Monday, 28 November 2016 18:27

Dairy sector the pessimistic stand out

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THE dairy industry is the pessimistic standout in an otherwise optimistic Australian agricultural sector.

The final Rabobank Rural Confidence Survey for the year has found Australian farmer confidence has been sustained at historically high levels throughout the past quarter, buoyed by good seasonal conditions across much of the country and solid prices for many commodities.

Across all surveyed commodities, confidence remained embedded in positive territory, except dairy where the net confidence reading was slightly negative.

That said, dairy posted the largest turnaround in confidence this quarter, with sentiment lifting strongly from its four-year low.

“While seasonal conditions have been behind some of the lift in dairy sentiment, it has largely been market-driven, with global commodity markets now in their recovery phase,” Rabobank national manager Country Banking Australia Todd Charteris said.

 “While the recent rally may be too late to have a material impact on farmer margins this season, it should start to flow through into improved returns in the 2017/18 season.”

The survey, completed last month, found cotton and sugar producers to be particularly bullish about the coming year, while sentiment remained strong in the sheep and beef sectors.

Meanwhile it was a mixed outlook for the nation’s grains sector, with many looking to harvest a sizable crop, but expectations reined in by frost damage in Western Australia and excessive rainfall in parts of the eastern states.

After posting a significant upswing in rural confidence last quarter, the net confidence indicator remained unchanged and at strong levels, indicating a larger proportion of farmers continue to expect agricultural economic conditions to improve (36 per cent) rather than worsen (15 per cent) over the coming 12 months. While the majority (46 per cent) expect the next 12 months to be similar to the last.

“Much of the country is experiencing a good season, following the second wettest winter on record, and a wet start to spring,” Mr Charteris said.

The nation’s grain producers are the biggest beneficiaries of the rain, Mr Charteris said, with many on the cusp of harvesting a sizable crop – particularly in Victoria and South Australia.

“That said, the rain has been excessive in northern Tasmania and parts of New South Wales and Victoria, with flooding causing water logging of pastures and crops, which has led to some pretty significant downgrades to crop yields,” he said.

“The Western Australian crop has also been hit by Mother Nature, with the crop now expected to be three million tonnes down on earlier projections due to early spring frosts.

(Source: Rabobank)

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