Why Graincorp Ltd Shares Jumped Higher Today

What happened to the Graincorp Ltd share price?

At the time of writing, shares of Graincorp Ltd [ASX:GNC] are up by 4.69%, to $8.48, in today’s trading.

Why did Graincorp Ltd shares do this?

Earlier in the week, Graincorp issued a statement regarding media speculation in relation to Archer Daniels Midland’s (ADM) stake in Graincorp. Apparently, the company has no idea why the US grains giant wants to sell its 19.9% stake. On the news, Graincorp’s share price fell $1.00, from $9.00 to $8.00 per share.

ADM tried to acquire Graincorp for AU$3.4 billion in late 2013, a move rejected by the then-Treasurer Joe Hockey.

What now for Graincorp Ltd?

It appears that the share price was oversold on the news — hence the rally in Graincorp today. Credit Suisse, a global investment bank, believes ADM’s failed attempt to offload its 19.9% stake on Tuesday night is good news. It told investors in a report this week, ‘There is a realistic potential that, post resolution of ADM’s ownership, GNC pursues the sale of a minority interest in its east coast port assets.’ The investment bank values Graincorp’s port assets at roughly AU$800 million, or $3.60 per share.

I have been following this company for months, and believe it offers good medium term share price reward. However, a fair few risks remain, which could put pressure on the share price in the short term. I’ll let Resource Speculator (my paid independent commodities investment-advisory service) readers know when the best time to buy is.

Jason Stevenson,
Resources Analyst, Money Morning


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