Farmer confidence lifts

06 Jun, 2014 04:00 AM
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5
 
Given the good start to date, farmers are going to invest in these crops

WITH one eye on the long-term seasonal outlook, agribusiness companies have been carefully cautious about economic predictions for the rest of 2014, but farmer expectations have bounced to a three-year high.

Despite some particularly tough seasonal hotspots around the bush, Rabobank has recorded a big upswing in confidence after timely rain triggered a good winter cropping season start in many areas and market dynamics lifted for beef, sheep, grain and dairy producers.

Investment intentions are also up, with 75 per cent planning to boost or maintain investment according to the bank's June quarterly survey of 1000 producers Australia-wide.

Good autumn rain in much of the nation's key cropping zones and southern grazing areas helped drive a rebound in farmer sentiment, which had been sliding during the previous six months.

Overall, 40pc of farmers anticipated agricultural economic conditions would lift (up from 29pc in March).

Those worried about worsening prospects nearly halved to 15pc.

In a stark contrast to a year ago dairy farmers are the most upbeat about prospects ahead.

Longer-term industry confidence was also sound, with two-thirds of farmers actively looking to incorporate the next generation into their business either by transferring the asset or sharing ownership with their children.

Rabobank's Australian country banking group executive Peter Knoblanche said the strong rally in sentiment was not surprising given production prospects across Western Australia, South Australia, Victoria and central and southern NSW had been revved up by perfectly timed autumn rain.

"Much of the winter crop has been planted on an excellent sub-soil moisture profile and graziers in many parts have more reason to smile, with markets responding to improved climatic conditions," he said.

However some regions were still badly affected by lack of rain.

While the autumn break had brought relief to central Queensland and some southern areas, more than 70pc of the State remained drought-declared, while much of North West and western NSW faced similar problems.

Recent commentary from mainstream agribusiness players including GrainCorp and farm services businesses Elders, Ruralco and Landmark has reflected some uneasiness about seasonal prospects, despite much-improved conditions of late.

"Favourable conditions and good finishing rains will be critical to the delivery of a good crop in eastern Australia," executive chairman, Don Taylor told shareholders.

With rising speculation about the likelihood of a drying El Nino weather cycle, Landmark managing director Tommy Warner said "we're going to need a bit of help from mother nature, but we're cautiously optimistic at this stage".

Chief operating officer with Incitec Pivot's fertiliser business James Whiteside conceded it was "always a good idea to be cautious in this game, but we're very happy with the cropping outlook".

"Given the good start to date, farmers are going to invest in these crops," he said, noting low fertiliser prices were another positive incentive for producers.

"The early break prompted strong orders and subsequent rainfall has left a pretty upbeat mood out there, although it's still dry in the Victorian Mallee and northern NSW and Queensland.

"We've been a bit unsettled by the unusually warm autumn, but a burst of cold and wet winter weather should be around the corner."

Rabobank confirmed seasonal conditions were a dominant driver of sentiment this quarter, with 60pc of those expecting conditions to improve citing the season as reason for their optimism.

However, commodity markets were also front-of-mind for 40pc, with grain and sheep producers notably buoyed by the price outlook, despite the relatively bearish sentiment in global grain markets.

Mr Knoblanche said Victoria had tallied up seven consecutive quarters of the highest sentiment across Australia.

"Over recent surveys this has been underpinned by the dairy sector, but this quarter we saw sentiment pick-up across beef, sheep and grains," he said

Sentiment was weakest in Queensland, although it did lift to its highest level since mid-2011 after "handy rains" in parts and some positive signals in the beef industry.

Improved confidence and increased re-stocker demand had strongly lifted beef prices, while positive market signals for the live cattle trade, including demand from Indonesia also helped.

Dairying remained the most optimistic of all the sectors, with 47pc of dairy respondents expecting this year to be better than the last.

While cotton prices were solid around $500 a bale, northern growers were concerned about how low irrigation storage levels would limit production options.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

beacon boy
6/06/2014 10:21:08 AM

confidence fast evaporating as the wheat price simply tumbles! down $45/t in under a month!
Meg
7/06/2014 12:57:12 AM

Maybe this is Rabobank talking up their risk in the hope of getting more farm loans on their books because with the present government's AGENDA 21 policies, this nation will lose what farmers it has left in the not too distant future...the lessons Europe learned during and after WW11 will be learned the hard way here...this nation will learn too late to value its farmers. Going hungry will take on a whole new meaning and there won't be any nation rushing to our aid either...WAKE UP Australia, hold our politicians to account before they strip this nation bare and sell it all offshore...
Mark
8/06/2014 8:09:21 PM

Lets stop tracking confidence and start tracking booked profits.
Inverell
9/06/2014 10:55:46 AM

Who are they asking for this survey? Farming is stuffed and getting worse every year. Up here we are having the worst winter in memory after 12 months with no effective rainfall at all. There is no positive outlook I can see for anything to change for the better. The Govt is still implementing more costs to business even after they promised to reduce regulations and costs. Min wages have just been increased again. I don't believe a word from Rabobank. Either this is made up or they are asking the stupidest farmers in AU for their opinion.
wtf
9/06/2014 12:00:30 PM

good suggestion Mark, they wont, they know the answers better than us.

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