Select Harvests, one of Australia's largest almond growers, saw its shares fall 7% in Wednesday trading after the company warned that a wet harvest would add another AU$7 million to its second-half costs. The news came even as almond prices continue to hold up, highlighting the tension between strong market conditions and operational challenges.
What's behind the cost blowout?
The extra costs are largely tied to the weather. A rain-soaked harvest means almonds need more drying, take longer to process, and require additional handling. These are the kind of one-off, non-recurring items that can catch investors off guard, especially when a company has already guided to a certain cost level.
Select Harvests had previously flagged AU$6.9 million in similar costs. The new AU$7 million guidance brings the total expected hit to around AU$13.9 million for the second half. That's a meaningful sum for a company of this size, and it explains why the market reacted negatively despite the otherwise positive price backdrop.
Almond prices: the silver lining
On the revenue side, the picture looks brighter. Almond prices are still holding up, which is a key support for the company's earnings. Strong prices help offset some of the cost pressure, but the market's reaction suggests investors are focused on the near-term margin squeeze rather than the longer-term pricing outlook.
Analysts at Jarden, a brokerage, described the update as a case of strong pricing fighting against weather-driven execution headaches. In other words, the company is selling its crop at good prices, but the cost of getting that crop to market is higher than expected.
What this means for investors
For everyday investors, this story is a reminder that agricultural companies are exposed to more than just commodity prices. Weather, processing logistics, and other operational factors can have a big impact on profitability, even when the underlying market is favourable.
Select Harvests' experience is not unique. Many growers and food producers face similar challenges when conditions turn wet or otherwise difficult. The key takeaway is that investors need to look beyond headline revenue and price trends to understand the full cost picture.
The company's shares have now fallen sharply, which may present a buying opportunity for some, but it also reflects genuine uncertainty about how much more costs could rise. The wet harvest is not yet fully processed, and there could be further surprises.
Broader market context
The news comes amid a mixed session for Australian equities, with the ASX slipping as geopolitical tensions keep oil prices elevated. The broader market is also dealing with softening business sentiment, as recent data showed Australian business confidence souring in August as costs squeeze margins.
For Select Harvests, the immediate focus will be on completing the harvest and managing costs. Investors will also watch whether almond prices remain firm, as that will be crucial to offsetting the higher expenses.
Looking ahead
Select Harvests has trimmed its 2026 crop outlook as a result of the wet conditions, which adds another layer of uncertainty. The company will need to demonstrate that it can control costs and deliver on its revised guidance to regain investor confidence.
For now, the market's verdict is clear: the wet harvest is a real drag on earnings, even if almond prices are holding up. Investors should keep an eye on the company's next update for any further cost revisions or signs that the weather-related issues are behind it.
In the meantime, the episode underscores the importance of understanding the full operational picture when investing in agricultural stocks. Commodity prices matter, but so do the costs of getting the product to market.
