UPDATE 2-Dean Foods warns of loss as China demand raises milk prices
* Sees first-qtr results between $0.03/share loss and $0.03/share profit
* Analysts were expecting a profit of $0.28/share
* Fourth-quarter revenue falls 7 pct; slightly above estimates
* Posts fourth-quarter net loss vs net profit a year earlier
* Shares fall as much as 10.5 pct
(Adds details from conference call, background; updates shares)
Feb 11 (Reuters) - Dean Foods Co, the largest U.S. dairy processor, warned of a first-quarter loss as a spike in China's demand for imported milk products sent raw milk prices soaring.
Dean Foods' shares fell as much as 10.5 percent on Tuesday to their lowest in over a year.
The company said it had expected raw milk prices to fall in the early part of 2014, but they rose sharply instead, driven by higher global demand for dairy products.
Asia's imports of dairy commodity products have jumped due to a rise in demand for dairy-based protein in the region and a fall in China's milk production, Chief Executive Gregg Tanner said on a conference call.
China's appetite for foreign milk powder has grown in the past few years due to distrust in local products since six infants were killed and thousands were taken ill in 2008 after consuming milk containing industrial chemical melamine.
Tighter food safety rules and disease among Chinese cattle also stymied the country's output in 2013, pushing import volumes up by almost a third in January-October.
Dean Foods expects China to remain a heavy buyer of imported dairy commodity products this year, keeping global raw milk prices high, Tanner said.
The Dallas-based company, which sells Meadow Gold and Dean's milk, said it now expected prices to rise through the first half of the year before flattening and then declining moderately in the second half.
Dean Foods said its results could range between a loss of 3 cents per share and a profit of 3 cents per share in the quarter ending March.
Analysts on average were expecting a profit of 28 cents per share, according to Thomson Reuters I/B/E/S.
"We expect our first quarter will be our most difficult quarter of this year ..." Tanner said in a statement.
Dean Foods has been closing factories to cut costs.
The company's milk sales volumes have declined since it lost a contract with Wal-Mart Stores Inc last year.
Dean Foods said on Tuesday it did not expect to "fully lap the impact" until the second half of this year.
Lower milk volumes dragged the company's fourth-quarter revenue down 7 percent, the steepest drop in six quarters.
Dean Foods reported a net loss of $37.7 million in the quarter ended Dec. 31 compared with a profit of $30.6 million, a year earlier.
Excluding items, the company earned 18 cents per share, in line with the average analyst estimate.
Revenue fell to $2.30 billion, but came slightly above the $2.27 billion analysts had expected.
Dean Foods shares were down 8 percent at $13.98 on Tuesday afternoon on the New York Stock Exchange. The stock hit a low of $13.59 earlier.
(Additional reporting by Shailaja Sharma in Bangalore; Editing by Kirti Pandey and Savio D'Souza)