UPDATE 2-Bunge results miss estimates as drought weighs

Tom Polansek

* U.S. drought alters typical grain trading patterns -Bunge

* Says world needs record corn, soy crops to rebuild supply

* Third-quarter profit $2.08/share vs Street view $2.17

* Revenue $17.29 bln vs Street view $17.80 bln

CHICAGO, Oct 25 (Reuters) - Agribusiness giant Bunge Ltd reported weaker-than-expected third-quarter results and said global grain trading would remain ``volatile and complex'' following the worst U.S. drought in more than half a century.

The four ``ABCD'' firms that dominate the global agricultural business - Archer Daniel Midlands Co, Bunge, Cargill Inc and Louis Dreyfus Corp - are grappling with reduced crop volumes and unusual trading patterns due to bad weather.

Bunge said the world needs record corn and soybean crops to build supplies back to comfortable levels.

``The current market environment, shaped most notably by the severe U.S. drought, has been and will continue to be volatile and complex for everyone who participates in our industry,'' Chairman and Chief Executive Officer Alberto Weisser said.

New York-based Bunge processes, stores and sells agricultural products as part of its agribusiness operations. It also markets vegetable oils for the biodiesel industry and is a leading sugar and ethanol producer.

Bunge managed 15 percent volume growth in its agribusiness segment during the third quarter, helped by strong export demand and higher oilseed processing. It said a global network of ports and elevators benefited its bottom line.

Quarterly net earnings rose to $297 million, or $1.92 per share, from $140 million, or 89 cents per share, a year earlier.

Excluding one-time items, the company earned $2.08 per share, below analysts' average forecast of $2.17.

Net sales rose 10 percent to $17.29 billion. Analysts expected $17.80 billion, according to Thomson Reuters I/B/E/S.


Global traders are on edge because of the drought in the United States, the world's top grain exporter, and poor weather elsewhere.

Flows of crops from the key Black Sea region are uncertain after Ukraine's agriculture minister said the country, one of the top 10 wheat exporting countries, will ban such exports starting Nov. 15 due to a weather-damaged harvest.

Bunge rival Cargill earlier this month said its broad global reach helped quarterly earnings quadruple from a year ago but warned that the full impact of bad weather had not yet been seen.

``As new crops are harvested, we should see a more balanced supply-demand situation, which will be good for consumers and for the market overall,'' Bunge's Weisser said on Thursday.

Bunge has taken advantage of unusual trading patterns, shipping corn to the U.S. Southeast from Brazil. Brazil brought in a record corn harvest this year.

Some long-time importers of U.S. corn have forged ties with alternative suppliers like Brazil, casting a shadow over continued U.S. dominance in the export markets, according to foreign grain buyers.

U.S. corn exports are projected to shrink this season to the lowest point since the mid-1970s, while rival exporters such as Brazil and Argentina have seen export volumes soar to record or near-record levels.

Bunge previously said it does expect a permanent reordering of the global grain trade as a result of the U.S. drought.

Bunge shares opened at $68.50, up 22 cents, on the New York Stock Exchange.