It's become so common that the investment news media hardly batted an eye.
Monsanto (NYSE: MON ) raised its earnings guidance on Monday, this time for its first quarter. Rather than earnings of $0.10 per share, as initially projected, the agricultural biotechnology firm now anticipates EPS will be $0.20.
A doubling in the quarterly earnings forecast is certainly newsworthy, but Monsanto's other comments in the press release may be more intriguing. Specifically, the firm pointed to better-than-expected performance for cotton traits in Australia as among the reasons for its improved outlook. In addition, Monsanto noted that there could be 15% more U.S. acres using its Roundup Ready and YieldGard Rootworm-protected corn than in previous estimates.
That Australia is eagerly adopting genetically modified (GM) cotton and U.S. farmers are embracing GM corn may be just small signs of a growing trend. I have written before that Monsanto will probably have more customers in the developing world in the future due to changes in the global trading system. However, it seems equally true that market penetration of GM crops in the developed world also probably continue to expand.
The Doha round of global trade talks drags on, and a major sticking point is agriculture. However, after years of keeping agricultural subsidies off the agenda, the U.S. and European Union may finally be forced to commit to cuts, which would hurt domestic farmers. Leading the charge against these subsidies are developing countries such as Brazil and India that have increasing clout thanks to their rapidly expanding economies. Indeed, Brazil has already successfully challenged the U.S.'s cotton subsidies. The end of agricultural supports in the U.S. and EU looks to be a question of when, not if.
Interestingly, Australia has no agricultural subsidies. Faced with competition from developing countries where labor is abundant, Australia's cotton farmers adopted the latest productivity-improving technologies, including GM seeds. Doing so allowed Australia to lead the world in cotton yields per hectare last growing season.
With agricultural subsidies under attack, U.S. farmers may already be making the calculation that they need more GM seeds to compete. Even the EU, which has been squeamish about GM crops, may be forced to change its attitude when confronted with the global market. That's good news, of course, not only for Monsanto, but also for its competitors, like Syngenta (NYSE: SYT ) and Bayer (NYSE: BAY ) .
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.