Up 18% today, why this ASX 300 share is going nuts

The Select Harvests Limited (ASX: SHV) share price is having a stellar day on Thursday.

In morning trade, the ASX 300 almond producer’s shares are up almost 18% to $5.78.

Why is the Select Harvest share price going nuts?

Investors have been bidding the Select Harvests share price higher today following the release of a market update.

According to the release, 80% of the company’s 2022 crop has now been processed and management is forecasting between 28,800 MT and 29,200 MT of almonds. This is a touch below its previous estimate due to wetter than normal harvest conditions, which have resulted in lower volume, reduced inshell, plus additional drying and operational costs.

Positively, though, this crop will still be an improvement on 2021’s crop volume of 28,250 MT.

Another positive is the price the company is commanding for its almonds. Approximately 72% of the 2022 crop is committed with a forecast fair value sales price of $6.75/kg. This compares favourably to its previously advised fair valuation sales price of $6.64/kg.

Furthermore, management notes that 100% of the 2022 crop is covered at 0.72AUD/USD and shipping challenges have eased.

Finally, despite facing challenges from bee hive shortages, management is guiding to further volume growth in 2023. It is forecasting a 2023 crop of approximately 30,000 MT.

What else?

Also potentially giving the Select Harvests share price a boost is an update on market conditions in the United States.

The United States Department of Agriculture’s 2022 Objective Measurement crop estimate is for 2.6 billion pounds, which is down 11% on the 2021 crop of 2.92 billion pounds.

The company notes that harvest climatic conditions in California (and also in Spain) have been extremely hot. Early reports are indicating that volumes are down significantly in both regions with almond sizing and quality adversely impacted. This bodes well for market pricing.

Select Harvests’s managing director, Paul Thompson, commented:

The strengthening of almond pricing is pleasing. The Select Harvests’ team have had to manage some difficult market and operational challenges over the last eighteen months. Market demand is beginning to build, and the Select Harvests’ team continues to focus on the basics: cost, quality, volume and price realization. The pollination of our 2023 crop is just another example of how having the right team makes the difference.

The post Up 18% today, why this ASX 300 share is going nuts appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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