By Tom Polansek and Arunima Kumar

(Reuters) -U.S. agricultural commodities trader Bunge Ltd raised its full-year adjusted profit outlook on Wednesday after stronger-than-expected food and renewable fuel demand for its vegetable oils drove a 41% jump in quarterly income.

Shares jumped 3% in morning trading after the company projected full-year 2021 adjusted income of at least $8.50 per share, up from its previous estimate of about $7.50 per share.

Bunge’s results offer an insight into how global grain traders are emerging from the COVID-19 pandemic that triggered massive shifts in demand last year as consumers cooked more meals at home and avoided unnecessary travel.

Increased demand for vegetable oils from U.S. food-service companies and the renewable diesel sector are now lifting Bunge’s expectations for earnings, Chief Executive Greg Heckman said. Renewable fuel demand, in particular, has triggered a “structural improvement” in oilseed markets, he told analysts on a conference call.

Unlike other green fuels such as biodiesel, renewable diesel can power auto engines without being blended with diesel derived from crude oil, making it a low-pollution option. Refiners can produce renewable diesel from animal fats, plant oils and used cooking oil.

“There’s going to be more capacity needed to meet this demand growth,” Heckman said.

Heckman in May said Bunge was working to squeeze more production out of its existing oilseed crush and refining operations to capitalize on soaring vegetable oils demand.

Rival Archer-Daniels-Midland unveiled plans for a new U.S. oilseed facility the same month.

Adjusted earnings in Bunge’s vegetable oils segment surged 135% to $113 million in the quarter that ended on June 30 from a year earlier. Adjusted earnings in the bigger agribusiness unit fell from last year, though net sales increased.

Total adjusted net income in the quarter rose to $2.61 per share from $1.88 a year earlier, beating analysts’ estimates for $1.62, according to Refinitiv IBES. Revenues of $15.391 billion topped Wall Street estimates for $11.583 billion.

(Reporting by Arunima Kumar in Bengaluru and Tom Polansek in Chicago; editing by Uttaresh.V, Kirsten Donovan)