ABARES has released its second east coast crop production estimates for winter, at 26.5mt. This is a 20% increase on the first estimate in June, and Macquarie raises its forecasts to the same level.
The broker’s previous analysis suggested there was potential for 28.5mt by the end of the season. The broker notes GrainCorp has the greatest leverage within the agricultural sector to another above-average winter crop.
The weather outlook also indicates above-average rainfall for the grain belt on the east coast over the next three months. Macquarie retains an Outperform rating and raises the target to $7.32 from $7.27.
Sector: Food, Beverage & Tobacco.
Target price is $7.32.Current Price is $6.32. Difference: $1.00 – (brackets indicate current price is over target). If GNC meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
