BY CHRIS PRENTICE AND RUJUN SHEN

NEW YORK/SINGAPORE  Thu Nov 7, 2013 1:01pm EST

  Nov 7 (Reuters) - Wilmar International Ltd 's reported a 2.5 percent increase in its third quarter profit from a year earlier as a boost in sugar milling and merchandising activities offset weakness in the palm oil  business.

The Singapore-based  commodity  firm's results bucked a larger trend in the  commoditiestrading sector, as the world's top merchants saw third quarter  earnings  hurt by a struggling Brazilian sugarcane  business  and a  grains  sector hit hard by a U.S. drought.

Wilmar's strong sugar unit is significant as the firm entered the global sugar business only in 2010 when it acquired Australia's Sucrogen Ltd.

The  commodities  merchants - Archer Daniels Midland, Bunge Ltd, Cargill Inc and Louis Dreyfus Commodities - that dominate the agricultural trading sector saw lower profits year-over-year in the third quarter.

Bunge, another relative newcomer to the competitive global sugar trading sector, said last month it is considering the sale of the Brazilian cane mill business that dragged it to a loss.

  Wilmar's net profits climbed to $416 million in the three months ended Sept. 30, compared with $405.8 million in the year-ago quarter, the company said in a statement.

Those gains came on the back of stronger sugar milling and  marketing  activities, even as revenue fell 4.2 percent to $11.8 million as palm oil prices hurt that sector of the company.

WILMAR'S SUGAR RUSH

Strong cane crushing due to favorable weather in  Australia  and increased merchandising activities boosted sugar profits, which were up 49 percent to $151.2 million.

The unit's sales volumes jumped to 3.4 million tonnes in the third quarter, up 44 percent from a year ago.

Wilmar has been expanding its footprint in the global sugar sector, even as it faces headwinds in the Indonesian palm oil business.

India's Business Standard reported that the company is eyeing a stake in Shree Renuka Sugars. A share of the Indian raw sugar producer, which has operations in  Brazil, would give Wilmar a foothold in the world's top sugar producers.

Earlier this year, the company bought a 27.5 percent stake in Moroccan sugar firm Cosumar S.A., and in August, Algeria's Cevital Spa named Wilmar Sugar its supplier.

Meanwhile, the company's palm and laurics business reported revenue of $4.9 billion during the quarter, down 15 percent from a year ago.

Wilmar's  oilseeds  and  grains  division saw a slight increase in revenue, while its consumer products division revenues were down year-over-year.