GrainCorp: Bumper Crop Expected in 2025, but Supply Chain Margins Aren't as Lucrative

The September revision of the crop report from the Australian Department of Agriculture, Fisheries and Forestry forecasts 2025 east coast winter grain production of about 29 million metric tons. This is a 25% increase from 2024 and significantly higher than the 10-year average of about 22 million metric tons. Conditions are favorable following high levels of soil moisture at the time of planting, good rainfall since, and the climate outlook from the Bureau of Meteorology pointing to likely above-average rainfall for most crop regions. We adjust our earnings forecasts accordingly and lift our fiscal 2025 EBITDA forecast by 11% to AUD 312 million. We lift our fair value estimate by 7% to AUD 7.90 per share, with about half of the increase due to the time value of money.