<p></p><p>California produces 80% of the world's almonds, and rains there have ignited expectations of a larger-than-expected crop, which means the spot prices of almonds are set to tumble. However, Australia's biggest listed producer of the nut, Select Harvests, says it has a strong enough balance sheet to ride out the volatility.The current prices – $9.73-$10.30 a kilogram – are about 15 to 20 per cent off Select Harvests' pool price. The dive has also belted Select Harvests' share price, which has more than halved to $5.71 since its 12-month high of $13.48 last April.Managing director Paul Thompson said the company was robust enough to weather the downturn and expects profit for the first half of the 2016 financial year to be higher than the same period in 2015. <br></p> <p>"But you have to remember we are coming off record highs and if you look at our assets base we are still cash-generative, still making good profits – it's just that we are not making outstanding profits."Mr Thompson said while almond prices were unlikely to rocket back to the highs of the past year soon, there was still strong demand for the nut and its associated products such as almond milk.Mr Thompson also stressed the company had transformed itself in recent years from a farm management business to a farm owner. It was also implementing a series of cost-saving measures, such as a biomass cogeneration plant which is expected to slash electricity costs.The company is also investing in its food business, which include the Lucky, Sunol, Renshaw and Allinga Farms brands, as well as planting an extra 971 hectares of almond trees this year.Morgans analyst, Belinda Moore, said it could be argued that Select Harvests' shares had been oversold, considering the drop was greater than the almond price fall.But she said there was too much uncertainty in the almond market. The United States almond bloom, which begins next month, is expected to have a sway on prices depending on its quality."Almond prices have clearly peaked and the earnings upgrade story which has driven Select Harvests' share price to record highs appears to be over."Ms Moore acknowledged Select Harvests management had a firm grip on "controllables" such as ramping up production, stripping out costs and investing in productivity. <br></p> <p>"We would return to a more positive view if we saw almond prices rising," Ms Moore said, adding that every US10¢ shift in the almond price hit Select Harvests' earnings before interest and tax by $4.6 million or 6.6 per cent, based on Morgan's forecasts.<br></p><p></p>