GrainCorp (GNC) – Relieving rain

GrainCorp is an agribusiness and processing company in Australasia and in North America, Europe, Asia, the Middle East and North Africa. It operates through two segments, Agribusiness and Nutrition and Energy. The company was founded in 1916 and is headquartered in Barangaroo, Australia.

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Grain-growing areas serviced by GrainCorp have received relieving rain in the past two weeks, which will now underwrite an FY27 winter crop. We note that at the first-half FY26results release on 14 May, there were growing concerns for the FY27 crop due to significant areas of northern NSW and Queensland not having sufficient soil moisture profiles to plant and a weather forecast suggesting a dry winter and the chance of El Nino. Relieving rains of the past two weeks, however, have washed away these fears.

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The FY27 crop is likely to be smaller than FY26, but it is now unlikely to be the disaster it was shaping up to be. In Ord Minnett’s view, this makes the 21% retracement in the GrainCorp share price since 14 May seem like a significant overreaction. Having already made allowances for a smaller crop we continue to maintain our FY27 forecasts but note that any uncertainty has been significantly removed. With our $7.25 price target and our investment thesis remaining unchanged, we upgrade our recommendation to Buy from Accumulate.

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