Replies to post #48 on Monument Circle Acquisition Corp (MON)

[DewDiligence]

Pioneer’s Next-Gen Corn, Soybean Products Delayed

[These are big delays, not small ones! The explanation given below for the soybean delay does not ring true, IMO, and one has to wonder if there isn’t some fundamental problem with DD’s “Optimum GAT” technology.

In the short run, DD’s delays probably won’t benefit MON to a material degree; however, I can’t see why these missteps by a leading competitor are not strongly bullish for MON’s prospects in seeds and traits during the next 5-10 years. Comments?]

http://finance.yahoo.com/news/DuPont-Updates-its-prnews-935067197.html?x=0&.v=1

›DuPont Updates its Commercialization Timelines for Optimum® GAT® Corn and Soybeans

8:00 am EST, Friday December 4, 2009

DES MOINES, Iowa, Dec. 4 /PRNewswire-FirstCall/ -- DuPont (NYSE: DD) business Pioneer Hi-Bred updated its commercialization timelines today for corn hybrids and soybean varieties with the Optimum® GAT® trait.

Corn hybrids

Optimum GAT corn demonstrates excellent glyphosate and ALS herbicide tolerance efficacy; however, based on comprehensive harvest results, the current version of the trait in corn does not meet Pioneer's high yield standards. Therefore, Pioneer has reset its plans to commercialize Optimum GAT corn and will not have controlled releases in 2010 and 2011 in North America. Meanwhile, Pioneer will intensify its ongoing research efforts along multiple pathways for the corn trait and work toward commercialization in the middle of the next decade.

Soybean varieties

Optimum GAT soybeans have shown outstanding glyphosate and ALS herbicide tolerance efficacy and strong multi-year yield results. Specifically, pre-commercial Optimum GAT soybean varieties repeated a 6 percent yield advantage on average when compared to current industry-leading Pioneer varieties.

Optimum GAT soybeans are expected to be commercialized about two to three years later than the anticipated 2011 introduction [i.e. 2013-2014 (maybe)] due to changes in regulatory policy in key import markets and increasing complexity in managing grain stewardship. [What the heck does this mean?] The business is aggressively pursuing these regulatory approvals and has already received regulatory approval in the U.S. and Canada.

"Our continued confidence in the Optimum GAT trait is supported by significant data. Over the past several years, we have gained additional knowledge about the Optimum GAT trait and we keep making progress on a number of fronts," said Pioneer President Paul E. Schickler. "Importantly, we already have a full lineup of herbicide tolerant corn and soybean products to meet customer needs now and in the future.

"To satisfy grower demand and deliver on our commitment to grow the business, we have a robust lineup of top-yielding hybrids and varieties with strong agronomics, defensive traits and herbicide tolerance that customers value," said Schickler. "Product performance, along with a strong focus on the right product for the right acre, grew corn and soybean market share in 2009, and we expect to do it again in 2010."

With Pioneer's continued strong performance, DuPont reaffirms its outlook for greater than 15 percent compounded annual earnings growth rate of the DuPont Agriculture & Nutrition business segment through 2013.

DuPont will host a teleconference today at 9 a.m. (ET) for investment analysts regarding the update. The teleconference number is: 847-619-6250, passcode: 25964519.

Pioneer Hi-Bred, a DuPont business, is the world's leading source of customized solutions for farmers, livestock producers and grain and oilseed processors. With headquarters in Des Moines, Iowa, Pioneer provides access to advanced plant genetics in nearly 70 countries.‹

[Democritus_of_Abdera]

Yield comparisons ...

Yield comparisons should be simple... Grant (and Monsanto’s speakers in general), however, make it complicated. Complications arise because of references to data that is not provided and by a penchant for using a 3 yr running average of yield data rather than that of a specific year. For example (in the Nov 8 CC, Hugh Grant stated in his prepared remarks) ...

A bunch of chatter and a lot of noise on the early Roundup Ready 2 Yield performance. If you look across 40,000 trials, 40,000 data points over three years, we see a 7% lift. So a 7% yield improvement on our Roundup Ready 2 Yield platform. If you compare the Class of 2010, so the offering that we will deliver to growers in the 2010 springtime, so the ‘10 planting. If you look at that 2010 Class, we anticipate we’ll have about 60 varieties for sale as compared to 15, one, five. That’s the Scottish accent, 15 varieties this year. So we’ll have about four times the offering of varieties that more accurately reflects a range in environmental conditions. And when you look at that Class of 2010, they will outperform that 7% average that was seen in the past.

The “chatter” refers to 2009 soybean yields in the field. Grant has diverted the discussion away the most recent year comparison (where Pioneer says it has a 2.7 bushel/acre advantage or about 5%, see #msg-4387750) to the 3 yr moving average for both the competition and for Monsanto (where the data includes all breeding and commercial strip trial data and is weighted equally by year). Then he has compared Monsanto’s anticipated class of 2010 yield to the 3 yr moving averages...

Ostensibly, this discussion has addressed concerns that the competition’s 2009 yield advantage wiill continue into 2010 (and the near future).... However, my concerns were not addressed.... What I needed to see was an apples-to-apples comparison of 2009 yields (i.e. if Monsanto includes breeding trial data in thier numbers, then include the competitor’s breeding trial data). And, I needed to see an apples-to-apples comparison of Monsanto’s anticipated 2010 yields to Monsanto’s 2009 yields (where this comparison probably must rest upon breeding trial data). I would expect to find Pioneer’s anticipated 2010 yields elsewhere.

In short, the moving averages are useful background data for my long-term investment plans, but they do not clarify the current “chatter” issue.

This obfuscation of yield data is out of character for Grant. In general I have been quite favorably impressed with his ability to make complicated things simple by explicitly defining what is most important and not digressing into tangential story lines.

For example, in the Nov 8 CC he repeatedly emphasizes that:

1. The two most important determinants of Monsanto’s success in the next 3 yrs are a) the degree to which farmers switch to SmartStax and Roundup Ready 2, and b) the regulatory changes in Argentina and Brazil. Adoption of Roundup Ready 2 soybeans is important, but less so than SmartStax; vegetables and cotton are less important than soybeans.

2. Monsanto’s most important marketing challenge is to get farmers to switch to SmartStax. Thus, Monsanto is changing its marketing focus from cost reductions due to insecticide and herbicide related traits to a focus upon reduced refuge enhancement of yield.

He could have just as easily focused upon a rosy distant future centered around the exciting prospects for taste and nutrition advances in vegetables and drought/nitrogen utilization traits in row crops. All very interesting, but not directly relevant to performance in the next 2-3 years.

[DewDiligence]

…Roundup Ready 2 will be integrated into 150 hybrid varieties in 2010 (up from 15 in 2009) and into 1500 varieties in 2011.

Who said this? These numbers must be wrong insofar as the numbers of RR2Y varieties given on the “R&D Update” webcast in January were 15, 50, and 60, respectively, for FY2009, FY2010, and FY2011 (#msg-48331353).

At the same R&D Update, 1,200 was cited as the total number of germplasm varieties in MON’s soybean estate. Hence, the 60 RR2Y varieties planned for FY2011 are 5% of the total. Regards, Dew