GrainCorp lifts profit forecast due to Black Sea uncertainty, good crop

GrainCorp has lifted its profit forecast off the back of uncertainty in the Black Sea and a good local crop. See the eye-watering numbers.

A big local grain harvest and trade disruptions in the Black Sea region have prompted GrainCorp to substantially lift its profit outlook for this year.

The east coast grain company has increased its forecast underlying net profit after tax for 2021-22 to $310-$370 million from its previous estimate of $235-$280 million made at the annual general meeting on February 17.

Significantly, the new lower end of the profit range is about 10 per cent higher than the maximum forecast made in February.

A good grain harvest in Australia and trade disruptions from the Black Sea have boosted the prospects of higher profits for GrainCorp. Picture: Zoe Phillips

GrainCorp’s share price rose 64 cents on Monday to a year-long high of $9.83 a share, before falling slightly.

GrainCorp managing director Robert Spurway said the improved outlook reflected significant global demand for Australian grain and oilseeds and favourable planting conditions for the coming Australian winter crop.

“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply,” Mr Spurway said.

“This has further increased both the demand for Australian grain and oilseeds and export supply chain margins.”

Global grain prices have been the most significant influence on the market.

December 2022 wheat futures on the Chicago Board of Trade were 788 US cents a bushel, or $A401 a tonne, when GrainCorp held its AGM on February 17.

Robert Spurway, GrainCorp managing director.

They were now 1053 US cents a bushel, or $A517 a tonne.

Mr Spurway said recent weather patterns and continued La Nina weather conditions had provided excellent planting conditions for the coming winter crop, building confidence in east coast grain supplies and further supporting export sales and supply chain margins.

“Despite recent weather-related supply chain disruptions across the east coast of Australia, we are continuing to operate our ports at close to full capacity, exporting as much grain as possible to international markets,” he said.

While GrainCorp is optimistic about the prospects of a good winter crop on the east coast, the Grain Industry Association of Western Australia was not confident of repeating a record harvest in that state.

“At this time of year, the models are not great at predicting weather events, but the rest of April looks likely to be dry with lingering La Niña effects causing some uncertainty,” GIWA said in its latest crop report.

The association said that while some areas had received good falls of rain in recent weeks, other districts had remained dry, prompting some growers to take a “wait and see” approach to cropping.