(Adds analyst comment, updates stock price)
By Karl Plume
July 28 (Reuters) - Bunge Ltd shares surged on Thursday after the U.S. grain trader said quarterly profit jumped despite volatile grain markets and maintained its higher full-year earnings forecast.
Strong results from its agribusiness unit, the company's largest revenue driver, boosted results. But the company also warned of weakening margins in Brazil and Argentina due to smaller crops and lower prices.
After posting a 51-percent profit rise in the second quarter, the White Plains, New-York-based company said second-half earnings would be weighted toward the fourth quarter, when crops in the Northern Hemisphere are harvested.
"Overall, we continue to expect to grow earnings in 2016," said Bunge Chief Financial Officer Drew Burke.
"However, in the near term, slow farmer selling in Brazil and Argentina, due to smaller than expected crops and lower prices, are negatively impacting margins. We also expect the mark-to-market gains we benefited from in the second quarter to largely reverse in the third quarter," he said.
Bunge had warned of second-quarter headwinds due to smaller-than-expected harvests in South America, home to many of its elevators and processing plants. Excessive rain in Argentina and severe drought in Brazil reduced yields, prompting farmers there to hoard more of their crops than grain traders had anticipated.
The South American crop shortfall, however, has raised demand for shipments from the United States, where rivals Archer Daniels Midland and privately held Cargill have a stronger presence.
Also, big North American harvests this fall are expected to boost export opportunities for the grain traders and global demand for the soybean meal that the company produces remains robust.
Bunge shares rallied on the strong demand outlook and as the company's stock had underperformed relative to its peers. Before Thursday's earnings release, Bunge shares had dropped 10 percent this year, while ADM shares were up nearly 20 percent.
"There's a lot of pent up demand for the stock because it's really very attractively valued. Investors were simply waiting for this quarter to get out of the way because it was a difficult quarter to call," said Farha Aslam, analyst with Stephens Inc, citing volatile soy prices in the quarter.
ADM reports quarterly results next Tuesday.
Net income attributable to Bunge rose to $109 million, or 78 cents per share, for the quarter ended June 30. Excluding items, the company earned 79 cents per share.
Revenue slipped 2.2 percent to $10.54 billion.
Bunge shares were up 6.5 percent at $65.23. (Reporting by Karl Plume in Chicago and Subrat Patnaik in Bengaluru; Editing by Robin Paxton and Bernadette Baum)