Monsanto Poised for a Bumper Crop

Torrential rains in the Midwest might have drenched corn and soybean crops, but that doesn't mean agricultural chemicals firm Monsanto(MON Quote - Cramer on MON - Stock Picks) will get soaked.

In fact, the opposite is likely to happen, because high crop prices will encourage farmers to replant their crops.

The firm makes genetically engineered seeds and pesticides such as weed killer Roundup, which together are used to increase crop yields and profitability for farmers. High corn and soybean prices have probably already made this a great year for Monsanto.

Analysts consensus now predicts income of $1.34 per share for the three months that ended May 31, up from about $1.02 in the same period a year earlier.

But that is for a period that only partially takes into account the bad weather and flooding that will lower yields across the Midwest, explained Bill Tierney, executive vice president of research and marketing at Washington-based futures brokerage firm John Stewart & Associates.

Floods Won't Soak Monsanto

So when the firm reports earnings Wednesday morning, the news might not fully reflect how well the company could do in the current quarter as a direct and continuing result of the bad weather.

The additional good news will likely play out as follows:

Crop insurance means that there is "huge financial incentive" for farmers to replant their crops that have been wiped out by the flooding, says Tierney. "Due to the high prices even at a reduced yield you are still looking at record or near record revenue."

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