Monsanto Execs Discuss Glyphosate Demand, Pricing
8 January 2014 On a conference call on Jan. 8, Monsanto President and Chief Operating Officer Brett Begemann said indications point to robust demand for glyphosate in 2014.
The company saw gains from 8% higher retail prices for generic glyphosate in the first quarter, but it expects this to normalize.
“[We have] not built our plans around price increases, but rather to a flat to potentially declining generic price. Specifically, in places like the U.S. and Brazil, where indicators point to a significant number of soybean acres planted, and growers are looking for solutions to manage tough to control weeds, we expect demand for glyphosate to stay strong over the coming year and to further drive our mix toward our branded products,” Begemann said. Its Roundup branded mix is at the highest levels of the past few years, and he expects that to intensify in 2014, he added.
Kevin McCarthy, an analyst with Bank of America Merrill Lynch, remarked on the decline in Chinese technical-grade glyphosate prices in the final months of 2013, and the implications for Monsanto’s prices and volumes going forward.
Begemann responded, “We have a six-month line of sight on what’s going on in Roundup. And we don’t pay as much attention to what’s going on with acid prices out of China as we do what the generics are doing, and how they’re pricing in the marketplace.”
In the next six months Begemann said he sees little change in glyphosate prices. “Our history has been in that $10 to $12 range. We’re kind of floating towards the high end of that $12 range, and I still feel like, as we look to this year, that’s going to be a reasonable place. But I still think it’s flattish as we go through the next six months.”
CEO Hugh Grant added, “We lay that Roundup brand price really close to that Chinese generic price. So we’re in no doubt that we continue to compete with that Chinese generic material.”
Monsanto Chief Technology Officer Rob Fraley said that volume will remain unchanged. “When we think about our Roundup business, we make around 300 million gallons and sell around 300 million gallons. So yes, we’ll continue to improve with the mix gain, and we’ll do that as we can throughout the year. But we won’t have additional volume.”
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