Citigroup is out negative on Bunge (NYSE:BG) saying that given what their Cir Emerging Markets Economist teamviews as the possible beginnings of a potential slowdown within the emerging markets, they believe that the risk of moderating demand growth has increased and thus future earnings at Bunge could come under pressure. This translates into a reduction in price target to $95 (from $130) on a reduced target PE multiple of 9.5x as they are becoming more concerned with the viability of ‘09 numbers at Bunge

Currently, CIR economist team is forecasting a slowdown in emerging market GDP growth to 6.3% in ‘08, down from 7.4% in ‘07, with growth expected to moderate further in ‘09 at 6.0%. This ties in with USDA projections for global soy demand over the next 12 months at 3.0%, down from the previous 10-yr CAGR of 4.8%.

Adding to the risk profile surrounding 2009 earnings at Bunge is the recent decline in commodity prices which has been led by crude oil, which is down approximately -25% from its July peaks. At this point they don’t know for sure that events will unfold to reduce commodity demand and thus prices, but the signs seem to be forming, as several of firm’s fellow analysts have reduced their price forecast for different commodities such as their commodities strategy analyst who on Monday reduced his forecast on aluminium, copper, and nickel prices by -10% to – 27%, due to concerns of a slowdown in industrial activity.

Notablecalls: BG will be in the casualty list today. Citi has been one of the more bullish firms covering the name. On the bright side, this is the 1st step towards capitulation.

I suspect BG will be down 5% on this.

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Bunge, Citigroup, crude oil, Market Commentary, USD, USDA