Bunge, while missing earnings hopes for the first half of
2012, forecast a "strong" performance in the second as the squeeze on grain supplies
favours crop trading giants, and its sugar division – at last – fulfils its
The transport-to-fertilizer group - one of the ABCD of top Western
agricultural trading houses with Archer Daniels Midland, Cargill and Louis
Dreyfus – flagged a benefit to international enterprises from the weak crop
supplies expected following weather damage to crops in, notably, the US and the
former Soviet Union.
"In times of tight commodity stocks and price volatility,
farmers depend on a trusted outlet for their crops, commercial customers rely
on a responsive supplier, and the world requires flexible trade that can move
products smoothly and safely," Alberto Weisser, the Bunge chairman and chief
For Bunge, a "diverse product portfolio and global asset
network enable us to provide these services in the most challenging of times",
Mr Weisser said.
Drew Burke, the Bunge finance director, said: "Considering
the smaller US corn harvest, global grain demand will be met by a variety of
products from different geographies.
"With our global network of ports and elevators, our grain
merchandising operations should perform well in this environment."
The group forecast a further boost from its Brazil-based sugar
operations, where weather conditions have "improved" after excessive rains
which have delayed the cane harvest so far in 2012-13, if raising hopes for
yields later in the season.
"While the heavy rainfall negatively impacted our results this
past quarter, it benefits the development of the sugarcane," Mr Burke said.
"We feel increasingly more confident in our ability to mill
at capacity in 2013," while standing by a forecast crush of 17m-18m tonnes of
cane in 2012.
The comments come the day after cane industry group Unica
revealed that the cane harvest in Brazil's Centre South region, where Bunge
operates, had in the first half of July risen above year-ago levels for the
first time this season.
Analysts including Czarnikow and Safras & Mercado have
sounded upbeat notes on Centre South cane output for the rest of the year.
In the April-to-June quarter, Bunge's sugar division recorded
an operating loss of $28m, compared with a profit of $18m a year before, and
representing a second successive quarter in the red.
Profits also declined in the edibles oils division, to $2m
Group earnings fell to $274m, or $1.20 a share on an underlying
basis, from $316m, or $1.78 a share, a year before.
Analysts had expected a $1.34-a-share result in the latest
period, according to a ThomsonReuters poll.
Bunge also forecast "strong export demand" ahead for its US
oilseed processing products, following the disappointing South American
And Mr Burke said that the group's "European sunseed and
Canadian canola processing operations should benefit from the combination of
large crop production and increased oil and meal demand due to tightness in the
global soybean and European rapeseed supply".
However, European rapeseed processing margins, hurt by high
prices of the oilseed, would "remain under pressure".
In China, while oilseed processing "will likely remain
challenging, we expect margins to improve later in the year as the market works
through excess inventory in the country".
Bunge shares closed up 4.9% at $64.81 in New York.