Australia’s largest almond growers and processing company Select Harvests [ASX:SHV] has put out an interim update regarding its progress with the 2023 crop harvest.
The group’s managing director, David Surveyor, flagged lower expectations for crop volume in 2023, dropping the forecast 25–35%, as conditions remain ‘generally consistent across the Australian Almond industry’.
This news hit shareholders hard, with the SHV stock price being pulled down 8.5% Tuesday morning to around $3.80.
The nut growers have dropped 25% in value over the full year, and are currently down 23% in the industry, despite being a global leader, and down 20% in the wider market:
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Select Harvests’ interim business update and crop harvest forecast
Select Harvests is the third-largest global along processor but it has not had a good run over the past year, with 2022 being its worst production rate in 10 years.
Today the group’s managing director, David Surveyor, revealed a lower-than-initially anticipated crop volume forecast for 2023 as part of a wider a trend that is proving consistent across the nation.
SHV explained 2023 crop harvests have been weighed at the company’s Carina West Processing Facility since mid-February, and upon analysing the data — taken from varying farms across geographic regions — realised there will be a 25–35% drop in initial forecasting.
This data was for the Nonpareil almond variety, which accounts for 50% of the group’s annual revenue, though the estimate is dependent on final crack out ratios.
Surveyor believes the financial impact should be ‘somewhat offset’ by global almond prices starting to rise on improving export market activity, weather conditions, and strong US and Australian shipments.
Low nonpareil volume was pinned down to a poor bloom period and unusually colder and wetter conditions persisting throughout the growing season.
As yet, there have been no indications for Pollinator almonds as the harvest season has not yet begun for this variety.
Mr Surveyor stated:
‘Recognising the variabilities of agriculture, the company advises that the 2023 almond crop volume is expected to be lower than initially forecast. This revised position is based on initial weighbridge data received from the 2023 crop being delivered to our Carina West Processing Facility.
‘As previously stated in Select’s announcement on 27 January 2023, the quality of the 2022 crop was the worst the company has experienced over the last 10 years. The remaining portion of this crop is undergoing a detailed assessment and a plan is being progressed to sell marketable almonds and utilise the remaining balance through the company’s value-add process.’
David Surveyor said February shipments to the US were 23.4% higher than last year, and January’s 60.4% higher.
He notes buyers in China are re-entering the market, and better-priced contracts are being discussed with Indian and Middle Eastern customers.
The company is currently forecasting net pricing for the 2023 crop to be in the range of AU$7.25–7.70/kg with potential further increases.
Despite the 2022 crop revaluation and the 2023 crop volume downgrade, the company is forecast to remain within its current financial limits.
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For Money Morning
