UPDATE 3-Bunge looks to next harvests after earnings sink

Thu Jul 25, 2013 12:43pm EDT
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By Tom Polansek

CHICAGO, July 25 (Reuters) - Agribusiness company Bunge Ltd on Thursday reported a sharp drop in quarterly earnings caused by tight crop supplies, and it forecast massive U.S. harvests will boost trading and processing volumes.

Bunge, one of the world's largest agricultural trading houses, is anxiously awaiting the autumn soy and corn harvests after a historic drought slashed production last year. The company also grappled with reduced harvests due to poor weather in Argentina and the Black Sea region.

Export demand for crops should be strong in the second half of the year because prices have dropped on expectations of large harvests, said Drew Burke, Bunge's chief financial officer, adding that buyers have been waiting to make purchases.

Still, inventories will likely remain scarce until the fourth quarter because planting delays in the spring will postpone the start of the U.S. harvest.

"Our oilseed processing and merchandising operations in North America and Europe will continue to be impacted by low capacity utilizations due to tight supplies until new crops are harvested," Burke said.

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.

The company, which makes money by buying, selling, transporting and processing crops, reported net earnings of $110 million for the second quarter that ended June 30 compared with $265 million for the same quarter a year ago.   Continued...