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Seeds & Traits Regional Sales

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Europe, Africa & Middle East

Q2 2017 sales in the Europe-Africa-Middle East region grew 4.2% and 7.2% for the H1 period due to higher sales of corn and sunflower seeds in Europe and Africa. Both volume and price increases for sunflower seeds drove growth. Currency strengthening in Eastern Europe added to the sales growth.

Although dominant in the region, DuPont continues to face competition from KWS and Vilmorin, as well as Monsanto and Syngenta. There were reports of unauthorised sales and planting of genetically engineered corn seeds covering between 60%-75% area in Ukraine and to a lesser extent in Russia over the past 2 years. This has had an impact on local companies’ legitimate seed sales.

DuPont’s over-dependence on mainly corn and sunflower seeds only serves to highlight their weakness in other seed segments in the region as vegetable and flower seeds from other companies have a high demand at this time of the year in the EAME region. DuPont has just managed to stabilize their market share in the North and Latin American markets. The combined Dow DuPont is not expected to have any immediate impact in this region.

The outlook for H2 2017 is slightly positive as the planting season in southern and eastern Africa is expected to grow in H2.

North America

Q2 2017 sales grew by7.4% and by 4.2% for the H1 period. Q2 sales were driven by soybeans, canola and corn. Despite the slightly lower area planted to corn, advance orders for XtendMax™/XtendPlus™ varieties of corn and the higher soybean acreage helped growth in Q2 and the first 6 months.

Pioneer has licensed in the CRW trait MIR 604 and VIP traits MIR 162/Duracade™ from Syngenta, marketed under their brand name Leptra™ using proprietary germplasm. The outlook for H2 2017 is positive as late planting of soybean and the fall cereal planting is expected to increase due to weather impact on the current harvest. One observation this season is reduced sales in areas where corn and soybean farmers expect lower returns. These farmers have chosen to plant their own saved soybean seeds and conventional corn hybrids instead of biotech varieties. Added to this is the fact that farmers in several areas are planting non-GM seed and increasing use of selective herbicides with safeners, prompted by the severity of resistant weeds.

The combined DowDuPont corn seeds portfolio would have an edge over Monsanto and Syngenta in North America especially with the licensing of the newer insect resistant traits from Syngenta and their own Herculex™ traits combined with Pioneer’s germplasm base. These may however be offset by resistance to the Cry1F (Herculex) trait of the western bean cutworm which has spread from the western states to the central corn belt. The resistance can spread very quickly within 1-2 generations forcing the company to look for newer alternatives.

Latin America

Sales for Q2 2017 grew by 3.5%, while they were even higher for H1 with 13.4% growth. Growth was driven by the high demand for corn hybrids (Leptra™) for the safrinha season. Price increases combined with higher volumes and a stronger Real drove growth.

The outlook for H2 2017 is strong growth as higher sales are forecast for H2 2017 planting in Brazil and Argentina. There could be some reduction offsetting the performance as Dow AgroSciences would be divesting part of their corn seeds business in south America as a requirement for the merger with DuPont.

Asia-Pacific

Sales in the smallest region declined slightly by (2.1%) for Q2 and by (1.7%) for H1 2017. This was largely due to competition from local seed producers; strong growth in Australia, hybrid corn and sorghum seeds sales in south and south-east Asia were not enough to offset weakness in China. Australian rains helped considerably and planted area grew strongly for all major crops.

China has largely benefited from the launch of locally developed hybrids, where DuPont has a joint venture with Shangdong Denghai group covering almost 10% of corn planting. Corn area was reduced in Q2 2017 as the Chinese government is trying to encourage rice cultivation. In south Asian markets, with lower priced competition from indigenous seed growers, DuPont have faced increasing levels of difficulties in these markets heavily dependent on sorghum and millets. They also need to focus more on crops like rice, vegetables, oilseeds and pulses in Asian markets to be competitive. They are now partnering with local companies in China and India to spread their germplasm and distribution bases.

Growth in China which was earlier hampered by over-regulation from the authorities especially regarding biotech traits and competition from home-grown biotechnology, is now expected to resume quickly. This is due to the regulatory process being streamlined and the choice of corn planting left to farmers in regions suitable for the crop. Prior to this change, farmers were planting any available seed to claim the high price support subsidy for corn.

H2 2017 is expected to improve slightly but not more than low single-digit figures. Longer term, DuPont is still facing problems with not having received approval for their biotech corn hybrids, whereas Syngenta have received authorisation for theirs (probably due to pressure from ChemChina).

Encirca™/Precision Agriculture Services: These are estimated sales based on precision planting technology and support that DuPont is offering to farmers, similar to Monsanto’s Climate Corp. This is an area of growth and will be revalidated as the season and year progresses. All major seed and crop protection companies are involved in similar programs which offer data support to farmers through proprietary or leased/partnered data collection, collation providers. The systems currently are in the process of being consolidated by input providers and equipment / machinery manufacturers. Cropnosis aims to present more information and analysis as the year progresses.

Seeds and Traits Regional Total

Sales grew by 6.1% – volume 5%, price 1% during the 2nd quarter as demand for soybean seeds and sunflower seeds was strong. Also their insect-resistant corn hybrids were in demand in North America. DuPont took the strategic decision to shift sales for the southern US from Q4 into Q1 2017.

Safrinha season sales in Brazil added to the numbers as demand for their Leptra™ corn hybrids was high. Sales in parts of Asia, Australia, East and South Africa added to the quarterly and half-yearly performance. EU and CIS sales increased strongly with sunflower seed sales in eastern Europe. Sales in H1 2017 grew 4.9% with volume +5%, price +1%, portfolio (1%) with their divestment of forage seeds.

Seeds & Traits Product Sales

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Corn

Corn seed sales grew 1.2% in Q2 and 2.5% during H1 2017. Although planted acres were slightly lower than last year in the US, demand for their Leptra™ corn hybrids, and early season sales due to a shift in US invoicing from the last quarter to Q1 2017 helped growth in the business. In addition, safrinha season sales in Brazil, and spring planting in Europe contributed to growth. Brazilian sales were driven by demand for their Leptra™ corn hybrids, with a double-digit price increase and stronger local currency versus the US dollar.

The outlook for H2 2017 is strongly positive as the main south American season is expected to be driven by higher demand for corn in the Brazilian and Argentinian feed markets, as well as for exports in high demand markets of China, India and the rest of Asia.

Soybean, Sunflower & Canola

Sales for Q2 with 25.7% growth and for H1 2017 with 20.7% growth were mainly due to high demand for sunflower seeds in eastern and western Europe and other countries in the region. Sales of soybean seeds were very high, especially in USA, of the Xtend™-dicamba-tolerant trait-bearing varieties, in collaboration with Monsanto.

They have chosen to license-in these traits to boost sales of their own soybean seeds. One threat as mentioned earlier is that of brown-bagging (farmer-saved seeds) which is a great cost-saving to the farmers, even if they pay a premium/licence fee.

H2 2017 outlook is positive as DuPont have licensed in the IntactaRR™ trait from Monsanto for the south American season in H2 2017.

Other Field Crops Seeds

Sales improved 6% as planting of sorghum and millets increased in the African and Indian markets and in the US for exports to China. Spring wheat seed sales were initially flat due to lower demand arising from high global and regional stocks and lower prices.

Outlook for H2 2017 is positive as the current wheat crop does not match up to expectations due to excessively dry, hot weather in Europe and parts of the US, wet weather conditions in the main North American planted areas for spring wheat.

Fodder Crops and Inoculants

Sales for these products grew 6% for the quarter and 3.3% for H1 2017. This was largely due to demand for green fodder for exports to Asian countries and the use of inoculants in both forage and legumes/soybeans. The outlook for H2 2017 is flat as demand for green forage is usually terminated by Q3. Development of biologicals and seed enhancements, forage inoculants for silage and yield boosters in fodder brassicas as well as mixed culture fodder fields is expected to grow further between 2017-2022.

Encirca™/Precision / Digital Agriculture Services: These are estimated sales based on precision planting technology and support that DuPont is offering to farmers. This is an area of growth and will be revalidated as the season and year progresses. All major seed and crop protection companies are involved in similar programs which offer data support to farmers through proprietary or leased/partnered data collection, collation providers.

The systems currently are in the process of being consolidated by input providers and equipment/machinery manufacturers. Cropnosis aims to present more information and analysis as the year progresses.