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Weaker Aussie harvest cuts GrainCorp crop receipts

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GrainCorp, the crop handler being pursued by Archer Daniels Midland, restated its "strong outlook" despite acknowledging that grain receivals would fall by at least 10%, dented by a weaker Australian harvest.

Don Taylor, chairman of the Sydney-based group, said the GrainCorp board "has great confidence in the strategy and outlook for the business", backed by a "highly valuable storage and handling infrastructure that spans eastern Australia".

Mr Taylor told investors that GrainCorp was "very excited" about its entry into edible oils this year, while seeing is long-term outlook "reinforced by the strong and growing tailwinds provided by rising demand for protein and changing dietary habits through the growing middle class in the Asian region".

"We have the best people, a clearly focussed strategy and uniquely placed assets to continue to deliver solid returns to you, our shareholders," he told the company's annual meeting.

'Good grain quality'

However, the meeting also heard that the group's grain receivals - mainly wheat - from the ongoing harvest were forecast to drop to 10.0m-11.0m tonnes, a reflection of weaker yields following an unduly dry spell.

Indeed, GrainCorp trimmed its estimate for the east coast harvest by 100,000 tonnes to 18.2m tonnes, below the 18.4m tonnes forecast by Abares, Australia's official commodities bureau, but above a 17.9m-tonne estimate from consultancy Australian Crop Forecasters.

GrainCorp's receivals from the last harvest came in at 12.2m tonnes, with the four-year average at 11.0m tonnes.

So far receivals had reached 9.1m tonnes, with "good grain quality across the network", despite harvest rains which have sparked concerns among some commentators.

The group also forecast a decline in bulk grain exports to 8.0m-8.5m tonnes in its 2013 financial year, from 10.6m tonnes in the year to the end of September 2012.

'Constructive' stance

Mr Taylor restated the belief of GrainCorp directors that ADM's revised Aus$12.20-a-share offer "materially undervalues" the grain handler.

However, he also flagged the board's openness to a takeover on the right terms.

"The board remains focused on maximising value for shareholders and will be constructive in any dealings in relation to proposals that may have the potential to maximise shareholder value," he said.

GrainCorp shares closed up 0.2% at Aus$12.34 in Sydney.


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