The Select Harvests Limited (ASX: SHV) share price has been amongst the worst performers on the market in morning trade.
At the time of writing the almond producer's shares are down 14% to $4.16. This brings its year-to-date decline to a whopping 27%.
What happened?
This morning the company advised that it has received 98% of its 2017 almond crop at its Carina West Processing Facility.
After processing approximately 60% of the crop, the crop estimate has been reduced to between 13,500 and 14,000 metric tonnes.
While this is the second-largest crop in its history, it falls well short of its half-year forecast of 16,000 metric tonnes.
Unfortunately, although the crop has fallen short of expectations, management does not expect to offset this decline with higher prices due to 60% of sales commitments being locked in already.
The company's almond price estimate has been revised to between $7.50 and $8.00 per kilo, compared to its prior estimate of $7.70 per kilo.
As a result management expects its full-year earnings to be materially impacted.
Should you buy the dip?
As tempting as it may be to invest in Select Harvests after this sharp decline, I would stay clear of the company.
Shares such as Select Harvests and Webster Limited (ASX: WBA) are among the more volatile on the market and are subject to significant risks from both weather conditions and of course supply and demand.
So rather than invest in a producer like Select Harvests, I would prefer to be invested in a company like Woolworths Limited (ASX: WOW) that ultimately sells its produce.
