.

Share Volatility

The shares may be down because investors aren't sure grain prices will continue to rise, Demos said in an interview. Corn futures, which hit a record today, have climbed 68 percent in the past year, and soybeans have gained 60 percent.

Sales jumped 45 percent to $3.78 billion, boosted by global demand for Roundup and modified corn seeds in the U.S. and Brazil, Monsanto said. Gross profit from seeds, including genetics licensed to competitors, gained 37 percent to $1.63 billion, as corn-seed earnings rose $383 million.

``Between now and 2012, I think we're the only company in agriculture that can point to consistent growth irrespective of swings in commodity prices, fluctuations in planted acres or the usual ups and downs in the popularity of things like ethanol,'' Grant said on the call with analysts and investors.

Roundup Profit

Gross profit from Roundup more than tripled to $478 million as the company raised prices to as much as $18 a gallon, Grant said. Demand is rising as some farmers plant more Roundup- resistant crops and others choose to save fuel by spraying the weed killer rather than tilling soil, he said. Gross profit from the product will stay at about $1.8 billion for the next five years, topping an earlier estimate that it would reach $1.2 billion by 2012, Grant said.

Roundup profit is unaffected by rising prices for phosphorous, a key ingredient in the weed killer, because Monsanto has its own phosphorus mine, Grant said.

Monsanto reduced its 2008 forecast for free cash flow to $1.3 billion, from $1.4 billion, because of spending to boost capacity at a Roundup plant in Luling, Louisiana. The project will cost $196 million through 18 months and increase Monsanto's total capacity for glyphosate-based weed killer by more than 10 percent, the company said in a separate statement.

Market-Share Gains

Monsanto said it won an additional 3 to 5 percentage points of the U.S. corn-seed market this year, confirming earlier forecasts. That includes a gain of as much as 3 percentage points in the Dekalb brand, ``most of which appears to be coming at the expense of other large national brands,'' Grant said on the call.

Monsanto last year surpassed DuPont's Pioneer unit as the largest producer with 32 percent of U.S. corn-seed sales. DuPont had 30 percent and has pledged to hold its share steady this year. Monsanto said its share this year will be 35 to 37 percent.

So-called triple-stack corn seeds will be planted on as many as 28 million acres in the U.S. this year, up 39 percent from 2007, Monsanto said, increasing its February forecast by 1 million acres. Triple stacks, the company's most profitable seeds, are engineered to resist Roundup weed killer and insects above and below ground.

Total gross profit may double to $8.5 billion by 2012 because of surging demand for genetically modified seeds that boost crop yields, Monsanto said in November. Better-than- expected Roundup sales may boost profit to more than $9 billion by then, and the company will formally revise its 2012 forecast at the end of the U.S. planting season, Grant said today.

U.S. farmer incomes last year jumped 48 percent to a record $87.5 billion, according to the U.S. Department of Agriculture. Incomes will continue to rise in tandem with global grain demand, Grant said in a Feb. 6 interview. Millions of Chinese are adding meat to their diets as they migrate to cities, boosting grain demand for years to come, he said.

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

Last Updated: April 2, 2008 16:29 EDT