GrainCorp Flags Softer FY26 Earnings as Global Oversupply Weighs on Margins

About GrainCorp Limited

GrainCorp Limited (ASX: GNC) is one of Australia’s largest integrated agribusinesses, operating across the food, feed and fuel value chain with a market-leading position in grain storage, handling, processing and marketing. With infrastructure assets spanning Australia’s east coast and operations extending into edible oils, animal nutrition and renewable energy feedstocks, GrainCorp has played a central role in connecting regional grain producers with domestic and global customers for more than a century.

As a highly cyclical business, GrainCorp’s earnings are closely linked to crop size, export demand, global commodity pricing and supply chain margins. The company’s latest update highlights the challenging phase of the current agricultural cycle, with record global production, subdued grower selling and weak international pricing combining to pressure margins in FY26, even as east-coast production volumes remain historically strong.

FY26 Earnings Guidance and Market Conditions

GrainCorp has guided to underlying EBITDA of $200–240 million for FY26 and underlying NPAT of $20–50 million, representing a material decline from FY25 outcomes. The guidance excludes business transformation costs and the impact of the sale of GrainsConnect Canada, allowing a clearer view of underlying trading performance.

Management attributed the softer outlook primarily to unfavourable global market conditions. Record grain production across major exporting regions has resulted in oversupply, outpacing demand growth and driving commodity prices lower. These dynamics have reduced export margins to multi-year lows, particularly impacting GrainCorp’s core east-coast export program.

The company noted that while east-coast Australia has delivered strong crop volumes, low global prices have reduced incentives for growers to sell grain into the market, contributing to slower receivals and lower throughput margins.

East Coast Harvest and Export Program

The east-coast Australia winter harvest is now substantially complete, with ABARES estimating the 2025–26 east-coast winter crop at approximately 31.2 million tonnes. Despite this sizeable production, GrainCorp expects receival volumes of 11.0–12.0 million tonnes in FY26, down from 13.3 million tonnes in FY25.

Export volumes are forecast at 5.5–6.5 million tonnes, compared with 7.0 million tonnes in the prior year. The reduction reflects both margin compression and the timing of grower selling, which has remained slow amid weak global pricing.

GrainCorp indicated that its FY26 export sales program is progressing, but pricing conditions remain challenging. Supply chain margins, including port elevation and logistics spreads, are under pressure as competition intensifies and international buyers remain price-sensitive.

Impact of Global Oversupply

Management highlighted that the current environment is being driven by structural oversupply in global grain markets. Strong harvests in North America, the Black Sea region and South America have contributed to abundant inventories, limiting price recovery despite ongoing demand growth from food, feed and biofuels.

This environment has weighed heavily on export economics, with GrainCorp experiencing lower margins per tonne on grain handled in FY26. While such conditions are cyclical, management acknowledged that the current phase represents a more difficult operating backdrop than experienced in recent years.

Cost Management and Operational Discipline

In response to the challenging market environment, GrainCorp has accelerated cost management initiatives across its operations. Management emphasised strong operating discipline, focusing on controlling discretionary expenditure while maintaining service quality and reliability for growers and customers.

The company’s integrated infrastructure network, including up-country storage, rail and port assets, provides a degree of operating leverage across cycles. However, management acknowledged that at this point in the cycle, proactive cost control is essential to protect margins and preserve balance-sheet strength.

Balance Sheet Strength and Strategic Positioning

Despite the softer earnings outlook, GrainCorp reiterated that its balance sheet remains strong, positioning the company to navigate the current downturn and continue executing its long-term strategy. The group’s financial resilience provides flexibility to invest through the cycle, pursue operational improvements and respond to future opportunities as market conditions evolve.

Management noted that GrainCorp’s diversified business model, spanning grain, oils, nutrition and energy, remains a key strength, helping to moderate earnings volatility relative to a pure-play grain handler.

Industry Context and Cycle Position

GrainCorp’s update reflects broader conditions across global agricultural markets, where supply cycles can remain depressed for extended periods following periods of record production. Historically, such environments have eventually led to production rationalisation, demand recovery or weather-related supply shocks that rebalance markets.

While timing remains uncertain, GrainCorp’s scale, infrastructure footprint and market access position it to benefit when margins recover. In the interim, disciplined execution and cost control remain critical to maintaining financial resilience.

Outlook

Looking ahead, GrainCorp indicated that FY26 earnings will remain sensitive to variables including grain volumes, export timing, supply chain margins, oilseed crush spreads and potential late-season opportunities in the fourth quarter. Management remains focused on navigating the current cycle while maintaining readiness for improved conditions.