UPDATE 3-Weak fertilizer prices pressure Bunge profits

* Bunge income falls 60 percent from a year ago
* Fertilizer prices weakened, pressuring profits
* Soft fertilizer market also clips Potash Corp

By Tom Polansek
CHICAGO, April 26 (Reuters) - Bunge Ltd's
first-quarter income sank a greater-than-expected 60 percent
from a year ago under pressure from falling fertilizer prices,
pushing down shares for the world's top soybean processor.
Weak fertilizer markets also clipped Potash Corp of
Saskatchewan, the world's top fertilizer maker. A nearly 60
percent decrease in its shipments of the crop nutrient potash
led to a 33 percent decline its first-quarter profit.
Fertilizer demand and prices softened earlier this year as
farmers delayed purchases in protest of high costs. Bunge, which
buys and resells fertilizer produced by companies like Potash
Corp, was caught holding the bag, as it had fertilizer in
storage that was devalued by the decline in prices.
Bunge shares were down 3.5 percent at 65.09. Potash Corp was
down 1.2 percent at 42.25.
"When fertilizer prices go up, we benefit. When prices go
down, obviously we suffer," said Alberto Weisser, Bunge's
chairman and chief executive officer, in an interview.
Bunge, the world's top soybean processor, is one of four
large players, known as the ABCD companies, that have
traditionally dominated business in agricultural markets. The
others are Archer Daniels Midland Co, Cargill
and Louis Dreyfus.
The slump came after Bunge reported better-than-expected
profits in February, following weak results from rivals ADM and
Cargill.
Cargill this month reported a rebound in earnings after its
worst quarter in a decade, led by record profits in its global
food ingredient businesses and stronger results in energy
trading.

FERTILIZER UNCERTAINTY
For Bunge, higher sales volumes in fertilizer in the last
quarter were more than offset by lower margins. The company
expects to recover, as "farm economics are strong in South
America and should result in higher fertilizer volumes," said
Drew Burke, chief financial officer.
Bunge reported a first quarter profit of $92 million, or 57
cents a share, down from $232 million, or $1.49 a share, last
year. Excluding costs for a legacy environmental claim in Brazil
and other adjustments, earnings were 69 cents a share.
Bunge listed a $27 million charge in the fertilizer segment
due to a sulfuric acid spill in the south of Brazil in 1998.
Revenue of $13.45 billion was up from $12.2 billion a year
earlier. Analysts polled by Thomson Reuters expected a $1.18 per
share profit on $13.25 billion of revenue.
Overall, the company said it expected results for 2012 to
beat those of 2011.
Still, investors focused on poor results in fertilizer.
Weisser said their attention was misplaced, as fertilizer only
accounts for about 5 percent of profits during a typical year.
"There's an incredible amount of searching, or inspection
that investors are doing on the sugar and fertilizer," Citi
analyst David Driscoll said. "These things are almost a
distraction."
Potash Corp helped fuel concerns about fertilizer by
trimming its estimate for global potash demand for 2012 and
lowering forecasts for its shipments and profits. It predicted
demand for potash will strengthen for the rest of the year after
a slower-than-expected start.
Mosaic Co, another fertilizer maker, said demand for
fertilizer has "increased sharply" in the past month.

BUNGE SUGAR UNIT DIPS
Profits in Bunge's sugar and bioenergy business were down
from a year ago because of lower ethanol margins, "stemming from
high-cost inventory that was carried into the year from 2011,"
according to the company.
Market sales prices in Brazil were pressured, in part, by an
increase in imports from the United States.
The sugar and bioenergy business has been in focus as
Standard & Poor's Ratings Services this week raised its outlook
for Bunge to positive from stable.
S&P warned it could revise the outlook back to stable if
Bunge did not sustain earnings and weakness persisted in the
sugar and bioenergy segment.
Results for Bunge's agribusiness unit, its largest segment,
were down from "an especially strong" first quarter last year,
according to the company. The unit buys, sells, transports,
stores and processes bulk grains and soybeans.
Bunge said improving margins for soy crushing in the
Northern Hemisphere and China should help lift the unit.