Harvesting profits from seeds and herbicides is nothing new for ag giant Monsanto (NYSE:MON), but the company seems to be doing a slightly better job of it lately.

Before the bell on Tuesday, Monsanto announced that it was raising its guidance for both the 2005 second quarter and fiscal year. The company now expects earnings of about $1.37 for the second quarter, compared with the previous consensus guess of $1.17. And it forecasts adjusted earnings of $2.00 to $2.05 for the full year, vs. a $2.05 average. Both of those numbers are also higher than the company's initial estimates had been.

It should be noted, though, that the company maintained its prediction that it will be free cash flow-negative for 2005 to the tune of $900 million, as the purchases of Seminis and Emergent will push up investment spending. Playing fast and loose with numbers you don't have in your hands is always dangerous, but stripping out these acquisitions would seem to leave the company generating about $400 million in FCF for the year -- a figure that's still somewhat low.

While the science that goes into creating the company's seeds and chemicals is not simple, the economics is. Simply put, the company is seeing higher demand for corn and soybeans in the United States, mostly corn in Africa and Europe, and herbicides worldwide.

What's more, the market looks to be expanding as many countries review their policy on genetically modified (GM) crops. Just last week, a new biosafety bill was signed in Brazil, and it's believed that the ban on GM seeds will soon be lifted, giving Monsanto full legal access to one of the largest agricultural markets in the world.

With Reuters reporting that Monsanto has also finished royalty accords with producers and cooperatives in Rio Grande do Sul, Brazil's third-largest state, it would seem that the situation is close to "all systems go" for farmers and Monsanto alike.

Shares of Monsanto have been growing at least as strongly as its modified soybean plants, with shares up over 70% over the past year. That has caused present valuation to look rich, but investors shouldn't underestimate this growing agriculture titan.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares), but he has decidedly unpleasant childhood memories of working in the corn and soybean fields of Nebraska.