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DuPont distances itself from talk of deteriorating ag input markets

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DuPont distanced itself from the worsened agriculture inputs market conditions which prompted rival Monsanto to warn, again, on profits, saying it was "not seeing anything significantly different".

Monsanto shares tumbled 7.8% in the last session, after the seeds and sprays giant cuts its full-year profits outlook, citing an "even more challenging" environment, marked by further setbacks, besides the currency, crop price and farmer profitability weakness which it flagged in January.

Monsanto chief executive Pierre Courduroux told the Bank of America Merrill Lynch global agriculture and chemicals conference of "additional headwinds from competitive dynamics" and a delay in US regulatory approval of a herbicide.

The comments prompted a succession of broker cuts to hopes for Monsanto shares, with Credit Suisse cutting its target price for the shares by $12 to $109, BMO lowering its target price by $6 to $100, while Barclays and Deutsche Bank cut hopes for the stock by $5 each, to $95 and $105 respectively.

And they prompted warning from some commentators of broader sector difficulties, with Citigroup, for instance, warning that "challenges in seeds, including pricing" highlighted by Monsanto "are also likely to impact DuPont", as well as Dow Chemical, with which DuPont is merging.

"Monsanto's comments regarding tough glyphosate market conditions, if indicative of broader ag chem challenges, could have implications for DuPont, Dow Chemical, FMC Corp and Agrium," Citigroup added.


Nothing different'

However, James Collins, DuPont executive vice-president, used the same conference, on Thursday, to distance the group from ideas of a worsened sector crisis.

He acknowledged that "markets remain dynamic".

However, he added that "we are not seeing anything significantly different in agriculture market conditions from what we communicated in January", when DuPont unveiled an operating loss of $54m in the sector, thanks to a $139m hit from weakness in emerging market currencies.

DuPont and Dow were "very excited" about merger plans, which will see the groups' combined agriculture operations spun off as a separate business.

'Potential disruptions'

Monsanto's Pierre Courduroux on Wednesday downplayed the competitive threat posed by the merged DuPont-Dow, and by the proposed Syngenta-ChemChina combination too.

"We have a compelling pipeline and we are the leaders in season trades across corn, soybeans, cotton and vegetables,

"None of those have changed with these recent proposed combinations."

The tie-ups would not "create any material change in innovation or access for our key competitors in the near term", Mr Courduroux said.

"Actually in the short term, the potential disruptions" to the groups caused by merging "may create real opportunities for us".

'Aggressive discounting


Mr Courduroux also, in comments to the conference, underlined tougher competition in the corn seeds market, flagging "the increased competitive discounting and free seeds offering in the US that we have seen in the most recent quarter.

"We signalled actually at our first quarter call [in January] that we were seeing some discounting actions, pretty aggressive discounting actions in Illinois, and unfortunately those have expanded driven by our main competitor," DuPont's Pioneer.

"We have responded and we have made the point very clear that we wouldn't lose share."

He also flagged that weak world corn prices "are continuing to affect planted acres around the world with additional weakening in Europe, and we also have seen the negative effect from the historical drought in South Africa".


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