(Recasts, adds analyst quote, updates trading)
By Karl Plume
CHICAGO, April 28 (Reuters) - U.S. agricultural trader Bunge Ltd said Thursday it expects a rough second quarter due to shrinking crop prospects in South America, home to many of its elevators and processing plants.
The warning came even as the company reported better-than-expected first-quarter results on strong exports from the continent as weak currencies propelled demand for grain shipments from Brazil and Argentina.
"Customer demand is strong and global soy processing margins are improving. Smaller harvests in South America, due to recent adverse weather, are introducing new market dynamics," Chief Executive Soren Schroder said in a statement.
Excessive rain has damaged a portion of the Argentine soybean crop while drought in parts of Brazil is threatening to cut the country's winter corn crop.
Smaller crops may prompt farmers to hold a larger share of their harvest, which could erode margins for companies like Bunge and rivals such as Archer Daniels Midland and Cargill.
Bunge expects grain handling assets in the Northern Hemisphere to benefit from the South American crop shortfall, but only later in the year.
Its 2016 earnings growth forecast remained intact.
"Overall, agribusiness results in (South America) were strong in Q1, but management anticipates a dislocation in supply/demand following recent weather concerns in the region, which is likely to result in a 'soft' Q2 before presenting opportunities in (North America) in H2'16," J.P. Morgan analyst Ann Duignan said in a note.
Bunge reported a net profit available to shareholders of $222 million, or $1.60 per share, compared with $249 million, or $1.58 per share, in the same period a year ago.
Excluding items, the company earned $1.41 per share, above analysts' average estimate of 73 cents per share, according to Thomson Reuters I/B/E/S.
Bunge shares were up 2.8 percent in morning trading.
The company's agribusiness unit turned in a profit of $282 million, down 15 percent from a year earlier, as weak soybean processing margins in the United States and Europe were only partly offset by stronger results in Argentina.
Robust demand for South American exports following an Argentine peso devaluation and a weak Brazilian real partly blunted the impact of lower North American shipments.
Food and ingredients earnings slipped 28 percent to $52 million, on weak demand in Brazil, Russia and Ukraine and currency headwinds.
Sugar and bioenergy posted a $14 million loss, compared with a $23 million year-ago loss. Fertilizer swung to a small profit from a loss last year.
Editing by W Simon and Bernadette Baum