* Expects higher potash, phosphate prices in Q2
* Expects phosphate unit margins to improve in 2017
* Adj EPS of $0.04 vs est $0.19 (Adds details, shares)
May 2 (Reuters) - U.S. fertilizer maker Mosaic Co reported a smaller-than-expected quarterly profit on Tuesday, as higher sales volumes were offset by lower phosphate and potash prices.
However, the company said it expects higher realized prices for potash and phosphate in the second quarter and earnings to improve "meaningfully".
Based on Mosaic's volume, price and margin outlook, analysts at BMO Capital Markets expect the company to post second-quarter earnings of 20 cents to 25 cents per share. Analysts on average were expecting 30 cents, according to Thomson Reuters I/B/E/S.
Mosaic said it expects margins to improve in its phosphates business for the rest of 2017 as the company begins to benefit from improving market conditions and completed plant maintenance.
The company, which agreed to buy Vale SA's fertilizer unit for about $2.5 billion in December, has been coping with a capacity glut and soft crop prices that have pushed potash and phosphate prices to multi-year lows.
Average diammonium phosphate selling price fell 7.9 percent in the latest quarter, while average potash MOP (muriate of potash) selling price fell 16.9 percent.
The company also said first-quarter earnings were hurt by an outage at its Esterhazy K2 potash mine in Saskatchewan and at an ammonia plant.
Mosaic reported a net loss attributable to the company of $900,000, in the first quarter, compared with a profit of $256.8 million, a year earlier.
On a per share basis, the company broke even in the latest quarter, compared with a 73 cents profit last year.
Mosaic recorded a $1 million charge in the quarter, compared with a $169 million gain, a year earlier.
Excluding items, the company earned 4 cents per share, missing analysts' average estimate of 19 cents.
Net sales fell 5.7 percent to $1.58 billion, well below estimates of $1.67 billion.
Mosaic's shares were down 1.9 percent at $26.36 in light premarket trading on Tuesday. (Reporting by Arathy S Nair in Bengaluru; Editing by Supriya Kurane and Shounak Dasgupta)