Rain may have come too late to help many graingrowers’ prospects, but it has contributed significantly to a mood revival across much of the farm sector.
Varied rainfall patterns in November have helped send farmer confidence levels doubling from their four-year lows of just three months ago.
Rabobank’s latest quarterly farm confidence survey shows the percentage of Australian farmers expecting conditions in the agricultural economy to improve in the coming year jumped from 17 per cent to 28pc thanks to rain and robust commodity markets for livestock producers.
Income expectations up
Almost a third of farmers expect higher gross farm incomes in 2018 (compared with 25pc a few months ago), while 45pc tip their incomes will remain stable, at least.
In particular, wool, beef, lamb and dairy producers are going into 2018 driven by strong, or much-improved, commodity prices and buoyed by rain after a tough autumn and winter for many.
“The phrase ‘riding on the sheep’s back’ is starting to ring true,” said Rabobank’s country banking national manager, Todd Charteris.
Sheep producers were the most bullish about prospects for the year ahead thanks to elevated wool and lamb prices.
You only need to look at the prices and clearance rates being achieved at ram and bull sales to see the sentiment still prevailing in the livestock sector
“About 38pc of sheep farmers anticipate conditions to improve further in the next 12 months, while another 56pc see a continuation of current conditions,” Mr Charteris said.
“You only need to look at the prices and clearance rates being achieved at ram and bull sales to see the sentiment still prevailing in the livestock sector after a number of years of strong lamb and beef prices, and the wool market’s recent resurgence.”
Appetite for farmland was particularly strong among producers seeking high-quality grazing and dryland properties.
Farm sector sentiment is strongest overall in Victoria, after a year of generally favourable seasonal conditions, although late season frosts hurt the grain belt in November.
In NSW and southern Queensland useful rain came too late for croppers.
Dry growing conditions and severe frost events have trimmed national winter crop predictions to a well-below-average 35 million tonnes.
That’s about 24m less than last year’s 59m tonne record.
Overall, the percentage of Australian farmers expecting conditions in their sector to worsen has halved since September to just 12pc.
About 58pc expect a stable outlook and relatively unchanged conditions in the year ahead.
Even croppers’ hopes for 2018 have been buoyed by a recent lift in domestic grain prices as local production shortages and weather disruptions to harvest recharge values in defiance of a depressed international markets.
Solid investment plans
A quarter of all Australian farmers are looking to increase investment in their farm businesses in 2018, while two thirds will maintain spending at current levels.
Mr Charteris said commodity prices were the biggest driver of farmer confidence, with two thirds citing a positive outlook as reasons for optimism.
Dairy farm income expectations have made a big shift, with 51pc anticipating better milk prices.
Seasonal conditions were also considered by 57pc of the 1000 survey participants as likely to improve their prospects into next year – up from 34pc three months ago.
The biggest seasonal turnaround was in South Australia, Queensland, Western Australia and Victoria.
“After such a dry winter, rain came in the nick of time for crops in the west and SA, minimising potential crop loss,” Mr Charteris said.
“Although it wasn’t enough to bolster production in SA’s Eyre Peninsula and arrived too late for many in central and northern NSW.”
NSW is now harvesting its smallest winter grain crop in 10 years.
Storms in northern Queensland have stirred hopes of an elusive decent wet season coming good, and Mr Charteris noted southern Queensland rain in recent weeks boded well for summer crop prospects.
For Victoria, the weekend’s major rain event was predominantly in grazing country in the north east, and beneficial, but northern horticulture areas felt some negative impact.
Cotton sector confidence is also up with 2018 crop prospects bolstered by October rain, but Mr Charteris said more was needed before Christmas to support a big dryland plant,” he said.
“However, irrigated growers have the water to fulfil their planting intentions and the 2018 national crop is forecast to come in around 4.3 million and 4.5 million bales.”
Sugar sector confidence was up too, slightly, but still well below levels seen a year ago because of an abundance of sugar on the market and 41pc of canegrowers expect lower incomes next year.
However, fundamentals do point to improved global sugar prices in 2018.