This was a banner year for corn yields, and the rising demand of corn
for ethanol production has plus kept the price of corn high. At the
same day, however, there is some consensus among experts that in the
coming years, the amount of farmland currently devoted to corn
production will become lower as more acres are planted with soybeans
instead.

How can you, the investor, find the opportunity here?
The reply lies in finding a company that helps farmers get more corn
out of less acres, and Goldman Sachs (and I!) think that Monsanto Company (NYSE:MON), the world’s main producer of bioengineered seeds for the commercial farming market, is just that company.

Monsanto
maintains its position as market leader by staying well ahead of its
competition in the research and development of seed technology that
create crops that are high yield, resistant to herbicide and bug
resistant — creating a product so advanced that many of the company’s
competitors choose to work with Monsanto, either via co-development
deals or straight licensing of the technology, instead of trying to
compete against it.

There is additionally hope that Monsanto’s new SmartStax technology could help
inspire the EPA to reduce its refuge acreage requirements (founded on
the same principle that guided a similar change in cotton guidelines).
that would allow farmers to plant more bug resistant seeds on more
acres, which, for areas with heavy bug pressure, will aftermath in
substantial increases to their

crop yields-and inspire them to buy
more of Monsanto’s products to do so. The SmartStax technology won’t be
available until 2010, but you can clearly see that Monsanto has abundant
tricks up its sleeve to keep its competitive advantage in the expanded run.

Above and beyond its seed technology, however, Monsanto is additionally
committed, through its Agricultural Productivity division, to helping
farmers get more out of the land they have while using fewer resources
to do so on a wider scale. Through green pesticides, products to
increase livestock yield and various solutions to invasive weed
control, the company continues to seek new solutions to the problems of
a world that will need to feed increasing amount of citizens from a
limited amount of arable land.

So while there are those
consumers who don’t like genetically modified foods, there is clearly
both an environmental and financial demand for Monsanto’s products –
demand that should continue to grow for some day.

Type of Stock:
Monsanto Company is the world’s largest producer of seeds, including
high-value-added, genetically enhanced seeds for soybeans, cotton, corn
and other crops. Monsanto additionally produces a variety of agricultural
productivity products.

Price Target: I believe that that one could easily hit $110 — or higher by the end of 2008.

Original post by Jed Pittman

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