The Graincorp Ltd (ASX: GNC) share price plunged 19% this morning after announcing the sale of GrainsConnect Canada and providing a trading update.
Graincorp is one of Australia’s largest integrated agribusinesses and operates across the food, feed and fuel value chain. It trades in wheat, barley, canola and more. Its infrastructure and operations are located across Australia and New Zealand. The company exports to over 50 countries and has a global network of offices.
Graincorp selling GrainsConnect Canada
Graincorp and Zen-Noh Grain Corporation are joint venture (JV) partners of GrainsConnect. The joint venture partners have entered into a binding agreement to sell GrainsConnect Canada to Canadian agribusiness Parrish & Heimbecker.
The deal is subject to “the satisfaction of customary conditions precedent”.
Graincorp said that the divestment follows a strategic review after a period of challenging financial performance by GrainsConnect. After considering several alternatives and having received multiple proposals from third parties, the sale was determined to be the best value option.
The transaction values GrainsConnect at C$150 million on a cash-free and debt-free basis. Graincorp noted that there will be an additional cash payment for net working capital at closing of the deal.
Graincop expects to report a loss on the sale of approximately A$5 million to A$10 million. However, the company said that this does not impact its “through-the-cycle” EBITDA (EBITDA explained) of A$320 million.
Graincorp Managing Director and CEO Robert Spurway said:
This transaction reflects Graincorp’s ongoing commitment to portfolio optimisation and our readiness to rationalise assets where necessary to improve returns. Divestment of GrainsConnect allows Graincorp to focus on alternative value-creating opportunities that are in the best interests of our shareholders.
GrainCorp will keep its Canadian marketing offices in Winnipeg. The company said that its Winnipeg offices will “continue to support our customers and provide key marketing to the broader Graincorp team”.
The completion of the sale is expected in the first half of 2026.
FY26 trading update
The company also announced a trading update, with harvest activity for the 2025 to 2026 winter crop largely complete in Queensland and northern NSW. Weather interruptions continue to affect southern NSW and Victoria.
Graincorp said that FY26 receival volumes are being impacted by an expected lower year-on-year crop from east coast Australia.
Margins for grain holders are experiencing pressure with current commodity prices are resulting in less grain being brought to market, combined with a near-record international grain and oilseed production.
Graincorp has a preliminary estimate of total receival volumes for FY26 of 11 million tonnes to 12 million tonnes. This is a drop from 13.3 million tonnes received in FY25.
In response to these conditions management said it is “maintaining a strong focus on cost management while continuing to deliver industry-leading customer service and reliability”.
Graincorp will provide earnings guidance at its annual general meeting on 18 February 2026.
Why is the Graincorp share price falling?
Tough conditions are a theme in this announcement, with lower volumes expected for FY26, weather interruptions and record levels of international production putting downwards pressure on prices, just to name a few.
The Graincorp share price is currently down 12%, having recovered somewhat from the drop of 19% in early trading. If we zoom out a little further to where it was at the beginning of the year, the share price is virtually flat, and it has experienced multiple dips lower through the year.
Agriculture businesses have traditionally followed cycles, with weather strongly impacting returns. For cyclical businesses the very simple old adage “buy low, sell high” is very applicable. Of course, nobody can truly know what “high” and “low” points to aim for, but there are indictors to look out for in the cycles.
However, I’m no expert on the particulars of grain businesses, I have other ASX growth shares on my watchlist.
