Australian farmers appear poised to enjoy continued strong grain prices, and may be poised for a third bumper harvest, GrainCorp said, even as wheat futures headed back towards record highs.

The Sydney-based crushing-to-trading group said that the Black Sea grain export disarray stemming from the Ukraine war had only enhanced global reliance on Australian supplies which had already been whetted by last year’s disappointing northern hemisphere harvest.

“The very significant disruption to the Black Sea probably has an even greater impact on medium-term supply and flows of grain” than the poor 2021 crops in the likes of Canada, said Robert Spurway, the GrainCorp managing director.

Wheat futures gain

He added that the company, which was bracing for the loss of some Aus$10m in Ukraine grain that it had been collecting for a shipment, believed that Black Sea trade was “going to be disrupted for a significant period of time”.

This period “could run to several years given the very disruptive hostilities on the ground in Ukraine, the infrastructure in that country that has been damaged”.

The Black Sea supply squeeze “just extends that period of significant demand and strong prices for Australian grain”, Mr Spurway told investors, even as east coast wheat futures for July gained 1.5% to Aus$440.00 a tonne in Sydney.

That represented the best close since October 2018 for a nearest-but-one contract, and was Aus$10 short of the record set in September 2018.

‘Potential for a good crop’

The outlook was promising too for Australia to enjoy a third successive bumper harvest this year, given the extent of rains running into the winter sowings season.

“Overall, the conditions are very favourable,” he said, if noting that “there are some isolated areas where it is probably a little wetter than growers would like.

“On average we would say the soil moisture [levels] across a much broader area of the east coast are better than they have been for the last two years.

“The potential for a good crop is there based on that soil moisture profile alone,” he told investors.

While there is a while yet until the crop is harvested, “you look at the medium-term [weather] forecast and it looks very favourable through the growing period”.

‘Maximise opportunities’

The comments followed GrainCorp’s release of results for the October-to-March half showing a five-fold jump in earnings, to Aus$246.0m, from Aus$50.5m a year before.,

Revenues soared by 50% to Aus$3.84bn, helped by high grain prices, a 25% increase to 38.0m tonnes, and widening oilseed crush margins in the face of squeezes on supplies of the likes of Malaysian palm oil, Canadian canola, and most lately Ukrainian sunflower oil exports.

Mr Spurway termed the results “exceptional”, adding that the group was “in a strong position to maximise opportunities through the current cycle”.

The “excellent” planting conditions had boosted confidence in grain supplies from eastern Australia, where GrainCorp is the top-ranked crop handler.

Nonetheless, the group held at Aus$310m-370m its forecast for underlying earnings in the year to the end of September, and at Aus$590m-670m its ebitda guidance.

GrainCorp shares closed down 1.0% at Aus$10.46 in Sydney.