(Adds details on market conditions, crop prices, stock performance)
By Tom Polansek
CHICAGO, Oct 30 (Reuters) - Bunge Ltd, one of the world’s largest agricultural trading houses, on Thursday defended its risk strategies as it reported lower-than-expected third-quarter earnings and revenue because of hedging losses and limited farmer selling.
The New-York based company suffered as farmers in North and South America, dissatisfied with falling commodity prices, held on to their crops rather than sell them to processors.
In Brazil, Bunge said it experienced its lowest level of forward selling of new crops in years, while Argentine farmers were holding soybeans as a hedge against inflation and currency devaluation.
Slow farmer selling has kept crop supplies tight despite massive U.S. harvests and prevented processors like Bunge from replenishing their inventories.
Global grain traders are adjusting to sluggish farmer sales as part of the impact of a drop in crop prices due to the large U.S. harvests. Prices soared in recent years due to poor weather that hurt output.
“Raw material supply ran low during the transition to the new soybean crop,” Bunge said in a statement.
Soybean prices are down almost 20 percent from a year ago at about $10.40 per bushel on the Chicago Board of Trade after dropping this month to their lowest level since 2010.
Bunge reported net earnings available to shareholders of $284 million, or $1.90 cents per share, compared with a year-earlier net loss of $165 million, or a loss $1.13 per share.
Excluding special items, earnings per share were $1.31, down from $1.89 a year earlier. Analysts had expected $1.90, according to Thomson Reuters I/B/E/S.
Revenue slid to $13.676 billion from $14.701 billion. Analysts had expected $15.33 billion.
Results were “well below consensus” and likely to weigh on Bunge’s stock price, JPMorgan analyst Ann Duignan said.
Bunge shares are up 3.5 percent this year, compared to 5.6 percent gains for rival Archer Daniels Midland Co.
Bunge said it suffered about $80 million in temporary hedging losses in its North American and European oilseed processing and distribution businesses.
Still, the company, one of the world’s top oilseed processors, “managed the complicated crop transition in North America well,” according to a statement. It expects about $60 million in reversals in the fourth quarter.
“Our risk strategies were successful in both grains and oilseeds,” Bunge said.
Bunge, along with ADM, Cargill Inc and Louis Dreyfus Corp, comprise the four large players called the “ABCD” that dominate the flow of agricultural commodities around the world. (Reporting by Tom Polansek; Editing by Grant McCool)