GrainCorp Rides a Record Crop as HMC Capital Exits Its Stake

Fund managers say record crop volumes and capital management are offset by margin pressure and a softer FY26 volume outlook

30 Apr 2026 · 4 min read

Australia's largest grain handler, GrainCorp has traded on a tug of war between record winter crop forecasts and shareholder frustration over a lack of strategic change, with major holder HMC Capital progressively selling down its stake through 2025 and 2026.

A major shareholder loses patience

HMC Capital's July 2025 update explained its decision to trim its shareholding: the fund continued to believe GrainCorp traded at a discount to the underlying value of its strategically important asset base, but after 12 months of engagement with management, concluded the prospects for meaningful near-term strategic change were limited, and chose to redeploy capital elsewhere. By August, media reporting confirmed HMC Capital had ceased to be a major shareholder entirely, having built its original 5 per cent stake at between $7.27 and $8.60 a share the previous year.

A record crop forecast drives a rally

The operational backdrop improved through the September quarter. HMC Capital's own quarterly update reported GrainCorp rising 16 per cent, supported by an ABARES crop forecast update pointing to a 30 million tonne east coast Australia winter crop, 29 per cent above the 10-year average, a catalyst HMC said underpinned stronger FY26 momentum, particularly as GrainCorp no longer needed to pay out under its Crop Production Contract. An expanded $75 million buyback programme was also underway, with further capital management anticipated as the outlook firmed.

GrainCorp rose 16% over the quarter, supported by the September 2025 ABARES crop forecast update, which reinforced confidence in record crop volumes and provided greater visibility into FY26 earnings. Forecasts now point to a 30 million tonne ECA winter crop, 29% above the 10-year average.

— HMC Capital, Quarterly Report, September 2025

Margin pressure offsets record volumes

GrainCorp's FY25 results in November 2025 showed the tension between volume and margin. HMC Capital reported record total grain handled of 31.6 million tonnes and strong growth in Animal Nutrition, but a tough cyclical environment cut crush margins by $22 million and international trading spreads by $31 million at the EBITDA level, sending shares down 10.8 per cent on the day despite a 24 cent per share dividend including a 10 cent special dividend. A December trading update compounded the disappointment, with management guiding to FY26 receival volumes of just 11 to 12 million tonnes, down materially from 13.3 million tonnes in FY25, as low grain prices encouraged farmers to hold volumes off the market.

The trading update highlighted continued margin pressure and a softer volume outlook for FY26 with management's preliminary estimate for FY26 receival volumes of 11.0-12.0mt. This represents a material decline from the 13.3mt received in FY25, despite continued strong crop conditions, with signs that low grain prices are leading domestic farmers to hold volumes from the market.

— HMC Capital, Quarterly Report, December 2025

A geopolitical tailwind and continued profit-taking

Ellerston Capital exited GrainCorp at healthy levels in October or November 2025, then bought back in after the stock's 11 per cent fall on the disappointing December trading update, before taking profits again in April 2026. That same month, Australian Eagle Asset Management pointed to an unexpected tailwind: the closure of the Strait of Hormuz was threatening rival fertiliser supply chains, pushing grain prices higher in a way the fund saw as beneficial for GrainCorp specifically, even as the broader agricultural sector faced higher fuel costs from the same disruption.