UPDATE 3-Bunge warns of lingering tightness in grain supply
* Shares soar 7.2 percent after earnings top estimates * Delays at Brazil ports improving but will persist -CEO * U.S. farmers hold back on crop sales after 2012 drought By Tom Polansek April 25 (Reuters) - Congestion at Brazilian ports and limited selling of crops by U.S. farmers are keeping global grain supplies tight despite expectations for massive harvests later this year, agribusiness company Bunge Ltd said on Thursday. Inventories of crops like corn and soybeans dwindled following a historic drought in the United States last year and because of strong demand from buyers like China. Food makers hope large harvests in the United States this autumn will replenish inventories and put further pressure on grain prices, which have pulled back from all-time highs reached last year because of the drought. However, the flow of key farm products to the world from growers in North and South America remains constrained, according to Bunge, one of the world's top agricultural trading houses. Earlier Thursday, Bunge reported earnings of $170 million for the first quarter ended March 31, up from $84 million a year earlier, led by a jump in sales of sugar and bioenergy products. Results in the agribusiness were down from a year ago. "The challenge continues," said Soren Schroder, who will take over as Bunge's chief executive on June 1, about logistical problems slowing exports from South America. "It's not over." Bunge is among the four large players known as the "ABCD" companies that dominate the flow of agricultural goods around the world. The others are Archer Daniels Midland Co, Cargill Inc and Louis Dreyfus Corp. Bunge profits by buying, selling, transporting and processing crops and faces challenges from a Brazilian soy crop that's almost one-quarter larger than last year's. The crop has strained infrastructure at ports to the breaking point, with long queues of ships waiting to berth and hundreds of trucks sitting idle for days waiting to offload. The delays have cost Brazil, with top soy importer China reported to have lost patience and canceled some loads to buy from the United States instead. Some ships stayed in congested Brazilian ports, rather than sailing away to export soybeans from the United States, because U.S. supplies are scarce. That exacerbated the logjam, Schroder said in an interview. Delays in Brazil will persist until the U.S. harvest this autumn, outgoing CEO Alberto Weisser said after Bunge reported higher-than-expected quarterly earnings. Increasing investment in Brazil's infrastructure should improve logistics for next year's harvest, he said. EARNINGS BEAT STREET Excluding items, Bunge earned $1.15 per share, topping the average analyst estimate of 92 cents per share, according to Thomson Reuters I/B/E/S. A year ago, it earned 57 cents per share. Revenue totaled $14.79 billion, above Wall Street's expectations of $13.99 billion and $12.91 billion a year earlier. Shares soared 7.2 percent on the New York Stock Exchange as investors cheered the results after Bunge swung to a surprising loss in the quarter ended Dec. 31. The move pushed Bunge 0.8 percent higher for the year. "Things look markedly better," Citi analyst David Driscoll said about the company's outlook. Shares of rival ADM, which is due to report quarterly earnings on Tuesday, rose 2.3 percent and are up 21 percent so far this year. TIGHT-FISTED FARMERS In the United States, grain and soybean supplies are tight as farmers are hesitant to sell any crops they have in storage after the savage drought caught them by surprise last summer. Cold, wet weather has slowed spring planting in the U.S. Midwest, raising uncertainty about prospects for the harvest this year. "We have a long way to go" before the next U.S. harvest, Drew Burke, Bunge's chief financial officer, said on a call with analysts. "Exactly how the year plays out depends a lot on how the Northern Hemisphere crops are." Bunge said earlier this month that it planned to idle a soy processing plant in Kansas from May 1 until the autumn harvest due to low supplies of the oilseed. Many U.S. soy processors shut down for a week or two beginning in April to prepare machinery ahead of the fall harvest. However, seasonal downtime could run longer this year because of tight supplies after the worst U.S. drought since 1934. Bunge said it does not plan to shut down other processing plants for extended periods of time but may have interruptions at other facilities. "Somehow the industry will find it's way through the summer and into new crop," Schroder told Reuters. "It will be tight but it will be manageable."
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