Monsanto FY 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

The industry will face a more challenging environment next year

“This year, the industry will certainly face the headwinds of a more challenging agricultural environment.”

We have to become more efficient in the way we produce agriculture

“Global grain demand is expected to grow every year through the end of the decade. The reality is with grain stocks replenished from this year’s harvest, we’re in a better position to meet normalized demand; and there are already the first signs of increased use across exports, ethanol, and animal feed. And given availability, costs in the environmental footprint, I think new acres isn’t likely to be the long-term answer to this demand.

So, the world needs to increase the rate of gain seen in the last five years by around 2x in corn and by 5x in soybeans just to meet baseline demand. That means yield and innovation are going to matter more than ever, and that’s who we are. At company level, we’ve more clear catalysts and more levers across our business than we’ve ever had before.”

Farmers are focused on harvest right now not ordering for next year yet

“This time Vincent as I mention the farmers are totally focused on getting harvest, I don’t see anything. It doesn’t say it’s going to be a pretty challenging harvest for our customers this year. The weather continues to be wet, there is a lot of rain forecasted again for later this week and it’s going to be difficult for them to get it out, that’s going to be their primary focus. So I would expect the things will continue to be slow as we go through the ordering season with their primary focus being on getting the crop out of field.”

Outlook for next year’s corn

“our assumptions are on acres, who knows we’re sitting here in the fall and we don’t have the crop harvested yet but our plan and our operating assumptions are that acres will be about flat with last year. So in the U.S. we said all the way through last year we would be happy if the crop had 9 on front if there is 90 something it looks as if it probably had an 8 in front of it. And as we go into next year plus or minus I think acres will be about the same. The Latin American markets are still playing out in front of us but there is no doubt that acres are going to be down the question is how much. And a lot of that is just them watching U.S. harvest.”