GrainCorp's (ASX:GNC) lower fiscal year 2026 earnings guidance reflects a "challenging cyclical backdrop" rather than operational underperformance, Jefferies said in a Tuesday note.

GrainCorp's fiscal year 2026 earnings guidance projected underlying earnings before interest, taxes, depreciation, and amortization of AU$200 million to AU$240 million, down from the actual result of AU$308 million in fiscal year 2025. Underlying net profit after tax is expected to be AU$20 million to AU$50 million, compared with the actual result of AU$87 million a year earlier.

The firm is being pressured by global grain oversupply, multi-year low export margins, slower grower selling, and lower expected receivals and exports, despite solid East Coast production volumes.

Any potential break in near-record global grain output will drive margins upwards.

The investment firm has a buy rating on GrainCorp with a price target of AU$9 per share.