The Stocks That Benefit When Drought Kills Midwest Corn Farmers
Farmers planted more corn this year than they have since the 1930s. But as the New York Times reports, corn plants are withering away in this year’s hot, dry weather. In some areas, the corn plants look more like onions.
That’s awful news for farmers, but it’s looking like a boon for seed companies. A bad year like this one could push farmers to upgrade next year to drought-tolerant seeds. As temperatures have risen, so have stocks at DuPont (DD), Swiss agribusiness company Syngenta (SYT) and, of course, Monsanto (MON).
Monsanto has spent years and millions of dollars developing genetically modified drought-tolerant corn seeds with BASF. This year 250 farmers are testing the seeds, which are scheduled for release in 2013. In June a group called The Union Of Concerned Scientists said the seeds looked ineffective, more hype than help. But Monsanto said to let farmers make that call. And on its third-quarter earnings call Chief Hugh Grant told investors Monsanto’s genetics tend to do well in hot, dry weather.