* Core Q2 profit up 47 pct at 5.20 bln crowns
* Forecast was 4.7 bln
* Lower costs boost results (Adds analyst comment, detail)
OSLO, July 18 (Reuters) - Norwegian fertiliser firm Yara's second-quarter core earnings beat expectations on Wednesday, lifted by tight global grain markets which supported demand.
Grain prices in many regions, including North America, have risen sharply during the summer on concerns over the expanding drought threatening crops in the U.S. farm belt, increasing farmers' incentives to use fertilisers to boost output.
There had also been significant delays in the fertiliser industry in getting new production capacity online, tightening the nitrogen market, Yara said.
"Second-quarter nitrogen fertiliser deliveries in Europe were primarily for immediate consumption, but pre-buying incentives for the new season are stronger than a year ago, given the recent strengthening of grain prices," Yara said.
Yara's April-June adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-off items, rose 47 percent to 5.20 billion crowns ($851 million), compared with a forecast for 4.47 billion.
The company's shares gained 4.5 percent in early trade.
Yara's energy costs, which fell 7 percent, were seen around 100 million crowns lower in the third quarter compared with 2011.
"Yara is showing very strong results indeed," said Eirik Dahle, analyst at Pareto Securities. "In terms of future growth I will not speculate, but I think the market is going to stay tight."
"I have to take my hat off to Yara. If you sum it up, the production volume, sales, and prices are all as expected, so eliminating these leaves lowered costs as the main reason for the good results," said another analyst who declined to be named.
Sales rose 15 percent to 21.4 billion, missing the average analyst forecast, while industry deliveries in Western Europe - Yara's core market - were up only 2 percent compared with the year-ago quarter.
The average realised urea price was up 25 percent compared with the April-June quarter in 2011, while nitrate and NPK prices decreased by 5 percent and 4 percent respectively.
Yara said that European nitrate prices had been lower relative to global urea prices than a year ago as Western Europe's winter crops had suffered substantial damage.
A late spring negatively affected European fertiliser demand for the season and significant carry-over stocks at the start of the season increased available supply.
However, North American demand for nitrogen had outpaced availability, pushing prices substantially higher than anywhere else in the world, Yara said.
Also, China - the world's largest fertiliser producer - had near-zero exports in the quarter. ($1 = 6.1134 Norwegian crowns) (Reporting by Victoria Klesty; Editing by David Cowell)