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BUSINESS & SEEDS: Monsanto and Sinochem talk about glyphosate-GE crop deal



                                  PART 1


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TITLE:   MONSANTO, SINOCHEM IN DEAL TALKS

SOURCE:  The Wall Street Journal, USA

AUTHOR:  Dennis K. Berman, Gina Chon & Scott Kilman

URL:     http://online.wsj.com/article/SB10001424052702303678704576438151534829450.html?mod=rss_us_homepage_articles

DATE:    11.07.2011

SUMMARY: "Chemicals conglomerate Sinochem Corp. is in advanced discussions with Monsanto Co. to deepen their ties significantly, people familiar with the discussions said, an important sign of China?s growing appetite for U.S. crops and biotechnology. [...] With a market value of $40 billion, Monsanto dominates crop biotechnology, a 15-year-old market the St. Louis company essentially created. Beijing-based Sinochem [...] is the nation?s largest importer and distributor of fertilizer and a large seed producer. Begun as a state-owned enterprise in 1950, the government-owned company today has more than $50 billion in annual revenue with operations that include real estate and finance."

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MONSANTO, SINOCHEM IN DEAL TALKS

Crop-Technology Company Negotiates With Sinochem Over Use of Farm Products Chemicals conglomerate Sinochem Corp. is in advanced discussions with Monsanto Co. to deepen their ties significantly, people familiar with the discussions said, an important sign of China?s growing appetite for U.S. crops and biotechnology.

The two companies have been in talks for months, the people said. It was unclear what form an agreement might take, though arrangements could include a large joint venture, the sale of a minority stake or Sinochem assuming a larger role marketing Monsanto products in China.

Discussions have been difficult, the people said, because of economic and political sensitivities of moving the companies closer together. ?You have to be very cautious and careful in these situations,? one of the people familiar with the matter said. ?It?s all very sensitive.?

A Sinochem spokesman said he wasn?t aware of a deal involving Monsanto and declined further comment. Monsanto also declined to comment.

With a market value of $40 billion, Monsanto dominates crop biotechnology, a 15-year-old market the St. Louis company essentially created.

Monsanto has at least one of its patented genes in about 90% of all the soybeans grown in the U.S. and in about 80% of U.S. corn. Farmers pay a big premium for seeds containing such genes because they equip plants to, for example, tolerate exposure to Monsanto?s popular Roundup herbicide or produce their own insecticides.

Beijing-based Sinochem has a similar role in China, where it is the nation?s largest importer and distributor of fertilizer and a large seed producer. Begun as a state-owned enterprise in 1950, the government-owned company today has more than $50 billion in annual revenue with operations that include real estate and finance. But Sinochem?s primary role is to help ensure food security in the world?s most populous nation, which increasingly means expanding internationally to procure supply lines and technology to feed 1.34 billion.

Although China is the world?s largest producer of wheat and rice, and the second-largest producer of corn, behind the U.S., the country isn?t producing enough. That forces China to import more crops?a rare category in which the U.S. is a net exporter to China?to keep volatile food prices from stirring up discontent.

China?s ability to grow more grain is limited. There isn?t much arable land that isn?t already under plow and the water table in some areas is falling amid heavy irrigation. The surest way for China greatly to increase its harvests is to raise field productivity?an area ripe for improvement. Chinese corn farmers produce an average of 85 bushels an acre compared with about 158 bushels for U.S. farmers, according to the U.S. Agriculture Department.

A big differences between U.S. farmers and their Chinese counterparts is crop biotechnology. Outside of cotton and papaya, few of China?s crops are genetically modified. In the U.S., where genetically modified seeds were introduced commercially in the mid-1990s, the vast majority of the corn, soybeans and cotton are bioengineered.

The Chinese government is doing extensive crop-biotechnology research, but the country remains far behind the U.S. in terms of commercialization partly because Beijing, leery of ceding control of its food supply to outsiders, has wanted to control the technology.

Monsanto has had a hybrid-corn-seed joint venture with Sinochem?s China National Seed since 2001. But Monsanto, which agreed in 2008 to pump an additional $84 million into the venture, is a minority partner. A senior Monsanto executive complained last year that the Chinese government was continuing to ban foreign companies from investing in agricultural biotechnology in China.

Chinese companies have been eager to develop close ties to U.S. agricultural companies. China?s Cofco Ltd. owns a 4.2% stake in U.S. pork processor Smithfield Foods Inc. DuPont Co.?s seed unit has corn-breeding joint ventures in China.

Sinochem has made no secret of its desire to strengthen its agricultural technology, saying in its 2010 annual report, ?We are committed to developing ourselves into China?s largest and the world?s leading provider of agricultural inputs and services.?

The Chinese government is concerned about food security because the expanding economy is creating more middle-class families who want to upgrade their diets by eating more meat and drinking more milk, which requires crops for feeding livestock. China imports nearly a quarter of the U.S. soybean crop, in part to fatten hogs and chickens craved by China?s middle class.

China?s textile mills are responsible for nearly a third of U.S. cotton exports. Corn prices moved higher last week at the Chicago Board of Trade because traders believed China is on the verge of importing millions of metric tons of U.S. corn.

Should Sinochem and Monsanto strike a new alliance, they will have to proceed carefully. Countries including Canada, the U.S. and Australia have grown more protective of their home industries, fearing the leakage of significant technology to foreign buyers, notably China. Chinese telecommunications company Huawei Technologies Co. dropped its offer for 3Leaf Systems Inc. this year after the U.S. Committee on Foreign Investment in the U.S. opposed the deal.

Protecting natural resources has been a particular concern for governments. A $5.5 billion deal for Canada?s Ecana Corp. to sell a 50% stake in a natural-gas field to China?s PetroChina Co. fell apart last month, partly because of politics, people familiar with the matter said.

?James T. Areddy contributed to this article.



                                  PART 2

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TITLE:   PLANT A MONSANTO SEED AND LET IT GROW

SOURCE:  Forbes, USA

AUTHOR:  Tracey Ryniec

URL:     http://blogs.forbes.com/zacks/2011/07/06/plant-a-monsanto-seed-and-let-it-grow/

DATE:    06.07.2011

SUMMARY: "Monsanto Company is back in the game after a tough couple of years where earnings tumbled. The company recently raised full year guidance after reporting a strong fiscal third quarter. This buy is expected to grow earnings by 18% in fiscal 2011. [...] Its dividend is currently 28 cents a quarter, which produces a yield of about 1.5%. Monsanto was one of the few companies that didn?t cut its dividend during the great recession, even as earnings declined."

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PLANT A MONSANTO SEED AND LET IT GROW

Monsanto Company is back in the game after a tough couple of years where earnings tumbled. The company recently raised full year guidance after reporting a strong fiscal third quarter. This buy is expected to grow earnings by 18% in fiscal 2011.

Monsanto is an agriculture company that primarily focuses on seeds, including genetically modified seeds, and herbicides. It offers farmers a range of seeds including corn, soybeans, cotton, wheat, canola and sugar cane.

Monsanto Surprised by 13.5% in the Fiscal Third Quarter

On June 29, Monsanto reported its fiscal third quarter results and beat the Zacks Consensus Estimate by 15 cents. Earnings per share were $1.26 compared to the consensus of $1.11. It was the third beat in the last four quarters.

Sales jumped 21% to $3.6 billion from $3 billion a year ago.

All of its seed segments saw increased year over year sales, including its biggest seed division, corn, which rose to $1.12 billion from $1.02 billion from the third quarter last year.

Raised Guidance for Fiscal 2011

The third quarter is the company?s most significant of the year due to planting cycles. The U.S. selling season is almost complete and farmers in Latin America have begun to harvest their crops.

Therefore, Monsanto has a pretty good idea on how fiscal 2011 is going to look now that the third quarter is completed.

The company raised its full year guidance to the range of $2.84 to $2.88 from its prior guidance of $2.72 to $2.82 per share.

Zacks Consensus Estimates Rise

Given the beat and the raise in full year guidance, analysts moved to raise fiscal 2011 estimates.

In the last week, 12 estimates have been revised higher, pushing the Zacks Consensus up to $2.86 from $2.80 per share. That is earnings growth of 18%.

For fiscal 2012, 7 estimates have moved higher and 2 have been cut since the earnings results. But despite the cuts, the Zacks Consensus has risen to $3.37 from $3.34 per share in that time.

This is further earnings growth of 17.8%.

An Earnings Turnaround Coming?

Could this be the start of an earnings turnaround?

Earnings tumbled the last few years as sales of its Roundup herbicide, which had once been a driver of growth, fell sharply due to generic competition and pricing pressures.

But analysts are now expecting double digit growth for this fiscal year and next.

Rewarding Shareholders

Meanwhile, Monsanto has been rewarding shareholders through a share repurchase program as well as a dividend payout.

It currently is funding a 3-year $1 billion share repurchase program and has already spent $487 million in the last 3 quarters.

Its dividend is currently 28 cents a quarter, which produces a yield of about 1.5%. Monsanto was one of the few companies that didn?t cut its dividend during the great recession, even as earnings declined.

Monsanto Has ?Momentum?

The company said in the third quarter that its results ?validated the momentum? it felt.

While shares aren?t ?cheap? by valuation standards, with a forward P/E of 25, investors get double digit growth with a company focused on returning cash to shareholders through both the share repurchase and the dividend payout.



                                  PART 3

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TITLE:   PUERTO RICO WILL GET BOOST FROM MONSANTO EXPANSION

SOURCE:  Kentucky.com, USA

AUTHOR:  McClatchy Newspapers, USA, by Adam Sege

URL:     http://www.kentucky.com/2011/06/29/1792967/puerto-rico-will-get-boost-from.html

DATE:    29.06.2011

SUMMARY: "Monsanto, the agricultural technology company, plans to announce on Wednesday a $4.3 million expansion of its research and development labs in Puerto Rico, a boost to the island?s economy. Monsanto executives plan to expand one of the company?s two Puerto Rico work sites, constructing a 20,000-square-foot home for new research and development laboratories. Monsanto?s research on the island focuses on corn and cotton, and it also grows corn and soybean seeds for the mainland United States."

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PUERTO RICO WILL GET BOOST FROM MONSANTO EXPANSION

WASHINGTON ? Monsanto, the agricultural technology company, plans to announce on Wednesday a $4.3 million expansion of its research and development labs in Puerto Rico, a boost to the island?s economy.

Monsanto executives plan to expand one of the company?s two Puerto Rico work sites, constructing a 20,000-square-foot home for new research and development laboratories. Monsanto?s research on the island focuses on corn and cotton, and it also grows corn and soybean seeds for the mainland United States.

The expansion will create 45 jobs and replace temporary facilities with permanent ones, said Kimberly O?Brien, a Monsanto spokeswoman.

The announcement sends a positive signal about the U.S. territory?s economy, particularly after other recent life science investments, said Jose Perez-Riera, Puerto Rico?s commerce secretary.

?If you have one company that decides to do it, it may just be that that company decided to do it,? Perez-Riera said during a visit to Washington for a biotech conference. ?If you start getting others, it means that the business climate for that type of activity works.?

At last year?s biotech conference, Pioneer Hi-Bred, an Iowa-based seed company, announced that it was adding a second research and development center in Puerto Rico.

Since Gov. Luis Fortuno took office in 2009, he?s implemented several programs aimed at guiding the island from a manufacturing economy to what Perez-Riera calls an ?innovation economy.? New tax incentives, in particular, are catching the interest of outside companies, Perez-Riera said.

Monsanto?s expansion will take place in Juana Diaz, a town of about 50,000 in southern Puerto Rico, and will bring the number of full-time Monsanto employees on the island to nearly 200. Hundreds more employees work on a seasonal basis.

The company also hopes to partner with two local agricultural universities, including hiring some of their graduates, O?Brien said.

Unlike the mainland United States, Puerto Rico has three to four distinct growing seasons, and the U.S. territory operates under the same regulatory structure as the rest of the United States, making it convenient for companies, O?Brien said.

The announcement came about two weeks after President Barack Obama traveled to Puerto Rico in the first visit by a sitting U.S. president in 35 years.

Despite the positive signs Perez-Riera highlighted, the island is still emerging from a recession deeper and longer than the one that hit much of the mainland U.S.

Sixteen percent of Puerto Ricans were unemployed last month, the Bureau of Labor Statistics reported. By comparison, of the 50 states, Nevada had the highest unemployment rate last month, at 12.1 percent.

Justin Velez-Hagan, the national executive director of the National Puerto Rican Chamber of Commerce, said he welcomed new investment in Puerto Rico as an encouraging sign.

?If any company?s willing to invest down there, it means they have some confidence in the government,? he said.