Confidence among Australian farmers has rebounded thanks to recent positive changes in commodity prices and better-than-expected seasonal conditions, a survey from Rabobank finds.
According to the data, national farm sentiment showed signs of recovery in the third quarter, climbing to a net reading of -19 per cent from -48 per cent in the second quarter, which was the lowest reading since 2006.
The portion of farmers who expect conditions to improve in the coming 12 months rose slightly to 12 per cent. Those who expect conditions to worsen fell significantly to 32 per cent from 58 per cent in Q2.
Just over half of respondents expect business conditions to stay relatively unchanged, up from 28 per cent last quarter.
According to the report, expectations of positive commodity prices were the leading driver of optimism, cited by 48 per cent of farmers. Good seasonal conditions followed, at 29 per cent.
Concerns about rising input costs and energy security also reduced during the period.
“Although input costs continue to be the dominant factor weighing on confidence this quarter, and cost pressures remain elevated, farming businesses have experienced the initial price shocks,” said Marcel van Doremaele, Rabobank group executive for country banking Australia.
“Despite ongoing tensions in the Strait of Hormuz and Black Sea, sentiment has been steadied by recovery of key supply chains and stronger commodity signals.”
By geography, every state recorded a lift in sentiment, albeit not evenly. South Australia recorded the biggest improvement, rising to 8 per cent from -39 per cent in Q2. It was also the only state with positive net confidence, driven by beneficial rain throughout winter.
Queensland producers saw confidence rise from -54 per cent to -37 per cent. However, they were the least confident in the country, with dry conditions prevailing across many southern districts.
“Seasonal conditions have improved through August compared to July, with rainfall supporting winter crops and pastures across parts of southern and eastern Australia. And this has helped stabilise production outlook,” van Doremaele said.
“That said, the Bureau of Meteorology’s spring forecast points to below-average rainfall and above-average temperatures across key southern agricultural regions, meaning growers may be relying heavily on stored soil moisture as we move into spring.”
The survey also finds higher investment intentions in line with the improved sentiment. Some 28 per cent of farmers plan to increase their spending (up from 21 per cent in Q2), while only 12 per cent expect to reduce investment.
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