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#Bull Case
Added a month ago

A Well Seeded Opportunity

Having grown up on a farm I have to admit the agri focused stocks are of particular interest. A drive through Gippsland, Loddon-Mallee, The Murray-Riverina or Central Tablelands will show you vibrant paddocks and excellent cropping conditions. This is fertile ground and prime conditions. 

A key beneficiary of the conditions in these regions is the simplified Graincorp. To highlight the opportunity has been the recent strong announcement from Elders. GNC should be able to capitalise on the tailwinds of rainfall, operational efficiency and oncoming tech. 

Tech in the grain industry has been steadily growing and improving. The AgTech space is huge and grain has been of particular focus for a number of competitors. Blockchain for farmers to manage contracts, grain shipments, and the ability to hedge/participate on futures and commodities markets directly. This tech is both a threat and opportunity for GrainCorp but currently should be viewed favourably as they have previously been key participants of blockchain and have also got their online CropConnect product. 

The headwinds are potential trade conflict with China and the stock becoming subject to political horse trading. Domestic demand for grain and feed will soften but shouldn't be a major factor,  and increased supply may bring prices down but also shouldn't be significant. 

  • Good balance sheet
  • Good margins
  • Great rainfall
  • Challenging politics
  • Rainfall already cooked into the share price

The June 10 ABARES crop report should be a positive catalyst for GNC and there is good upside to the stock. That being said, the upside is limited which is reflected in my valuation. 

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#Bull Case
Added 3 months ago

Good forward rain forecasts for winter
Biggest grain plantings in 7 years.
GrainCorp chief executive Robert Spurway:
"It's still early, but certainly the signals are that growers are planting many more acres than they have in more than six or seven years, so that's encouraging,"

Globally, news from Russia, courtesy of Bloomberg

"World’s Biggest Wheat Supply Dries Up When Some Want It Most"

The top shipper last month limited sales through June to protect its own supply as the coronavirus crisis sparks food-security concerns around the world. Although the curbs were seen loose enough to ensure normal trade flows for this time of year, Russia has already burned through the entire quota. It will halt grain shipments to all but four former Soviet neighbors once the last cargo booked under the limits leaves the country. "


In the mid-term for GNC we will need to see that the crops do go through to full harvest (drought may return or too much rain at the wrong time may ruin the crops), plus the full impacts outbreak is a big  unknown (Captian Obvious).

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