UPDATE 2-Viterra profit, sales surge with commodity tide

(Adds details from conference call. Updates share price)

By Roberta Rampton

WINNIPEG, Manitoba, Sept 10 (Reuters) - Strong world demand for grain and fertilizer helped push Viterra Inc's (VT.TO) quarterly profit up 69 percent, but also put prices for potential acquisition targets beyond reach, Canada's largest grain handler said on Wednesday.

Regina, Saskatchewan-based Viterra is seeking to expand its grain-handling and processing and fertilizer operations in the United States, Europe or Australia, but has shied away from making a couple of acquisitions to that end because of price, Chief Executive Mayo Schmidt said.

But Viterra, which was known as Saskatchewan Wheat Pool before it acquired rival Agricore United for C$1.8 billion last year, hopes to be able to make a deal by the end of the calendar year as the commodity mania cools and target prices deflate, he said.

"Right now, obviously, it's a little difficult because the marketplace is in a lot of turmoil and there's a big commodity correction taking place," Schmidt said on a conference call.

"We realize that, and the targets that we're looking at realize that, and I think you just continue to have a watchful eye," he said.

Tight global grain supplies boosted sales volumes and prices for Viterra in the quarter ended July 31.

Viterra earned C$166.7 million ($155.8 million) in the quarter, or 71 Canadian cents a share, up from C$98.5 million, or 58 Canadian cents a share, in the year-before quarter.

The profit beat analysts' expectations of 54 Canadian cents a share, according to Reuters Estimates.

Viterra stock has dropped about 30 percent in the past three months, caught in a global downturn of commodity-related stocks.

Early on Wednesday, Viterra stock fell to lows not seen in more than a year, but it closed 2 percent higher at C$10.51 on the Toronto Stock Exchange.

"Overall, results were very strong," wrote Orin Baranowsky, analyst at BMO Capital Markets, in a note to clients.

"The company has been able to thrive in a tough market," said Baranowsky, who has a target price of C$15.50 on the stock, and said recent weakness was an opportunity to buy it.

While grain prices have come off their historic highs, they are still strong, and fertilizer margins also remain strong, boding well for the sector, Schmidt said.

"Food stocks are low and there remains a significant food deficit," he said.