There's a fly in the ointment at Monsanto (NYSE: MON). Or, rather, a rootworm in the corn field. Western corn rootworms have been found in four pest-resistant fields in Iowa, and while you might think it's normal for some bugs to make it past even Monsanto's vaunted pest-resistant genetically modified corn, the corn in question was designed to resist this specific pest. If the bug is developing its own resistance to the corn, that could open a whole can of worms for Monsanto.

The world of genetically modified crops is fiercely competitive, with Monsanto, DuPont (NYSE: DD), and Syngenta AG (NYSE: SYT) controlling about 47% of the global proprietary seed market. While Monsanto is by far the largest, farmers are under pressure to keep corn yields high, and they may switch to competitors if Monsanto's product doesn't work as intended. Aaron Gassman, the scientist who discovered the affected fields, tested some of the rootworms there and found that they were still highly vulnerable to corn grown from competitors' seeds, indicating that they had only developed a resistance to the specific gene in Monsanto corn.

This isn't surprising, given that Monsanto's gene is found in roughly one-third of all corn grown in the U.S., and that the high price of corn has led farmers to stop rotating crops each year. Farmers might be able to continue growing corn each year if they instead rotated pest-management strategies, giving pests less time to build a resistance. This would be bad news for Monsanto, but good news for its smaller rivals, as well as insecticide companies like Dow Chemical (NYSE: DOW) and Scotts Miracle-Gro (NYSE: SMG).

Monsanto has already stated that its seeds work as intended on 99% of the acres using them, and Gassman has also said that it's too early to tell whether this is just an isolated issue, or if it will be more widespread, like Roundup-resistant "superweeds." To stay updated on any developments, add these companies to your My Watchlist.

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