GNC - Graincorp Limited

The latest grains cropping forecast from Rabobank predicts the current winter crop will hit just under 53 million tonnes, just slightly off 2020's highs.

• Winter grain crops are predicted to hit just under 53 million tonnes
• Western Australia was set to have a record year for production
• While grain crop yields are slightly down on last year, it comes amid high commodity prices

The large crop would be 5 per cent less than last year but more than 25 per cent above the five-year average.

Western Australia though is predicted to achieve a record harvest with an 18 per cent increase on the previous year.

Queensland will also increase 18 per cent on last year's crops, but New South Wales, Victoria, and South Australia will all be down.
NSW production is forecast to drop 14 per cent with dry areas in the Riverina and north-west, and waterlogging in the central west.

Victoria is forecast to fall 24 per cent with dry conditions in the western cropping region and the Mallee.

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"In my years of experience in global supply chains, it is an exceptional result at any time, particularly in a year like we've seen."

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Dona Ferentes said:

Graincorp handled 34.4 million tonnes of grain in 2021, just above the 33.4 million tonnes it handled in 2017. But four years ago, the group only produced EBIT of $127 million, compared with $331 million in 2021.

Although CEO Robert Spurway has pulled costs out of the businesses, he is also invested to improve efficiency across the supply chain, from the amount of time it takes to turn trucks around at the farm gate to improved storage at high demand locations.

Spurway says the business is better placed than ever to weather the inherent cyclicality of the industry and he has initiatives in place that will add another $40 million EBITDA by 2024. This will come from further cost cutting but also greater utilisation of the Graincorp supply chain; repurposing port infrastructure to handle cement for example, as well as growth opportunities in handling wood pellets, wood chips and mineral sands.

While bumper grain crops provide a massive tailwind, there have been challenges in the form of labour shortages (which are particularly acute in regional areas) and supply chain issues.

But thanks to advanced planning, Spurway has dodged both. Having seen the bumper crop coming, he got in early last year to hire 3000 harvest casuals, emphasising local jobs for local people in this employment drive and structuring this temporary workforce in such a way that he could limit the need to move workers across borders. For the harvest that started a few weeks ago, Graincorp got 70 per cent of these casuals back - an impressive result given the war for workers.

Supply chains issues have been relatively minor, in part because 95 per cent of the Graincorp business is bulk charters, not the container ships that have been most affected by the disruptions seen at ports around the world. Spurway says that of the 115 ships charted, just two suffered minor charges because of delays.

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The Triangle said:

This is still overvalued. The demerger presentations with maltcorp are complete with a lot of corporate doublespeak. Both separately are going to be too small to just sit there and pay dividends consistently at a high return. With the asset sales, I think we'll see the corporate costs relative to market cap jump up.

Growth according to their own presentations is at the bottom of the priority tree - so why invest in either one? Even at a 70% payout, I doubt there would be much more than 2.5% if you look at the last 6 years. And if you look at the last 6 years - there has been nothing but sideways movement. If I had to pick I would prefer maltcorp - should be interesting to see where it trades next month.

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mullokintyre said:

Listening to the OPS manager for GNC on the Country Hour this afternoon.
Says the wet weather has seriously curtailed the start of the grain season.
In Victoria at least, they are 50% down on the amount of grain bought in compared to the same time last year.
Some areas have not even started.
The worry now is if the rain keeps hanging around and the wether warms up , grain sprouting as well as black mildew on barely will become an issue.
Everyone is hoping for no more rain, but cool windy days to keep the conditions ok for the grain before it gets harvested.
After i sold out at 6.77, was looking to get back in around 6.15, but never got that low, so still out of it.
Will keep my powder dry on GNC for a little while yet.
Mick

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GrainCorp says it expects its full year net profit to soar by as much as 100 per cent following a bumper crop, defying pandemic-fuelled labour shortages and supply chain disruptions that have plagued Australia’s food bowl.
The profit upgrade made it the best performer on the ASX on Monday, its shares surging by 13 per cent to $8.50 before easing to close at $8.10.

Chief executive Robert Spurway said the company overcame labour shortages and supply chain disruptions from Covid-19 and floods to process the harvest, which “broke multiple site receival records across our network”.
“The biggest challenge in the end for growers was the wet weather and the interrupted harvest from that point of view. Labour supply was certainly a challenge. But from our perspective, we planned for that very early and we were able to get the complement of workers that we needed,” Mr Spurway said.

The company now expects its full-year earnings before interest, tax, depreciation and amortisation to be $480m to $540m. This compares with $331m in 2021.

Meanwhile it has forecast underlying net profit of $235m to $280m versus $139m last year.

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India has dropped its import tariff on lentils paving the way for Australian farmers to cash in after a bumper harvest.

Key points:​

• India has removed an 11 per cent import tariff on lentils
• The tariff is removed effective immediately
• Before the tariff, India imported more than $900 million of lentils

New Delhi announced it would reduce the 11 per cent tariff to zero over the weekend, effective immediately.

A prohibitive 66 per cent tariff on chickpeas remains.

India applied tariffs of 33 per cent to both lentils and chickpeas in 2017, cutting the lentil tax to 11 per cent in 2020.

According to the Department of Foreign Affairs and Trade before the introduction of the tariff India was the world's largest customer for lentils and the trade was valued at close to $1 billion.

Grain Producers Australia spokesman Andrew Wiedemann said it was great news for farmers to have the lentil tariff "finally back to ground zero".
Andrew Weidemann, of Grain Producers Australia, says India's decision to remove the tariff will be reviewed later in the year.
ndia's decision to drop the tariffs follows just days after Australia's trade minister Dan Tehan travelled to India as part of negotiations for a free trade agreement.

Grain Growers chief executive Dave McKeon hoped the negotiations would create an opportunity to better conditions for Australian farmers.

"It's great to see an outcome on lentils, fingers cross for chickpeas," Mr McKeon said.

"We need to have an innovative and forward-focused approach to avoid unnecessary trade barriers into the future."

Grain Growers had been seeking to have a grain annex included in the trade agreement, specifically outlining trade arrangements for the grain trade with India.

According to the grower group, despite India accounting for the world's second-largest population, it currently imports less than 2 per cent of Australia's grain harvest.

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mullokintyre said:

From ABC News

If Australia can increase that measly 2% to something like 7 or 10%, it would be a huge boost for OZ.

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Dona Ferentes said:

Give us this day our daily dal bhat

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mullokintyre said:

At the beginning of April, Canola Futures were sitting around 5.80USD bushel.
By mid July, they were at 9.12 USD a bushel. They have stayed in a narrow band around 9.00USD a bushel.

Just to show how risky farming is, about 3 months ago, Canada was looking at a record harvest after the biggest Canola planting in years 5 years.
But thanks to drought and hot weather the forecast is for the smallest crop in 9 years, down 25% on last year.
So if the largest producer in the world of Canola cuts 25% of its output, you might expect that to provide some level of support foir canola prices, ...

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"The fertiliser has just about doubled in cost. Fuel is costing us an absolute fortune, even the price of canola seed has gone up quite a bit," he said.

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Dona Ferentes said:

Shares in GrainCorp (GNC) jumped yesterday after the company again upgraded earnings guidance for its year to September 2022 results.

The company told the ASX that the new range was $680-$730 million, up a possible $60 million as the company enjoys plentiful supplies, exports and solid prices.

Net after tax profit for the year to September is now estimated to be in the range of $365 to $400 million, up from the previous estimate of $310 to $370 million.

That saw GNC shares close up more than 5% at $8.03, still a long way under the high of $10.86 hit in early May as global wheat prices soared in the aftermath of the confusion caused by Russia’s invasion of Ukraine.

GrainCorp CEO Robert Spurway said in Wednesday’s statement that the improved outlook reflects outstanding execution across each of GrainCorp’s business areas and expectations for the east coast Australian (ECA) crop in 2022/23.

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InsvestoBoy said:

Will be very curious to see outcomes over the long term on stocks like this, can higher prices for their product outweigh rising input costs?

i.e. are prices of GNC or SGLLV going up because they are printing money or because ASX participants don't have access to agriculture futures/ETFs?

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SGLLV Trade History​

InsvestoBoy said:

Will be very curious to see outcomes over the long term on stocks like this, can higher prices for their product outweigh rising input costs?

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