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                                                                                                                                                   Chemicals, Specialty
 UBS Investment Research
                                                                                                                                                   12-month rating                                                                                       Buy
 Monsanto Co.                                                                                                                                                                                                                       Unchanged
                                                                                                                                                   12m price target                                                                          US$94.00
 FY Guidance Reaffirmed, Pattern Shifts                                                                                                            Price                                                                                             US$74.04

     Reaffirmed full-year guidance, but Q3 now largest quarter                                                                                     RIC: MON.N BBG: MON US

 MON reaffirmed its FY10 guidance of $3.10-$3.30, but now expects only 50% to                                                                                                                                             25 February 2010
 be realized in FQ2. Q2 is typically the largest quarter but MON had been
 indicating recently that earnings could shift from FQ2 to FQ3, which starts Mar. 1,                                                               Trading data
 due to the late 2009 harvest delaying grower decisions and MON seed production.                                                                   52-wk range                                                                         US$91.83-67.18
 Today’s press release was the first quantification of the magnitude of the shift.                                                                 Market cap.                                                                                        US$41.1bn
                                                                                                                                                   Shares o/s                                                                                  555m (COM)
     Lowering our FQ2:10 estimates, raising our FQ3:10 estimates                                                                                   Free float                                                                                                     100%
 We are lowering FQ2 to $1.50 from $2.00, and raising FQ3 to $1.75 from $1.25 to                                                                   Avg. daily volume ('000)                                                                                        1,385
 reflect an anticipated shift of soybean, corn, and glyphosate sales into FQ3. We
                                                                                                                                                   Avg. daily value (US$m)                                                                                         111.0
 continue to see a sharp rise in EPS in 2011-12 to $4.50/5.63 as RR2 and SmartStax
 corn volumes ramp up quickly and launch costs decline from 2009 levels.                                                                           Balance sheet data 08/10E
                                                                                                                                                   Shareholders' equity                                                                               US$8.18bn
     Delivering advertised yield on new products is key to 2011-12 EPS rampup
                                                                                                                                                   P/BV (UBS)                                                                                                            5.1x
 MON is seeing resistance to the higher prices it is asking for SmartStax corn and
 RR2 beans given the 2009 RR2 yield shortfall. MON claims improved yields on its                                                                   Net Cash (debt)                                                                                    US$1.21bn
 2010 RR2 varieties and is offering “satisfaction guarantees” to growers. Delivering
                                                                                                                                                   Forecast returns
 the promised 7+% and 10% yield gains on RR2 and SS in fall 2010 is critical in
 ensuring the aggressive volume ramp-ups MON is targeting in 2011-12.                                                                              Forecast price appreciation                                                                                  +27.0%
                                                                                                                                                   Forecast dividend yield                                                                                          1.4%
    Valuation: Pipeline accounts for $60 of our $94 price target                                                                                   Forecast stock return                                                                                        +28.4%
 Seed and genomics accounts for $86 of our price target with the majority of this                                                                  Market return assumption                                                                                         5.9%
 value - $60 - coming from the pipeline. Post 2012 introductions are 60% of our                                                                    Forecast excess return                                                                                       +22.5%
 pipeline value. Roundup prices have stabilized and we expect a modest earnings
 recovery in 2011-12 but overall Roundup accounts for only $8 of our target price.                                                                 EPS (UBS, US$)
                                                                                                                                                                                                          08/10E                                                 08/09
                                                                                                                                                                                      UBS                                            Cons.                      Actual
                                                                                                                                                   Q1E                                 0.00                                          (0.02)                       0.98
                                                                                                                                                   Q2E                                 2.00                                            1.99                       2.16
                                                                                                                                                   Q3E                                 1.25                                            1.37                       1.23
 Highlights (US$m)                                     08/08                08/09              08/10E               08/11E              08/12E     Q4E                               (0.10)                                          (0.04)                       0.02
 Revenues                                          11,353.27            11,719.77           12,084.71            13,782.56           15,983.80     08/10E                              3.15                                            3.29
 EBIT (UBS)                                         2,874.65             3,547.04            2,613.46             3,689.84            4,598.92     08/11E                              4.50                                            4.44
 Net Income (UBS)                                   2,035.65             2,446.04            1,767.02             2,532.44            3,168.26
 EPS (UBS, US$)                                         3.64                 4.41                3.15                 4.50                5.63     Performance (US$)
 Net DPS (UBS, US$)                                     0.77                 0.88                1.06                 1.06                1.06     160
                                                                                                                                                           Stock Price (US$)                                                                         Rel. S & P 500
 Profitability & Valuation                      5-yr hist av.                08/09              08/10E              08/11E               08/12E    120
 EBIT margin %                                              -                 30.3                21.6                26.8                 28.8     80                                                                                                                    150

 ROIC (EBIT) %                                              -                 36.4                31.0                48.3                 53.1     60
 EV/EBITDA (core) x                                         -                 11.1                12.8                  9.4                  7.6    20

 PE (UBS) x                                                 -                 18.7                23.5                16.5                 13.2      0                                                                                                                    0













 Net dividend yield %                                       -                  1.1                  1.4                 1.4                  1.4
                                                                                                                                                                            Price Target (US$) (LHS)                      Stock Price (US$) (LHS)
 Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for                            Rel. S & P 500 (RHS)
 abnormal and economic items at the analysts' judgement.                                                                                           Source: UBS
 Valuations: based on an average share price that year, (E): based on a share price of US$74.04 on 24 Feb 2010 19:15 HKT
 Don Carson                                      Sandy Klugman, CFA                               Philip Kirkman
 Analyst                                         Associate Analyst                                Associate Analyst                                      
 +1-212-713 2491                                 +1-212-713 8973                                  +1-212-713 4105

 This report has been prepared by UBS Securities LLC
 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
 have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
 their investment decision.
Monsanto Co. 25 February 2010

SmartStax/RR2 ramp is key driver of 2010-2012 growth
Monsanto continues to guide to near 20% cagr growth in gross profit in
Seed and Genomics from 2009-2012. SmartStax refuge-reduced corn and RR2
soy are the key drivers of this growth with important contributions also coming
from corn trait penetration in South America and yield gains in US corn. Our
expectation that Monsanto will gain market share in corn seed this year is
predicated on our assumption that the company will widen the yield advantage
over Pioneer (10+ bu/acre) that was first made apparent in last Fall’s
independent University field trials. Further, in conjunction with our above-
consensus estimate for 90mm corn acres in 2010, the market share gains imply
that Monsanto will benefit by increasing share in a growing market.

Chart 1: Monsanto expects Seeds and Genomics Gross Profit to grow by ~ $2.8-$3.0
billion between F2009 and F2012

               ~35% SmartStax                                 ~30% Intl Row
                      / RR2Y                                       Crops
                                                                                                  Our above-consensus estimate for
                                                                                                  90mm corn acres in 2010 will be a
                                                                                                  positive for Monsanto as we expect the
                                                                                                  company to increase its market share
                                                                                                  in a growing market
                                                              ~5% Vegetables

                                     ~30% All Other
                                      US Row Crops

Source: Company presentation September 15, 2009.

Yield gains will drive SmartStax and RR2 penetration post-2010. While
there have been anecdotal reports that Monsanto is having a difficult time
garnering its intended price premium on SmartStax and RR2 Yield Soybeans,
management’s use of “Promise” programs will limit the downside risk                               Overall we expect Monsanto’s yield
associated with being an early adopter, and help to establish a foundation that                   advantage in base genetics and the
increases penetration in 2011. Of course, the yield benefits, or lack thereof, as                 superior refuge reduction of SmartStax
well as the premium at which they’re provided will ultimately determine                           over AcreMax to contribute to share
whether Monsanto can achieve its ambitious post-2010 earning targets. While                       gains in 2010-12 in US corn
the results for the upcoming Spring planting season will not be known until
September/October, we expect them to be favourable. Beyond 2010, the
earnings contribution from increased SmartStax and RR2Y acreage will be even
more pronounced as the significant launch costs of 2010 will be behind them.

Table 1: Monsanto: Key new biotech product introductions F2009E-F2012E

                                                               US Planted Acres

                                                     F2009E    F2010E       F2011E       F2012E

SmartStax Corn                                          0.0        4.0            17.0     39.0

RoundupReady2Yield Soybeans                             1.5        9.0            17.0     34.0

Source: Company reports and UBS estimates

                                                                                                                                   UBS 2
Monsanto Co. 25 February 2010

Monsanto’s expanded corn yield advantage over Pioneer in 2009 should                       Monsanto sees breeding advances
help to drive renewed share gains in 2010. In its December 8 yield                         contributing almost as much to revenue
presentation Monsanto indicated that its yield advantage over Pioneer grew to              growth by 2020 – of the $8 billion gross
9.7 bu/acre in 2009 up from 8.8 bu/acre in 2008. We view this as a significant             pipeline revenue opportunity in 2020
advance as we believe that Pioneer’s US corn seed share gains in 2009 – the first          MON attributes $3.5 Bn to breeding
such gain in ten years, were driven primarily by its narrowing of Monsanto’s               driven improvements in disease control
lead in 2008 from the 13 bu/acre level of 2007. Pioneer’s revamped direct to               and yield improvements ex vegetables
grower distribution system also contributed to the 2009 share gain.

Our review of independent University field trials confirms Monsanto’s yield                The yield potential from molecular
gains over Pioneer in 2009. MON maintained its lead in Illinois and grew in                breeding should accelerate in 2010-11
Indiana, while in Ohio, Pioneer narrowed MON’s lead. University trials have                as more products are commercialized –
less numerous comparisons than producer trials but are viewed as unbiased by               in 2009 only 6% of MON’s corn hybrids
growers. Pioneer’s December 7 yield data presentation not surprisingly showed              were developed via molecular breeding.
its corn yields were above MON’s. However, the claimed 1.2 bu advantage was
unchanged from last year which is confirmation that PHB did not narrow
MON’s lead in 2009.                                                                        Gains from molecular breeding should
Where is Pioneer’s AcreMax I? Pioneer has yet to receive EPA approval for                  lead to a growing lead in corn yields
its competing reduced refuge corn product. AcreMax will not have above-                    and the potential for leading soy yields.
ground refuge reduction below 20% until 2012 and may not achieve the 5%                    Improved genetics will be offered
below-ground refuge level the EPA approved for SmartStax. If the EPA                       primarily in SmartStax and RR2 helping
approves Pioneer’s request for refuge-in-a-bag Pioneer may have a 12-24 month              accelerate adoption of these traits
lead with this feature. The effectiveness of RiB at refuges above 5% is
questionable, however.
Table 2: Status of refuge related approvals for Monsanto and Pioneer products

                            Above Ground         Below Ground          Refuge in a Bag     Monsanto has submitted a regulatory
                           Reduced Refuge        Reduced Refuge           Concept          package for refuge-in-a bag for
Monsanto                   5% - Approved      5% Approval Received   Possible by 2011/12   SmartStax and expects EPA approval in
SmartStax                                          July 2009                               12-24 months.

Pioneer Hi-Bred            AcreMax II only       EPA Approval         Approval Pending
AcreMax I                 Currently Planned    Pending-Likely 10%        Likely 2010
                              for 2012

Source: Company reports and UBS estimates.

                                                                                                                              UBS 3
Monsanto Co. 25 February 2010

RoundUp has bottomed
Generic glyphosate prices appear to have bottomed based on our survey of
internet resellers. While rising power costs in China have resulted in generic
glyphosate intermediate prices increasing to $3.40-$3.60/kg from a $3.00/kg
trough, with significant inventories of formulated glyphosate still in the North
and South American distribution channels, and an increasingly promotional
environment, we do not expect price increases to have a significant impact on
Monsanto’s F2010 results. However, we project that F2011 gross profits will
increase 26%, to $849mm, on modestly higher prices, as gross margins lift to
30% from 25% due to the absence of $150mm in anticipated F2010 incentives
to dealers. We project RoundUp gross profits of $1bn in F2012, in-line with
management’s guidance

Chart 2: Branded-generic price premium for Roundup is near historical norms
                                                                                                                                                                                                                                   Our projection for $674mm in F2010
 $35                                                                                                                                                                                                                         $35
                                                                                                                                                                                                                                   RoundUp gross profit compares to
 $30                                                                                                                                                                                                                         $30
                                                                                                                                                                                                                                   management guidance of $650-$750mm
 $25                                                                                                                                                                                                                         $25
 $20                                                                                                                                                                                                                         $20
 $15                                                                                                                                                                                                                         $15
 $10                                                                                                                                                                                                                         $10
  $5                                                                                                                                                                                                                         $5
  $0                                                                                                                                                                                                                         $0

                            Branded Premium                                                    RU 4lb Equiv Price                                             Av g. Generic Price

Source: UBS estimates

We expect an increase in Roundup gross profit in 2011 due to significant
cost reductions and reduced dealer incentives. We estimate that MON will
incur an extra $150 million in dealer discounts in F2010 in order to induce
dealers to carry Roundup in the face of still above-average channel levels of
generic glyphosate. Monsanto is targeting a total of $220-$250 million in annual
cost reductions by F2011, with approximately one-third of the total realized in
F2010. Monsanto announced a cost cutting program targeted mainly at
achieving savings in its Roundup business and, to a lesser extent its Vegetable
unit. The program will eliminate a total of 1,800 positions, and is targeting
savings of $220-$250 million over two years.

                                                                                                                                                                                                                                                                UBS 4
Monsanto Co. 25 February 2010

Table 3: Roundup/Glyphosate: Price/Volume assumptions F 2008-F2011E

                              F2008                        F2009                      F2010E                     F2011E                      F2012E

                            Shipments        Avg Price    Shipments      Avg Price    Shipments     Avg Price    Shipments     Avg Price     Shipments      Avg Price

Roundup / Glyphosate         (mm gals)        ($ / gal)   (mm gals)       ($ / gal)   (mm gals)      ($ / gal)   (mm gals)      ($ / gal)    (mm gals)       ($ / gal)

US Branded                            53          $17.0            29         $22.7            55        $11.0            55        $11.5             61           $12.0

Non-US Branded                        96          $21.5            77         $23.7            95        $11.0         100          $11.5          110             $12.0

Third Party                           108         $10.6            76         $13.7         100          $10.0         108            $9.5         122              $9.5

Total                                 257         $16.0            182        $19.4         250          $10.6         263          $10.7          293             $11.0

Gross Profit ($mm)                               $1,976                      $1,836                       $674                       $849                       $1,006

Source: Company reports and UBS estimates.

                                                                                                                                                           UBS 5
Monsanto Co. 25 February 2010

Table 4: Monsanto Quarterly Income Statement ($ millions)

                                                           F2009                                        F2010E                      F2011E F2012E
                                            F1Q    F2Q      F3Q     F4Q      Year    F1QE      F2QE     F3QE     F4QE       Year     Year     Year
 Corn Seed and Traits                   $628      $2,078   $1,020   $387    $4,113   $569      $2,206   $1,663   $558      $4,997   $5,926   $6,987
 Soybean Seed and Traits                    212    615      540      81     1,444     201       423      885      145      1,654    2,020    2,629
 Vegetable Seeds                            157    209      206     236      808      173       235      232      254       894     1,028    1,130
 Cotton Seed and Traits                     47     33       333      53      466      59        37       373      64        533      594      720
 All Other Crops Seeds and Traits           55     107      149     151      462      29        107      149      175       460      492      529
 Total Seeds and Genomics               1,099     3,042    2,248    908     7,292    1,031     3,009    3,301    1,197     8,538    10,060   11,995
 Roundup / Glyphosate                   1,359      776      614     778     3,527     509       503      836      802      2,650    2,809    3,211
 All Other                                  191    217      299     193      900      157       200      300      248       905      880      856
 Total Agricultural Productivity        1,550      993      913     971     4,427     666       90      1,136    1,050     3,555    3,689    4,067
 Total Sales                            2,649     4,035    3,161    1,879   11,720   1,697     3,712    4,437    2,247     12,093   13,749   16,062

 Gross Profit
 Corn Seed and Traits                       403   1,412     630     184     2,606     304      1,445    1,079     306      3,134    3,846    4,625
 Soybean Seed and Traits                    145    373      338      15      868      139       258      540      24        961     1,287    1,705
 Vegetable Seeds                            80     115      113     131      416      112       139      137      140       527      658      722
 Cotton Seed and Traits                     26     21       249      48      344      33        26       261      55        375      446      543
 All Other Crops Seeds and Traits           24     56       97       31      267       9        59       82       73        223      281      302
 Total Seeds and Genomics                   678   1,977    1,427    408     4,501     597      1,927    2,098     598      5,220    6,517    7,897
 Roundup / Glyphosate                       804    437      273     322     1,836     87        111      234      242       674      849     1,006
 All Other                                  68     107      134     113      422      55        74       114      111       354      340      326
 Total Agricultural Productivity            872    544      407     435     2,258     142       185      348      353      1,028    1,189    1,332
 Total Gross Profit                     1,550     2,521    1,834    843     6,759     739      2,112    2,446     951      6,247    7,706    9,229

 SG&A                                       514    509      497     468     1,987     482       530      660      577      2,249    2,509    2,931
 Bad debt expense                           36     13        7       (7)     49       14        20       20       21        75       90       95
 R&D                                        224    265      295     286     1,098     267       335      335      330      1,267    1,375    1,558
 Other (income)/expense                     26     32        4       16      78        0        10       10       20        40       45       45
 EBIT                                       720   1,699    1,015     63     3,547     (24)     1,217    1,421      3       2,616    3,687    4,600
 Interest expense, net                      (2)     8       18       34      58       28         5        8        (9)      32        1        1
 Pretax Income                              724   1,691     997      29     3,489     (40)     1,212    1,413     12       2,584    3,687    4,600
 Income taxes                               176    490      303      8      1,019     (30)      364      424      18        775     1,106    1,380
 Effective tax rate                     24.3%     29.0%    30.4%    26.0%   29.2%    75.0%     30.0%    30.0%    153.2%    30.0%    30.0%    30.0%
 Minority Interest                           2      1       11       10      24        0         5       10       25        40       50       50

 Net income (recurring)                     546   1,200     683      11     2,446     (10)      843      979      (43)     1,769    2,531    3,170
 EPS Recurring                          $0.98     $2.16    $1.23    $0.02   $4.41    ($0.02)   $1.50    $1.75    ($0.07)   $3.15    $4.50    $5.63
 Shares outstanding (MM)                    557    555      554     545      555      546       561      561      576       561      563      563
 Dividends                              $0.18     $0.18    $0.27    $0.27   $0.88    $0.27     $0.27    $0.27    $0.27     $1.06    $1.06    $1.06
 Gross Cash flow                            671   1,329     812     176     2,994     125       978     1,114     87       2,304    3,071    3,715

Source: Company reports and UBS estimates

                                                                                                                                                UBS 6
Monsanto Co. 25 February 2010

   Monsanto Co.

Monsanto is the world's leading seed producer and the global leader in
genetically modified seeds. The company is the primary producer of genetic
traits for major crops such as corn and soybeans. It sells the majority of its corn
seed and traits through its Dekalb unit. The majority of its soybean seed and
traits are sold through its Asgrow unit. The company also produces and
distributes one of the world's biggest herbicides, Roundup. Monsanto operates
within two segments: Seeds & Genomics and Ag Productivity.

   Statement of Risk

Risks include swings in commodity prices which in turn can shift planted acres
as well as farm incomes significantly. Lower commodity prices and farmer
income could ease demand for higher priced biotech seeds. Unfavorable weather
for agricultural products and currency fluctuations may also impact profitability.
Finally, if the market senses that a strong economic recovery lies ahead, there
could be a significant shift out of MON shares into more cyclical, less defensive

   Analyst Certification

Each research analyst primarily responsible for the content of this research
report, in whole or in part, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately
reflect his or her personal views about those securities or issuers; and (2) no part
of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the
research report.

                                                                                       UBS 7
Monsanto Co. 25 February 2010

Required Disclosures

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For information on the ways in which UBS manages conflicts and maintains independence of its research product;
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UBS Investment Research: Global Equity Rating Allocations
                                                                                              1                                2
 UBS 12-Month Rating            Rating Category                                     Coverage                      IB Services
 Buy                            Buy                                                        48%                            40%
 Neutral                        Hold/Neutral                                               40%                            35%
 Sell                           Sell                                                       13%                            26%
                                                                                              3                              4
 UBS Short-Term Rating          Rating Category                                     Coverage                      IB Services
 Buy                            Buy                                               less than 1%                            17%
 Sell                           Sell                                              less than 1%                            67%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.

Source: UBS. Rating allocations are as of 31 December 2009.
UBS Investment Research: Global Equity Rating Definitions
 UBS 12-Month Rating            Definition
 Buy                            FSR is > 6% above the MRA.
 Neutral                        FSR is between -6% and 6% of the MRA.
 Sell                           FSR is > 6% below the MRA.
 UBS Short-Term Rating          Definition
                                Buy: Stock price expected to rise within three months from the time the rating was assigned
                                because of a specific catalyst or event.
                                Sell: Stock price expected to fall within three months from the time the rating was assigned
                                because of a specific catalyst or event.

                                                                                                                          UBS 8
Monsanto Co. 25 February 2010

 Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12
 Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a
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 Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are
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Negative on factors such as structure, management, performance record, discount.
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Company Disclosures
 Company Name                                  Reuters     12-mo rating Short-term rating                Price         Price date
 Monsanto Co.                                   MON.N              Buy                N/A             US$74.04       24 Feb 2010
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing

16.    UBS Securities LLC makes a market in the securities and/or ADRs of this company.

Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.

                                                                                                                              UBS 9
Monsanto Co. 25 February 2010

Monsanto Co. (US$)
                                                                                                       Price Target (US$)                             Stock Price (US$)
























                  Buy 1
              Neutral 1
            No Rating
        Short-term Sell

Source: UBS; as of 24 Feb 2010

Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table
for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6%
above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 =
FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA,
lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6%
below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A
predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities.
A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities.
From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.

                                                                                                                                                                                                                                                                                      UBS 10
Monsanto Co. 25 February 2010

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