February 27, 2008

 

Australia's Graincorp sees significant increase in grain deliveries

 

 

Australian logistics, milling and trading group GrainCorp Ltd. Wednesday (February 27, 2008) raised its forecast for grain deliveries for the 2008-09 crop to 4 to 5 million tonnes.

 

That number is "well short" of what Graincorp would consider a "normal" year, but represents a significant improvement on the 2.8 million tonnes it took during the 2007-08 drought-affected crop year, Graincorp Chairman Don Taylor said at the annual general meeting.

 

The summer crop harvest in Queensland and northern New South Wales, Australia is progressing well, and soil moisture levels in Eastern Australia bode well for the winter crop, Taylor said.

 

Graincorp is continuing to diversify and add scale to its operations to protect from changes in agricultural production.

 

"Further diversification and scale is required if we are to mitigate against droughts to any significant extent. This was a key consideration in undertaking the A$60 million capital raising to strengthen the balance sheet and enable the company to take advantage of future opportunities," said Taylor.

 

The company's shareholders also voted to scrap the company's 'foundation share' structure at the annual general meeting.

 

The foundation share has been in place since 1993, and gave the Grain Growers Association certain voting rights including the appointment of a majority of directors.

 

Analysts say abandoning the current arrangement will make GrainCorp more attractive as a merger or acquisition target as well as opening up opportunities for the business, analysts said.

 

Shares rallied further on the news, up 17 percent at AUS$13.00 after rallying about 10 percent following the release of the chairman's speech prior to GrainCorp's annual general meeting.