Seed giant Monsanto (MON) is seeing a great deal of positive momentum as fiscal 2014 kicks off. Thanks to the extremely favorable economics of the agriculture industry due to booming global populations and an unprecedented demand for food in the emerging markets, the company has a bright future ahead. While all this increased demand presents its own challenges, namely the immense pressure to improve yields from a constant amount of available farmland, there's no real reason for pessimism when it comes to Monsanto's outlook. Monsanto's core products are highly sought after by farmers around the world, meaning the company should keep the wind at its back and sail through the upcoming year.

Strength across its key markets
First, the headline numbers from Monsanto's fiscal 2014 first quarter were solid. Revenue and reported diluted earnings per share climbed 7% and 8%, respectively, versus the first quarter last year. Digging deeper, a divergence appeared between the company's main profit-generating segments. Seeds and genomics, which represents nearly two-thirds of Monsanto's gross profit, saw its gross profit decline by 2%. This was due to some weakness in its Latin American corn operations, but this is a short-term concern.

More than offsetting this was outstanding performance in its agriculture productivity division, where Monsanto's herbicides are housed. This segment saw gross profit soar by 50% in the quarter. Put simply, the marketplace environment is extremely favorable for herbicides, particularly in the international markets, and Monsanto's results more than reflect this.

Even better, Monsanto has great things to say about its own outlook for the remainder of fiscal 2014. Thanks to strong demand for its core products, which are expected to continue throughout the year, management expects $5.10 in earnings per share at the midpoint of its guidance. This would represent 12% growth over the $4.56 per share it earned in fiscal 2013.

It's clear from Monsanto's results that agriculture is poised to grow strongly in the years ahead, thanks to booming emerging-market populations and rising standards of living. For example, Monsanto notes that worldwide corn and soybean demand increased by 9 billion bushels and 2.5 billion bushels, respectively, over the past decade. This trend will only continue in the future. Management expects at least 500 million bushel-per-year growth in corn demand and at least 200 million bushel-per-year demand growth for soy. Not surprisingly, many chemicals giants are positioning themselves to benefit from soaring agriculture demand, particularly within under-developed economies.

Agriculture represents a huge opportunity
This is why some chemicals giants are rapidly transitioning their strategic focus toward agriculture. DuPont (DD) considers expanding its agriculture and nutrition segment one of its top priorities going forward. This is because the agriculture industry presents extremely high-value opportunities that other industries simply don't.

That's why DuPont divested a group of underperforming businesses in recent years, including the sale of its performance coatings business for $4.9 billion. Its strategy appears to be working, as DuPont has gained six points of market share in corn and 10 points of market share in soy in North America since 2008, according to the company.

Likewise, Dow Chemical (DOW) exited its oldest business last year, its chlorine segment. It was probably a necessary move, since Dow's overall business struggled under the weight of non-performing segments. The company's sales and adjusted earnings per share both declined through the first nine months of fiscal 2013. As a result, it's not at all surprising to see major chemicals companies exiting certain businesses to focus on the highest-value opportunities elsewhere.

Bet on a bright future for Monsanto
In closing, Monsanto has a great deal of momentum working in its favor, driven by the extremely positive underlying economics of the agriculture industry. Business conditions remain strong, particularly in the emerging markets. That's why continued growth in corn, soy, and Monsanto's herbicides should result in a 2014 that was every bit as strong as 2013.

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