SEED makers face corn retrenchment
Several agricultural stocks have pulled back in recent trading, as the boom in commodities loses some of its froth. But there may be more at work here than simply chasing some of the speculative money out of the farm sector. Fundamentals may be changing in ways that could cause some dislocation in the business of selling seeds to farmers. Shares of Monsanto (MON) fell sharply in Thursday’s early trading, though the stock has retraced a big chunk of the intraday weakness. In a research note, Citigroup said seed makers have been forced to discount prices of corn seed. On the supply side, corn seed makers, who produced less than the farm economy wanted during last year’s record-setting corn-planting season, amped up production heading into the 2008 planting campaign. Off the record 94 million acres that farmers devoted to corn last year, seed makers prepared to release enough seed to cultivate 95 million acres this year. However, with corn prices easing, while other agricultural commodities rise, some of the presumed corn acerage could actually be given over to soybean crops. Citi said farmers, who planted 66 million acres of soy last year, could boost that total to 72 million acres. Some of that increase would come at the expense of corn planting, which could decline to 88 million acres this year. Farmers also face pressure on the input side, as agricultural chemicals rise in price, another factor that could take the edge off the planting campaign.
In the spirit of full disclosure .... I just recently bought a nice bag of SEED and will hold it long term. SEED is trading at its 5 YR low right now. 
