Bunge Ltd. Projects Boost From Big North American Crop Harvests

(Dow Jones) -- Bunge Ltd. projected a boost from big North American crop harvests after struggles in its Brazilian grain business slashed the agricultural giant's quarterly profits.South American farmers' reluctance to part with corn and soybeans at current low prices will be countered by the glut of grain being brought off farms in the U.S. and Canada, executives said, bolstering Bunge's shipping and processing businesses."A solid fourth quarter is in sight and we expect significant growth in 2017," said Soren Schroder, Bunge's chief executive, on a conference call.Bunge and other top agricultural trading firms, such as Archer Daniels Midland Co., have high hopes for what forecasters expect to be a record U.S. corn and soybean crop. The anticipated flood of grain should help offset a roughly 51% decline in third-quarter profits Bunge reported Wednesday, which executives largely attributed to sluggish crop sales by Brazilian farmers."Farmers just don't like prices and they can't make returns, based on forex," he said. He estimated the slow crop selling by South American farmers impacted Bunge's results by about $100 million.The White Plains, N.Y., company lifted profit projections for its food, ingredients and sugar businesses over the remainder of 2016, citing improved demand for vegetable oils as Brazil's economy stabilizes and rising sugar prices.Bunge anticipates a bin-busting soybean harvest in North America to help rejuvenate soybeans' competitiveness in animal feed production, after a price spike in the oilseeds earlier this year prompted more feed makers and livestock producers to swap in wheat for more-expensive soybean meal.The coming flood of soybeans should generally boost soybean-crushing volumes and boost profit margins for processors like Bunge, executives said.Mr. Schroder said he expects "a significant uptick" in 2017 earnings as conditions in South America return to normal and Bunge's own expense-reduction efforts, which include about $125 million in cost improvements this year, take effect.For the quarter ended Sept. 30, Bunge reported $118 million in profits, down from $239 million in the year-ago period, when the company benefited by recovering about $50 million in trading-position losses. Earnings improved across all of Bunge's businesses, including food products, sugar, milling and fertilizer, but were offset by the bigger profit decline in Bunge's agribusiness unit.On an adjusted basis, Bunge reported earnings of 73 cents a share, below analysts' average estimate of 81 cents, according to Thomson Reuters. Sales were $11.4 billion, above the $10.3 billion analysts expected.