Australia | Feb 09 2026
This story features GRAINCORP LIMITED.
For more info SHARE ANALYSIS: GNC
The company is included in ASX200, ASX300 and ALL-ORDS
A global wheat glut has cruelled GrainCorp’s margins, leading to FY26 guidance substantially below consensus.
- GrainCorp issues significantly weak FY26 earnings guidance
- Bumper harvest locally, but also internationally
- Balance sheet and asset value provide support
- A lack of catalysts in the near term
By Greg Peel
Agricultural businesses are forever beholden to the weather, both in their region of operation and all other regions competing in the same commodity. A bumper harvest locally is great news, unless bumper harvests are the story all over the world.
Such is GrainCorp’s ((GNC)) current dilemma.
GrainCorp has not waited until its AGM on February 18 to provide FY26 (September year-end) earnings guidance, as is typically the case, rather it has moved to disclose the bad news early –- guidance is materially below consensus expectations, attributed to the ongoing global grain market dynamics of ample supply and lower prices.
GrainCorp’s FY26 underlying earnings guidance is $200-240m, down from $307.9m in FY25 and well below consensus of $305.6m. Underlying profit guidance is $20-50m, down from $86.7m in FY25 and well below consensus of $85.3m.
Guidance is particularly disappointing, Morgans suggests, given FY26 doesn’t include any more crop production payments to the insurance company and removes GrainsConnect losses. While volume guidance is unchanged, margins have weakened given the grain trading environment has deteriorated further.
Morgans notes that GrainCorp is not alone and many of its peers globally have been impacted by similar issues.
Depressed supply chain margins have been a constant these past three years, Macquarie notes, driven by elevated global grain supplies. This has also fed into volumes, with low prices inducing growers to move less grain through GrainCorp’s system.
Macquarie thinks there is also a structural element considering GrainCorp’s market share is down -10ppts on the prior large seasons of FY22/23.
Low grain prices are resulting in farmers selling less grain, bypassing GrainCorp’s network. Additionally, notes Morgans, grain trading margins are weak given Australian grain is trading at a premium to US grain which is making it less competitive. Global wheat prices have been under pressure given large crops around the world (global wheat supply has exceeded global demand).
Given GrainCorp’s grain volume guidance hasn’t changed, Morgans suspects grain trading is loss-making and the company has had to discount to attract grain into its network. Morgans also doesn’t expect FY25 trading profits in chickpeas and canola seed will be repeated in FY26.
GrainCorp’s Nutrition and Energy business unit earnings guidance is also weaker than expected. While crush margins and Animal Nutrition are broadly in line with FY25, Agri Energy has been impacted by ongoing uncertainty around US biofuels policy and its tax credit regime.
No Relief in Sight
Outside of an unforeseen supply shock, Macquarie does not see a catalyst for a meaningful lift in grain prices near term and expects GrainCorp’s export margins to remain constrained.
The 2026/27 season is now moving into focus with planting set to occur from April (depending on winter break timing). Northern east coast areas have seen back-to-back bumper harvests, Macquarie notes, with a previously dry Victoria recovering in the 2025/26 season.
Rainfall in the coming months will shape the next season and there are some pockets of dryness emerging (to which this writer can overwhelmingly attest). At this stage, Macquarie expects the 2026/27 east coast winter harvest to be down -15% year on year.
Morgans has assumed an average size crop until proven otherwise. It is dry in the south (very in NSW) and good rainfall during February-May will be required to underpin a decent winter crop plant, Morgans warns.
This broker has always viewed GrainCorp’s “through-the-cycle” (TTC) earnings guidance as aggressive and capitalising the peak trading conditions during the Russia/Ukraine war.
The issue that is likely to face investors, Bell Potter suggests, is the level of confidence around Graincorp’s $320m TTC earnings. Over the past three years, east coast Australia has enjoyed well above average crops earnings of $268m.
GrainCorp does particularly well when east coast grain crops are large, global grain crops are small and EU/Canada oilseed planting are soft.
Bell Potter notes for the last two seasons only one of these dynamics has been at play.
Latent Value
GrainCorp’s strong balance sheet provides ballast and assists in weathering the Agri cycle, Macquarie suggests. It is also an enabler of capital management and Macquarie projects an FY26 total dividend payout ratio in excess of 100% of underlying profit, consistent with past practice.
Macquarie notes there remains upside risk from the latent value of the company’s infrastructure-like assets and potential for corporate interest in such, but concedes returns on these assets are now likely lower, limiting potential upside.
While Ord Minnett’s investment thesis that GrainCorp’s TTC earnings and port assets are undervalued remains current, this broker questions just how achievable the $320m TTC earnings level is given recent results and FY26 guidance.
Morgans agrees GrainCorp owns valuable strategic assets which have attracted corporate interest in the company over the years. While it may take time for confidence to rebuild in the GrainCorp’s earnings leverage to favourable cropping conditions given grain trading has been a headwind, the company is worth materially more than its current share price, Morgans believes.
However, this broker recognises GrainCorp is lacking near-term share price catalysts and investors will need to be patient before a material re-rating emerges.
While GrainCorp’s export volume guidance is seen as impressive against the global backdrop, Canaccord Genuity suggests the significant margin contraction implied by earnings guidance highlights an aggressive approach to grain originations.
In Canaccord’s view, this will see further investor uncertainty over TTC earnings, which will remain discounted in the share price.
Further capital management initiatives (relative to the recent track record) have the potential to provide incremental support for the share price. On balance, Canaccord views GrainCorp’s share price as fundamentally undervalued.
Earnings versus Assets
Following weak FY26 guidance, brokers have substantially cut earnings forecasts for FY26 and, given no relief in sight, FY27 as well. This has led to lowered target prices.
Canaccord Genuity has cut its target to $7.51 from $8.71 but given the broker’s belief the stock is fundamentally undervalued, Canaccord sticks with its Buy rating.
Among the four brokers monitored daily by FNArena covering GrainCorp, Ord Minnett also retains a Buy rating, noting that on its revised forecasts, the stock offers a total shareholder return of 46%.
Morgans similarly maintains its Accumulate rating (between Hold and Buy).
Bell Potter (Hold) notes the latest update highlights how dependent GrainCorp returns are on global grain fundamentals. With improved cropping conditions in the EU and North America and record crops in Brazil, it is unlikely the headwinds being seen today are likely to ease over FY26, Bell Potter laments.
A lack of catalysts near term to support a lift in margins and earnings growth, combined with normalisation in the season ahead, drives Macquarie’s downgrade to Neutral from Outperform.
In Macquarie’s view there is a structural element to lower volumes (lower market share) and this is a headwind, albeit the potential for asset value realisation nevertheless remains key upside risk.
The consensus target among the four brokers has fallen to $7.19 from $8.55.
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