(Dow Jones) -- Monsanto Co. on Wednesday issued a profit warning but said there were signs of stabilization in a weak farm economy hampered by low global crop prices and a strong U.S. dollar.
The world's biggest seller of corn and soybean seeds and the maker of Roundup weed killer cut the midpoint of its fiscal 2016 profit forecast by 11%, but doesn't plan any further job cuts after announcing plans in recent months to lay off 3,600 employees, about 16% of its global workforce.
"There are no signs of improvement, but not much indication of further deterioration," Chief Executive Hugh Grant said in an interview.
Monsanto shares were recently down 5.2% at $87.68, and have shed 27% over the past year.
The company said ahead of an investor meeting that it expects adjusted earnings for 2016 in a range of $4.40 to $5.10, down from its prior forecast of $5.10 to $5.60.
Monsanto, along with rivals in the seed business and suppliers of fertilizer and tractors, is grappling with a severe downturn in the U.S. farm economy and pressures in overseas markets.
Farmers' incomes have been pinched as grain and oilseed prices have sagged for three straight years following a string of bumper harvests. The strength of the U.S. dollar has also made Monsanto's products more expensive overseas.
The U.S. Department of Agriculture last week forecast another big U.S. crop, helping send corn stockpiles to a projected 12-year high and wheat to the highest levels in nearly three decades. That extended the pressure on farmers' income, which the agency expects this year will fall to the lowest level since 2002.
The St. Louis, Mo.-based company said Wednesday it also faces pricing pressure from generic versions of glyphosate, the main ingredient of its Roundup herbicide. It is also still awaiting regulatory approval for a new version of the dicamba herbicide, which Monsanto aims to pair with a new line of soybean seeds that are already approved.
The company is hopeful the U.S. Environmental Protection Agency will approve the chemical in the "next several months," Chief Technology Officer Robert Fraley said in the interview.
Consolidation in the agricultural seed and chemical business is likely to continue, Monsanto executives said, though the company currently favors striking partnerships with rivals rather than acquiring them outright, Mr. Grant said, adding that any deal "has to make economic sense, especially in these times."
The sector in the last three months has been reshaped as DuPont Co. and Dow Chemical Co. in December unveiled a merger plan that will lead to a separation into three separate companies, including one focused on agriculture. In February the Swiss pesticide giant Syngenta AG, which Monsanto pursued unsuccessfully last year, agreed to sell itself to China National Chemical Corp.
Regarding Syngenta, Mr. Grant said that while it is difficult to predict how regulators would consider the deal, "from all our planning, that ship has sailed."
For the second quarter, the company forecast earnings of $2.35 to $2.45 a share, a decline versus the prior year, on glyphosate pricing declines and the devaluation of the Argentine peso. Analysts surveyed by Thomson Reuters had expected $2.84 a share.
Monsanto said currency headwinds would shave about 25 to 30 cents off its full-year earnings results. The company also anticipates results in its seeds and genomics business to bite into its bottom line by an additional 30 cents, which the company blamed on industry discounting and a delay in the U.S. approval of dicamba for in-crop use.