AUD Dollar Dropping/Almond Price Increasing, page-9

In some respects, I am surprised that Select didn't finish 2016 higher. I would argue that based on the available information, a share price closer to the $10 mark would not be entirely unjustified.

I am basing this on the following assumptions: a) the Australian dollar will continue to weaken against the USD, b) the likelihood of a strong 2017 almond harvest and c) the assumption that the food division will surprise on the upside this year, as I think there is some reason to believe this may be the case.

On the downside, I suspect the almond price might be a bit soft in the near term, partly due to the 'demonetisation' situation in India (in Novemeber the Modi government cancelled all the large denomination rupee notes, promising to replace them with lower value notes, but the painfully slow process has impacted the Indian economy). This, however, should be a short term problem.

There are a couple of developments in California that are worth keeping an eye on this year. In California, the minimum wage increases by 5% from January 2017, rising from US $10 to $10.50.

Another law that will come into effect this month is the Farm Worker Overtime Law, which makes farm workers in California eligible for overtime after working eight hours.

Coming at the same time as Trump's promised crackdown on illegal immigrants in the US, it is not hard to imagine that these changes could potentially cause some disruption to the Californian almond harvest later in 2017.