(Adds 2017 outlook, updates share price, adds byline)
By Karl Plume
Oct 5 (Reuters) - U.S. seeds and agrochemicals company Monsanto Co, which agreed last month to be bought by Germany's Bayer AG for $66 billion, reported a surprise adjusted profit, helped by a drop in expenses and higher corn seed volumes.
Monsanto agreed in September to a sweetened $128-per-share offer from Bayer that, if approved by regulators, would create a company commanding more than a quarter of the world market for seeds and pesticides.
The St. Louis, Missouri-based company had been expected to report a loss on an adjusted basis, reflecting a slump in commodity prices and a fall in farm incomes.
However, net sales in the company's corn seeds and traits business jumped 34 percent in the three months ended Aug. 31 as corn seed volumes rose in the United States.
Monsanto's expenses also dropped, by nearly 10 percent, as cost-cutting measures paid off.
It expects fiscal year 2017 earnings per share of $3.83 to $4.35 on an as-reported basis, which included costs related to the Bayer transaction of 27 to 34 cents. On an ongoing basis, EPS was expected between $4.50 and $4.90 a share, assuming stable currencies, the company said.
Monsanto, whose shares traded on either side of the previous day's close on Wednesday, did not offer any update on potential divestitures related to the Bayer deal but said it expects the deal to close by the end of 2017 as previously stated.
Some farm groups, seed companies and lawmakers have raised concerns about the deal, saying it could result in higher prices and reduced choices for farmers.
Bayer and Monsanto have said they are confident that the deal will pass regulatory muster. Bayer has said it is committed to divest up to $1.6 billion of its portfolio to win approval.
The net loss attributable to Monsanto narrowed to $191 million, or 44 cents per share, in the fourth quarter ended Aug. 31 from $495 million, or $1.06 per share, a year earlier.
Excluding items, however, the company earned 7 cents per share. Analysts had expected a loss of 3 cents per share on that basis, according to Thomson Reuters I/B/E/S.
Net sales of the company, known for its genetically engineered corn, soybean and the Roundup herbicide, rose 8.8 percent to $2.56 billion, beating the average estimate of $2.36 billion.
Up to Tuesday's close of $102.15, Monsanto's shares had fallen about 4.3 percent since the Bayer deal was announced. (Additional reporting by Arathy S Nair in Bengaluru; Editing by Ted Kerr and Meredith Mazzilli)