Monsanto (MON) Pricing Power Diminishing

One of the more solid reasons to invest in Monsanto (NYSE:MON) appears to be weakening, as the ability of the company to raise prices when it needed to has weakened over the last couple of years, as companies that compete in traits with them are making inroads into market share with lower prices.

DuPont (NYSE:DD) is an example there, as they developed seeds with less traits at a lower price which farmers were will to change over to. The successful marketing strategy of DuPont was to put doubt in the minds of farmers as to whether or not the extra cost of Monsanto seed was worth the extra price. A growing number said no.

But we'll wait this year to see if that has changed, as farmers are flush with cash after a strong year where margins and earnings increased because of high crop prices.

Even so, Gilford Securities doesn't believe they have that power any longer, and maintain its "Sell" rating on Monsanto, even though the seed company has been winning court decisions against their detractors.

Noted by Gilford as why they maintain its "Sell" rating is the overdependence of Monsanto on glyphosate and glyphosate tolerance, overdependence on corn, pricing strength, and weak pipeline.

Monsanto closed Monday at $71.89, down $0.32, or 0.44 percent.