Shares in GrainCorp hit a two-year high after the Australian
grains handler-to-processing group reported a leap in half year profitability
on the back of the large domestic harvest.
The Sydney-based grain trader, processor and food
manufacturing group said investment in its storage and export infrastructure
helped it manage this years volumes, and for future expansion.
GrainCorp earnings from the first six months were 176% higher
at Aus$236m from the Aus$134m a year earlier.
Record east Australia
The record eastern Australia crop production estimate of
28.2m tonnes for 2017 (18.6m tonnes in 2016) has favoured GrainCorp's farm
procurement, storage and export activities, despite some disruption from rain
transport strikes in Victoria.
"Strong Australian production has improved opportunities and
increased competitiveness with a higher exportable surplus from
Australia," said managing director and chief executive Mark Palmquist.
However, the 2017 sorghum crop is down by some 700,000
tonnes to 1.2m tonnes as a result of poor seasonal conditions.
Craft beer demand
Mr Palmquist noted the small drop in global barley
production to 147.0m tonnes predicted from 2016's 148.7m tonnes.
He forecast softening beer and malt demand in mature markets
and slower growth in developing markets.
Even the North American craft beer boom, up 6% in 2016, is
slowing, but it is leading a global shift away from large to smaller brewery businesses,
and continued strong demand for specialty malt products.
With Australia's canola production estimated to rise 30% to 4.2m
tonnes, GrainCorp said it woujld benefit from a more competitive crushing and
refining market and steady demand for bulk liquid storage.
"GrainCorp's strong first half performance benefited from
the large Australian grain harvest and higher export volumes, combined with our
intense focus on improving network efficiency and managing costs," Mr Palmquist
The company's share price ended on Thursday up 8.3% at
Aus$9.88, a two-year closing high.