By Euan Rocha

NEW YORK (Reuters) - Dow Chemical Co <DOW.N> and DuPont Co <DD.N> have faced a tough first-quarter due to soaring costs and economic difficulties, but gains from a weak U.S. dollar, strong overseas markets and booming agricultural sector are likely to offset some of the negatives.

Analysts expect both U.S. chemical makers to show benefits from significant exposure in European, Asian and Latin American markets when the companies post first-quarter results later this week.

Wall Street has forecast first-quarter earnings of 96 cents a share for Dow, below year-earlier earnings of $1 a share. DuPont is expected to post earnings of $1.29 a share, well above the $1.07 a share it earned a year earlier.

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DuPont has already raised its outlook for the quarter twice in recent weeks, on the back of solid demand for its biotech seed offerings.

Growing food demands from developing countries and global mandates for the increasing use of biofuels have led to soaring grain prices that have encouraged farmers to use more high-yielding biotech seeds and increase fertilizer usage.

Dow has a more limited exposure to the agricultural sector and is likely to have had a rougher quarter given its large hydrocarbon-based raw material needs and the soaring cost of crude oil and natural gas.

"The big headline risk with Dow is higher hydrocarbon prices; with a barrel of oil touching $115, that puts a lot of strain on Dow," said Morningstar analyst Ben Johnson.

Dow manufactures over 3,000 products that are used in applications ranging from automotive to agricultural and electronics to footwear. Over 60 percent of its revenue is generated in Europe, Asia and Latin America.

Johnson said he expects strength in agriculture and overseas markets to offset the weakness that DuPont is facing in the U.S. housing and automotive markets.

DuPont sells products like Tyvek, Corian and powder coatings that are used in housing, while it is also a major supplier of paints, coatings and other systems used by the automotive industry.

However, DuPont's exposure to these sectors is reduced, as 60 percent of its revenue comes from overseas markets. Moreover DuPont's first-quarter will get a big boost from its agricultural segment, which contributes about a quarter of the company's annual revenue.

VOLUMES AND PRICING

In a note to clients, HSBC analyst Hassan Ahmed noted that recent data indicate volumes and profit margins among a range chemicals are still quite strong in the United States.

"Despite all the noise surrounding a potential U.S. recession, we expect volumes to be relatively strong in Q1 '08," said Ahmed.

According to latest data, year-to-date rail car chemical loadings have risen 2.7 percent from a year earlier.

Chemical shipments on trains, called rail car loadings, often provide an early glimpse of broader trends for the chemical industry and are closely watched by analysts.

"While rail car loading data represent only about 25 percent of domestic chemical volumes, historically, they have been a good proxy for volume strength or weakness from a directional perspective," said Ahmed.

Ahmed said he expects Dow to meet or beat Wall Street's expectations on the strength of improved profit margins in most product lines and a strong performance from its joint venture businesses.

However, BB&T analyst Frank Mitsch warns that Dow could miss expectations, as there is typically a delay in passing through the costs for more specialty-orientated products.

With soaring raw material costs and growing recessionary concerns in the U.S., any positive outlook from the chemical makers would likely be important for share prices.

"We believe that this earnings season share performance will be driven more by the views on 2H08-2009 than on the quarter that has just ended," said Jefferies & Co analyst Laurence Alexander, in a research note.

(Reporting by Euan Rocha, editing by Gerald E. McCormick)