UPDATE 3-Bunge earnings double as drought alters grain trade

* 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) - Bunge Ltd shares jumped on Thursday as the agribusiness giant doubled quarterly profits by mobilizing its global grain network to supply customers hit by the worst U.S. drought in more than 50 years.

Bunge said the world was modifying ``typical trade flows'' after poor weather slashed output in the United States, the world's top grain exporter, and other countries.

Shares were up 3.2 percent at $70.44 on the New York Stock Exchange.

``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.

The four ``ABCD'' companies that dominate the global agricultural business - Archer Daniel Midlands Co, Bunge, Cargill Inc and Louis Dreyfus Corp - are emerging from a period of dismal earnings in which tough new competitors and volatile markets pressured profits.

There are signs the scramble for grains after the U.S. drought may be helping their recovery, as companies with geographically diverse resources can acquire and deliver grain where it is needed.

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

Bunge managed 15 percent volume growth in its agribusiness segment, which processes, stores and sells agricultural products, during the third quarter, helped by new grain-handling and port facilities.

Bunge ``had a great quarter,'' said Christine Healy, an analyst for Scotia Capital, on an investors' conference call. ``Volumes I think were higher than what people expected.''

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 still on edge about tight supplies.

U.S. farmers harvested much less corn and soy than expected this year, and Ukraine's agriculture minister said his country, one of the top 10 wheat exporting countries, will ban such exports starting Nov. 15 due to a weather-damaged harvest.

Still, reduced wheat exports were expected from Ukraine, and a significant volume has already been exported, Weisser said in an interview.

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

Exports of corn from Brazil are ongoing and a ``very important component'' of Bunge's business, Weisser said.

Bunge also has exported corn from Ukraine, which is ``something new'' for the company, he said.

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.

Weisser does expect a permanent reordering of the global grain trade as a result of the U.S. drought.

``The U.S. is really the best in terms of corn,'' he said. ``This is a unique situation we are having at the moment.''


Investors have been keeping an eye on Bunge since rival ADM this week bid $2.8 billion for smaller Australian shipper GrainCorp.

ADM's bid comes at a time of consolidation in the global grains sector amid intense competition for grains trading power to feed fast-developing countries seeking food security.

U.S. industry bankers have said Bunge and Cargill were no doubt evaluating rival bids.

Weisser declined to comment specifically on GrainCorp but said was interested in expanding in Australia, adding that consolidation will likely continue in the grain industry.

``The market has shown that it is necessary to have large companies'' with geographically diverse assets and strong balance sheets ``to operate and serve the market in these volatile times,'' he said. ``We are part of it.''