‘Quality issues’: Bad oranges bruise Costa Group shares

Rain bombs that have pummelled Australia’s east coast for months have hit ASX-listed fruit and vegetables company Costa Group’s orange crops – as well as its share price.

Australia’s biggest fruit and veggies producer requested a trading halt just before noon on Monday after investors sold off an unusually high volume of its shares, causing the stock price to tumble sharply within minutes of the opening of trade.

Trading was paused for exactly three hours. It lifted at 2:56pm AEST after Costa issued a market update outlining damage to its citrus crop.

“Some quality issues have been encountered due to weather events occurring over recent weeks,” the company said the statement.

“Certain varieties have been affected, and at this stage of the harvest this has resulted in a lower percentage of first grade product versus the prior year.”

Demand for Riverland, Sunraysia and Navel crops have remained strong despite high pricing, but Navel oranges have suffered the most damage, Costa said.

“Weather events have also resulted in some quality issues which have become evident as the season has progressed, most notably with Navels, and more so in Sunraysia than the Riverland. This has impacted pack out rates versus the prior year.”

The company will not know the full extent of the weather damage’s impact on its prices and earnings until the “citrus season is further progressed”.

It will provide a more comprehensive update at its investor briefing on August 26 after it releases its results for the first half of the 2022 financial year.