UPDATE 1-Yara Q3 profit lags forecast, sees high winter gas cost

* EBITDA rises 16 pct to $402 mln vs poll $458 mln

* Price of fertiliser increasing, but so is the input cost

* Says current sales conducted at higher margin

* Shares fall 3.8 pct (Adds quotes, analyst comment, share price)

OSLO, Oct 18 (Reuters) - Fertiliser maker Yara International reported a smaller than expected increase in third-quarter earnings on Thursday as higher prices and production were partly offset by the rising cost of natural gas, a key input.

The Norwegian company’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 16 percent year-on-year to $402 million before non-recurring items, short of the $458 million in a Reuters poll of analysts.

“Yara’s operating environment is improving, due to a combination of higher grain prices and receding urea supply pressure, resulting in an improving urea price trend,” the company said in its third-quarter report.

“However, gas prices have increased in many regions including Europe, and look set to stay high through this winter,” Yara added.

The company predicted its fourth-quarter gas cost would rise by $125 million year-on-year, and the first-quarter 2019 cost would be $100 million higher than in the same period of 2018.

While the market price of fertilisers has also risen, the company’s product deliveries typically lag orders by around three months, Chief Financial Officer Petter Oestboe said during a presentation of the earnings.

“We’re now selling at a higher premium,” he added.

Yara’s shares traded 3.8 percent lower at 374.2 Norwegian crowns at 0757 GMT, virtually unchanged from the start of the year.

Brokers Pareto Securities, which have a buy recommendation on Yara’s stock, said fertiliser prices were also likely to rise and this could help the company overcome the gas price pressure.

“In total, the (earnings) do not change our positive stand and hence weakness today could be a buying opportunity,” said Pareto, which has a target for the share price of 450 Norwegian crowns.

The company’s plan to improve annual profits by at least $500 million by 2020 has so far resulted in gains of $330 million, up from $310 million at the end of the second quarter, Yara said. (Reporting by Terje Solsvik, editing by Ole Petter Skonnord and Emelia Sithole-Matarise)