Hot summer cools farming confidence

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Rabobank's quarterly report shows confidence cooling among farmers Rabobank's quarterly report shows confidence cooling among farmers

Rabobank’s latest Rural Confidence Survey shows that while sentiment among Australian farmers remains high, confidence in certain sectors has eased as the result of a particularly warm summer.

The quarterly report’s first glimpse at 2017 shows that the net confidence indicator has dropped this quarter. According to the report however, the majority of farmers still expect agricultural performance to remain steadfast, with 59 per cent expecting the agricultural economy to mimic last year’s performance over the coming months.

Rabobank Country Banking Australia national manager Todd Charteris says while the hot summer in eastern Australia have driven the pull-back in confidence, the nation’s farmers are poised for a good year, with the farmgate prices of most livestock and crops expected to come in above their five-year average in 2017.

Charteris’ views were reinforced by the survey, which show that 74 per cent of farmers expect conditions to improve as a result of commodity prices.

"The stars have really aligned for those in the livestock industry – and have for some time now – with sheep and cattle still fetching strong prices in the saleyards, while many entered summer with a good availability of feed and water," he says.

"Wool prices have also risen strongly in recent months, particularly at the finer-end of the market, which has seen some renewed confidence in the industry."

Charteris also says that the spike in confidence from dairy farmers this quarter was a result of improved expectations in the sector.

"Farmgate prices for southern export-orientated dairy farmers are expected to increase in 2017/18, while producers in the fresh milk market are anticipating prices to remain stable at relatively elevated levels," he adds.

According to Charteris, both cotton and sugar markets will continue to be supported by global fundamentals, however grains and oilseeds are expected to take a hit, particularly wheat.

"The wheat market continues to face strong headwinds, with the sheer abundance of wheat on the global market expected to mute potential price improvement this year," he says.

The sweltering summer felt by south-east Australia has led to a sizeable drop in sentiment among farmers this quarter, with only 31 per cent of farmers expecting conditions to improve, down from 68 per cent in last quarter’s survey.

"Much of New South Wales, southern Queensland, South Australia and parts of northern Victoria sweltered through one of their hottest – and in some areas hottest – summers on record," Charteris says.

"This particularly took its toll on the cotton sector, with the hot weather impacting dryland cotton yields." 

Western regions of Australia, however, are proving to have a very different outlook, with the wet weather conditions felt in February leading to sizeable stored moisture which will aid Western Australia’s 2017 grain crops. 

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