Aug. 6 (Bloomberg) -- Monsanto Co., the world's biggest seed producer, said soybeans engineered to increase yields are surpassing the company's expectations in field tests.

The beans boosted output as much as 10 percent at 10 sites in Argentina, topping Monsanto's target of 5 percent to 7 percent gains, the St. Louis-based company said today in a statement. Monsanto is testing an additional 60 experimental varieties of high-yielding soybeans in the U.S.

Chief Executive Officer Hugh Grant joined with BASF AG in March to develop crops that have higher yields and resist dry conditions. Drought-tolerant corn produced as much as 12 bushels more an acre than controls during water-stress field tests in Argentina, Monsanto said. The company's drought-tolerant corn is in its fifth year of U.S. field tests.

``Our first-generation drought tolerant corn trait is one of the centerpieces of our pipeline,'' Chief Technology Officer Robb Fraley said in the statement. ``Beyond this first generation, the combined capabilities in our collaboration will help us develop more leads and even better performing upgrades.''

Shares of Monsanto fell 17 cents to $63.91 at 4:26 p.m. in New York Stock Exchange composite trading. They have gained 41 percent in the past year.

Engineered canola had 15 percent more output than control plants in the first year of field testing, Monsanto said. About 60 additional varieties are being tested in the U.S. and Canada this year, the company said.

Field Test

Soybeans modified to resist dicamba weed killer are meeting expectations in their second year of field tests, the company said. Dicamba resistance will be combined with Monsanto's second-generation technology for resistance to Roundup herbicide, called Roundup RReady2Yield.

Roundup RReady2Yield soybeans have received U.S. and Canadian regulatory approvals, Monsanto said last week. The product, whose genes will form the base of all of the company's soybeans, may be commercialized in 2009, pending import approvals from key nations.

Monsanto also said it is progressing on making healthier oil in its third-generation Vistive soybeans, which are designed to produce health benefits similar to olive oil. First- generation Vistive soybeans were planted on as many as 2 million acres (809,371 hectares) in the U.S. this year.

``With the traits in development today, soybeans are poised to emerge from the shadow of corn in terms of technology application,'' Fraley said in the statement.

Monsanto now sells corn seeds with as many as three genetic benefits, including resistance to weed killer and two types of insects, while soybeans are modified to resist only Roundup weed killer.

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

Last Updated: August 6, 2007 16:38 EDT