The GrainCorp Ltd (ASX: GNC) share price looks set to end the week in style.
In morning trade, the grain exporter's shares are up 9% to a record high of $9.46.
Why is the GrainCorp share price racing higher?
Investors have been bidding the GrainCorp share price higher today in response to an earnings update.
According to the release, the company has been benefiting from significant ongoing global demand for Australian grain and oilseeds. It also notes that planting conditions for the upcoming east coast Australian winter crop are favourable.
In light of this, GrainCorp is upgrading the FY 2022 earnings guidance provided to the market in February.
The company was previously guiding to underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $480 million to $540 million and underlying net profit after tax (NPAT) of $235 million to $280 million.
Whereas it is now expecting underlying EBITDA of $590 million to $670 million and underlying NPAT in the range of $310 million to $370 million.
Management commentary
GrainCorp's Managing Director and CEO, Robert Spurway, advised that this strong demand is being driven by a number of factors. He explained:
"As we outlined at our AGM in February, we are seeing high global demand for Australian grain and oilseeds and strong supply chain margins for grain exports. This has been driven by two consecutive bumper crops in east coast Australia (ECA), coupled with supply shortages in the northern hemisphere."
The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply. This has further increased both the demand for Australian grain and oilseeds and export supply chain margins.
Recent weather patterns and continued La Nina conditions have provided excellent planting conditions for the 2022 winter crop to date, building confidence in grain supplies from ECA and further supporting export sales and supply chain margins.
Despite recent weather-related supply chain disruptions across the ECA, we are continuing to operate our ports at close to full capacity, exporting as much grain as possible to international markets. Our supply chain resilience demonstrates the value of our infrastructure assets and is testament to the capability of our operations and planning teams."
