GrainCorp to cop $40m drought, trade hit

GrainCorp’s share price has fallen after the company reported it expects a $40 million hit to its half-year earnings of its grains business as drought and international trade tensions wilted its summer crop.

GrainCorp shares slipped 1.59 per cent to $9.26 at 1028 AEST.

“Clearly this is a disappointing outcome in a challenging period in international grain markets, compounded by the ongoing drought conditions in Australia,” GrainCorp chief executive officer Mark Palmquist said in a statement in the company’s report to the ASX.

Market volatility and shifts in global grain flows due to a trade war between the United States and China have not been the boon once expected for grain merchants.

China is Australia’s largest trade partner.

Australia’s biggest listed bulk grain handler also said ongoing drought conditions in eastern Australia “significantly” impacted summer crop production, especially sorghum.

Earlier this month, GrainCorp announced plans to separate into two, spinning off and listing its global malting unit and restructuring its grain business, whose earnings have been hit by drought.

AAP

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