Let's start with the second question. The obvious answer is that farmers will get hurt, but a casual glance at a corn-price chart over the past year shows that they can pretty easily recoup such a modest increase in costs. Of course, another casual glance at an Iowa weather report reveals that times aren't really that great after all for farmers in the Corn Belt. Whatever the price of corn, it's hard to recoup the costs of production if yields are too low.
However, part of Monsanto's rationale for raising prices is that the seeds have been revamped with new genetic traits that it thinks will help increase yields. If they do, there will be more corn for farmers to sell in order to recoup the cost, so it's not clear whether the net impact will be positive or negative.
Less likely to benefit are massive buyers of corn, from poultry farms like Tyson Foods
As for whether it will boost Monsanto's profits, the competition is getting intense. DuPont has continued to grow its market share and is even planning its own round of price increases. Monsanto, meanwhile, is losing some of its competitive edge, as it continues to battle RoundUp-resistant "superweeds" and recently discovered corn rootworms resistant to its pest-killing corn genes. DuPont's own pest-resistant corn, developed with Dow Chemical
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Fool contributor Jacob Roche holds no position in any of the stocks mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool owns shares of Coca-Cola and PepsiCo. Motley Fool newsletter services have recommended buying shares of Coca-Cola and PepsiCo, creating a diagonal call position in PepsiCo, and creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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