The biggest grain handler on Australia's east coast is optimistic about margins going into 2027, after copping a battering on prices due to oversupply issues in its most recent fiscal year.
GrainCorp, which facilitates grain storage, receivables, and logistics, oversees a highly cyclical business dictated by climate volatility, weather patterns, supply disruptions and geopolitical events.
It made a $10.1 million net loss in fiscal 2026, as grain margins fell and the war in the Middle East pushed up the cost of goods and agricultural inputs for farmers around the world.
The result was a big slump from the $39.9 million profit in fiscal 2025.
"We have seen a year with surplus global grain production, resulting in lower commodity prices and a reduced willingness by the grower to bring grain to market," chief executive Robert Spurway told a results briefing.
"That has created below-average margin opportunities, not just for us but our global peers as well."
For example, global production of wheat outstripped demand by about 20 million metric tonnes, or roughly 8000 Olympic-sized swimming pools, in fiscal 2026.
Grain pricing fell to multi-year lows just under 600 US cents per bushel, although prices have improved since due to disruptions in grain exports in the Black Sea because of Russia's war against Ukraine.
Still, the group's preferred underlying earnings came in at $222.9 million, broadly in line with its guidance in May, in the 12 months ended September.
Underlying earnings for the main agribusiness unit fell to $156 million, from $218 million, reflecting those lower grain margins in its east coast operations.
During the year, the Australian arm handled 28.6mmt of domestic grain, of which about 6mmt was exported.
GrainCorp receives more than 400,000 truckloads of grain into its network each year across more than 170 sites.
Its nutrition and energy business, which supplies ingredients and oils, livestock feed additives and renewable fuel inputs, generated underlying earnings of $95 million, down from $117 million.
Looking ahead, there's optimism given the export gaps created by the situation in the Black Sea and separate signs of margin and price improvements.
The federal government agricultural forecaster has predicted an east coast winter grains crop of 26.6mmt for 2026/27, which would be a solid outcome despite being lower than 2025/26.
"Volume is likely to be down year-on-year, but we've certainly seen a lift in margins and much stronger sentiment globally in terms of the outlook," Mr Spurway, who revealed he will be stepping down soon, noted.
While GrainCorp won't be releasing its next earnings guidance until February, it did acknowledge that margin improvement should outweigh pressure on volumes, allowing for "a bit of a recovery in agri business".
"However, it's always tricky at this time of year to fully predict it," chief financial officer Ian Morrison said. "Harvest has really just got underway."
Still, recent rainfall should be very supportive of the summer crop planting.
"We're well placed," Mr Spurway said.
GrainCorp will pay a final dividend of 14 cents, taking the total for the year to 28 cents, down from 48 cents the previous year when it paid a special dividend.
Its shares fell 3.2 per cent to $6.82 in afternoon trading.
