There is much that could be written about the California situation at the moment, where there are farragoes of factors currently at play in that part of the United States that could connive to drive up the almond price.
Despite that, today I think it might be best to take a sojourn in pastures closer to home. After all, if events in California do conspire to push up the almond price, that isn't of much benefit if Select don't have a crop to speak of.
That doesn't seem to be strictly true for this year, even if 'the quality of the 2022 crop was the worst the company has experienced over the past 10 years' (as per the 'Business Update' announcement of 21/03/23). Based on that appraisal, you'd have to assume the crop will ultimately prove to be something of a fizzer. So, can we hope for a better crop in 2023?
Last year, rainy weather played no small part in crimping the crop, and so we will need to cast our eyes to the skies if we are hope to make any kind of forward crop estimation.
Making weather forecasts is generally fraught with peril. However, at this moment in time, quite possibly - and rather unusually - there might be a blueprint to go off, even if it is a rather old and dusty one. The chart below provides something of a clue.
The graphic pasted below illustrates the precipitation data from a rather remote weather station at a place called Wamberra, in the south-west of NSW.
As is evident from the dates, these records go back a fair way. This would have been one of the first weather stations operational in regional Australia.
But notice that striking pattern within that red circle, on the far left of the chart?.
There is a very prominent spike in the year-on-year rainfall measurement in the year 1887, and an equally noticeable plunge in precipitation the very following year: that odd year of sparsity, 1888, was to be remembered as the 'Centennial Drought' for decades afterwards.
You find that same pattern of deluge followed by dry in numerous colonial era weather stations in eastern Australia over those years. What exactly is going on there?
That chart above has been taken from an article about Paul Handler, a geophysicist of the late 20th century, who formulated some interesting ideas about the weather. Most notable, Handler had an unusual theory that powerful volcanic eruptions had broadly predictable flow-on impacts on weather patterns.
While this theory was unconventional, his track record was quite impressive: He called the end to the late 80s/early 90s Californian drought months in advance, for example, and he then went on to predict the 1993 floods in the US mid-west at the start of that same year.
Handler's tip-off was Mt Pinatubo, which erupted in 1991.
Handler noticed that the weather in the Western US conformed to particular patterns in the wake of powerful tropical eruptions, pointing to a pattern of one year of wet, followed by one of dry, followed by another wet year.
Now you might get an inkling as to how this ties in to that chart of the rainfall in Wamberra.
In 1886, the year before we see that distinctive 'peak' and 'trough' pattern at Wamberra, there was a major volcanic eruption at a place called Mt Tarawera, in the North Island of New Zealand.
The weather pattern that was recorded at Wamberra- one very wet year, followed by a dry year, and another of wet- is bascially in line with the pattern that Handler noticed in the United States after volcanic eruptions in the Pacific.
How this is relevant to the here-and-now is that, at the start of last year, another volcano erupted in the South Pacific, the most powerful eruption on the eastern Australian sea board since Tarawera. Some indications suggest that the recent volcanic eruption in Tonga may have far eclipsed Tarawera.
To date, the rainfall patterns recorded in the aftermath of the Hunga-Tonga eruption correlate quite well with those that were recorded in NSW weather stations in the aftermath of Tarawera.
If we are going to run with this historic analogy, the implication is that Australia could be set for another year akin to that of the infamous 'Centennial Drought'.
Whether that would be good or bad news really depends on which side of the fence you sit. Cattle farmers or Grain-growers- or for shareholders in AAC or GNC, for that matter- wouldn't relish the thought.
But for almond-growers- and of course, Select Harvest shareholders- the prospect is much more appealing. A bit of dry isn't bad for almonds: they are, 'dry fruits' after all- and with dams currently full-to-bursting, water for irrigation is in plenitude, and will be so for some time.
In short, Handler's observations about the weather patterns in the wake of volcanic eruptions would suggest that over the next year or so, Eastern Australia might be set for a dry one.
It must be noted, that Handler's theory, while interesting, is hardly orthodox science.
But when we factor in the conventional meteorological forecasts, the case becomes even more compelling: The current forecasts indicate that an El Nino is likely to emerge before the year is out, implying drier conditions for Australia, and wetter weather in the United States.
Drier days might thus be ahead, and that usually points to bountiful crops for almond growers, assuming that there are not too many lingering ill-effects from the soaking that many orchards have endured over the past 12 months.
If so, that would indicate that the shareprice could have some way to rise over the next 12 months, though over the next few months it would be reasonable to expect that the share price could be under pressure as a result of tax-loss selling. Perhaps that might present a nice window to buy in.
(20min delay)
