E.I. du Pont de Nemours & Co. (DD) – commonly known as DuPont – raised its first-quarter earnings by 20%, highlighting the investor-friendly team of Agriculture Boom companies that are capitalizing on the demand for raw commodities.

The Wilmington, Del. conglomerate raised its earnings estimate to $1.29 per share, up from its March 14 outlook of $1.14 to $1.19.

The company – a component of the 30-stock Dow Jones Industrial Average – also raised the lower range of its full-year 2008 earnings estimate by five cents to $3.40 to $3.55 per share.

"Growth in agriculture and emerging markets, along with continued cost productivity gains, are enabling us to overcome challenges in certain U.S. markets and higher cost ingredients," said Charles Holliday, Jr., DuPont chairman and chief executive officer.

"While the macroeconomic outlook remains difficult to predict, we are focused on our priorities to capitalize on rising global demand for our products; further penetrate key markets in the world’s rapidly growing geographies; and extend our productivity improvement programs," he said.

Story continues below…

Sign up right now, and we’ll send you an important new report for free: “The Three Best Investments in Asia.”

Some of those priorities include its crop-protection chemicals and seed hybrids, which are in dire need as emerging and major economies alike try to accommodate growing populations around the world.

Earlier this year, the firm received approval for two new herbicides that are designed to protect soybeans and wheat. In addition, farmers using DuPont’s Pioneer brand seed hybrids won top honors in national crop-yield contests for corn and sorghum last year.

And DuPont’s well positioned, not just because of its products, but also because it provides them in more than 70 countries.

Supplying "Double-Duty Crops"

DuPont is one company of several argi-biotech firms – companies using biotechnology to solve farming problems – fattening that are their bottom lines during the current agricultural boom.

Another is St. Louis-based Monsanto Co. (MON), whose recent second fiscal quarter earnings doubled from the previous year – earning $1.13 billion, or $2.02 per share, in the three months ended Feb. 29, up from $543 million, or 98 cents per share, in the prior year – on the strength of its corn seed and herbicide sales. 

Once highly controversial, Monsanto’s genetically engineered products have established a definite foothold in agricultural markets throughout the world. Farmers in China and India planted more than 17 million acres of biotech crops last year, according to BusinessWeek.

Approximately 7% of the world’s farmland acreage is planted with genetically modified crops. While some pockets of controversy remain – and likely always will – Monsanto’s financial performance is a strong indication that sales of these modified agricultural products are only going to increase in the years to come.

Emerging middle classes in China, India and elsewhere are driving the need for commodities. As more people incorporate meat and dairy products into their daily diets, supplies of "double-duty crops" – capable of feeding both livestock and people – continue to fall short of global demand. Drought and floods have also done their part to reduce crop yields, but companies such as Monsanto and DuPont are doing their part to try to boost those yields.

"The agri-boom is alive and well," said Horacio Marquez, a Money Morning contributing editor and a former Wall Street veteran. "The relative lack of rain in the southern United States, Argentina and Brazil promise to restrict supply [of farm-grown crops], while demand is exploding as more and more global consumers come out of poverty and demand better food, including bread, meat and vegetable oils."

According to Marquez, this trend is even more powerful in India and China. Similar trends are playing out in other Latin American, African, and Asian countries that export commodities and are being lifted by globalization. Energy trends – including the move into ethanol – also are driving demand for robust seeds.

DuPont reports its first-quarter results on April 22. Monsanto reports its fiscal third quarter on June 23.

Two More Agri-Boom Profit Plays

If investing in agri-biotech isn’t up your alley, there are two alternative investments.

Van Eck’s recently launched Market Vectors Agribusiness ETF (MOO) spreads out its assets across the agriculture industry. This fund reflects the infrastructure of the agriculture industry, focusing on chemicals (34%), agri-product operations (33%), equipment (24%), livestock operations (6%), and ethanol/biodiesel (2%). Deutsche Bank’s Power Shares Agricultural Fund (DBA) is intended to reflect the performance of commodities in the agricultural sector – soybeans (31%), wheat (28%), corn (23%), and sugar (16%).

News and Related Story Links:

• DuPont:
  DuPont Expects Higher 1Q Earnings

• Money Morning:
  Conglomerates Offer Protection in Rocky Markets

• Money Morning:
  Outlook 2008: BioTech Offers Investment Longevity

• Money Morning:
  Monsanto Reaps Huge Rewards From Its Blossoming Seed Business

Fueled by a combination of international sales and a growing demand for genetically enhanced agricultural products, Wilmington, Del.-based E.I. du Pont de Nemours & Co., more commonly known as DuPont (DD), has emerged as one of the few bright spots in an otherwise gloomy U.S. stock market.

DuPont announced Wednesday that it expects full-year 2007 earnings to be at the high-end of its previously projected range of $3.15 to $3.20 per share. The science-focused conglomerate also boosted its 2008 earnings guidance to $3.35 to $3.55 per share. 

"We expect that continued growth worldwide from our Agriculture & Nutrition business segment and growth from all of our segments in emerging markets will more than compensate for a slower U.S. economy," Charles O. Holliday, Jr., DuPont chairman and chief executive officer, said in a statement.

DuPont is the latest example of a U.S.-based biotech firm that’s reaping major profits from surging overseas growth in key markets like Brazil, and that’s benefiting from soaring demand for higher-yielding agricultural products and for fuels that can augment or, even replace, conventional gasoline.

Just last week, sector rival Monsanto Co. (MON) announced it nearly tripled its fiscal first quarter earnings, which rose from $90 million in 2006 to $256 million in its just-completed fiscal 2007 year.

DuPont – a component of the 30-stock Dow Jones Industrial Average – does business in more than 70 countries where the blue chip company’s array of agricultural offerings are strong sellers. DuPont is a leading developer of crop-protection chemicals and seed hybrids.

The firm recently received approval for two new herbicides that are designed to protect soybeans and wheat.  In addition, farmers using DuPont’s Pioneer brand seed hybrids won top honors in national crop-yield contests for corn and sorghum last year.

DuPont’s success reinforces two important trends that Money Morning has previously identified as key factors for investors to consider in order to maximize their profits – and their success. Some of the better investment opportunities will include:

• U.S.-based multinationals with a significant portion of their sales overseas, since those firms are well positioned to profit despite recessionary conditions and a weak dollar at home.

• And both companies and commodities tied into agri-business [agriculture chemicals, agriculture equipment, and so-called agri-product operations] are a smart play for 2008.

Emerging middle classes in China, India and elsewhere are driving the need for commodities. As more people incorporate meat and dairy products into their daily diets, supplies of "double-duty crops" – capable of feeding both livestock and people – continue to fall short of global demand. Drought and floods have also done their part to reduce crop yields.

Monsanto has benefited from similar catalysts. In fact, the stock was one of 2007’s best performers, having soared more than 120%. Monsanto shares got a nice boost last week after the company announced that Latin American sales of its seeds and Roundup brand herbicide helped the company to nearly triple its fiscal-first-quarter profit.

These stunning results are largely due to sales of Monsanto’s genetically modified seeds, which have been engineered to repel pests and be immune to herbicides. Like DuPont, Monsanto sales have benefited from soaring crop prices and an increased interest in alternative energy sources.

Reacting to DuPont’s disclosures, investors drove the shares higher in recent days. The stock gained $2.02 [4.73%] to close at $44.77 on Wednesday. The company’s shares tacked on an additional 1.12% yesterday (Thursday) to close at $45.28.  DuPont’s shares have traded between $42.25 and $53.90 over the past 12 months.

Monsanto shares have risen 9.04% year-to-date and closed at $122.04 yesterday.
News and Related Story Links:

• Bloomberg:
  DuPont Climbs as Seeds, Global Growth Increase Profit

• MarketWatch:
  DuPont offers hope to a beleaguered market

• DuPont News Release:
  New DuPont™ Agility™ SG Herbicide Offers Wheat Growers Answers to Changing Weed Control Needs

• DuPont News Release:
  DuPont Congratulates Growers Planting Pioneer® Brand Sorghum Hybrids in Winning Majority of National Categories in Yield Contest

• Monsanto News Release:
  Monsanto Sees Record Sales in Fiscal Year 2007; Seeds and Traits Business Contributes to Strong Fourth Quarter and Year-End Results

• Money Morning:
  Wheat Futures Break Into Double Digits, Stoking Inflation Fears

• Money Morning:
  Monsanto Reaps Huge Rewards From Its Blossoming Seed Business