Monsanto’s SmartStax Corn Yield So Far Lags Forecast

Monsanto Co., the world’s biggest seed company, said early harvest data show some of its new SmartStax corn hybrids are missing projections by yielding less than cheaper seeds that use older technology.

Some SmartStax seeds, which have eight added genes to protect against weeds and bugs, “have shown yield variability below” VT Triple seeds, which have three extra genes, St. Louis-based Monsanto said today in a statement. Yields of other SmartStax hybrids are on a par with the so-called triple stacks, the company said.

Monsanto, led by Chief Executive Officer Hugh Grant, in December promoted SmartStax, its most expensive seed, as “the highest yielding corn product available,” topping triple stacks. The company is counting on SmartStax to help boost profit as much as 17 percent a year after earnings from Roundup herbicide collapsed as competitors cut prices on generic versions.

“Some farmers are wondering whether there might possibly be a yield drag” with the insertion of multiple genes, Mark Gulley, a New York-based analyst at Soleil Securities, said today in a telephone interview. “The significance of the data is still limited because the harvest hasn’t been completed yet in the heart of the Corn Belt.” He rates the shares “hold.”

Early Results

Monsanto said the data reflects less than 10 percent of the U.S. corn harvest. SmartStax corn is mostly growing in the northern Corn Belt where the harvests haven’t begun, the company said.

Monsanto fell 69 cents, or 1.2 percent, to $55.54 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 32 percent this year.

Monsanto still expects SmartStax will yield 5 percent to 10 percent more than triple stacks when all the data is collected because the seeds offer better insect resistance, genetic improvements and the ability of farmers to reduce plantings of conventional corn in a so-called refuge, said Kelli Powers, a spokeswoman.

SmartStax reduces the conventional-corn refuge to 5 percent of biotech acres from 20 percent for earlier technologies. Such refuges are required by regulators to prevent bugs from developing resistance to pesticides made in the modified corn.

SmartStax traits are working as expected, reducing insect damage more than 70 percent, the company said.

‘Terrible Weather’

Charlie Rentschler, an analyst at New York-based Morgan Joseph & Co. who today cut his rating on Monsanto shares from “buy” to “hold,” said in a report that SmartStax corn on his southern Indiana farm yielded 10 percent less than triple-stack corn amid “terrible weather” in the weeks before harvest.

Rentschler said he still would pay the premium to plant SmartStax again because yields appeared promising before drought set in.

Monsanto said its VT Triple and VT Triple Pro corn seeds are yielding as forecast, with the latter product’s output exceeding competing seeds by more than eight bushels an acre.

Soybean harvest data isn’t yet available, Monsanto said.

The company is posting updated harvest data from 15,000 U.S. comparisons of seeds throughout the season to help growers evaluate products.

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

To contact the editor responsible for this story: Simon Casey at scasey@bloomberg.net.

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