AUSTRALIAN sheep producers were the most optimistic farming sector in the nation this quarter, according to the latest quarterly Rabobank Rural Confidence Survey.

The survey found that net confidence among sheep producers rose from -27 percent to -6pc, supported by price stability.

Rabobank group executive for Country Banking Australia, Marcel van Doremaele said sheep producers continue to benefit from solid market conditions for sheep meat and wool.

He said their “bullish” confidence is underpinned by generally favourable seasonal conditions across most production regions.

Mr van Doremaele said beef producer confidence also strengthened from net -40pc last quarter to -18pc.

“This improved sentiment is despite global trade restrictions reshaping beef flows around the world,” Mr van Doremaele said.

“Cattle prices are closely following seasonal conditions, so producers are hoping for beneficial spring rainfall to continue supporting an upside to prices.”

The survey found confidence among Australia’s grain growers rebounded from net -61pc last quarter to now sit at -28pc, as the industry responds to firmer global wheat and barley prices, paired with easing concern about input cost pressures.

“The market is currently being shaped by wheat availability, rather than wheat production, which is influencing prices,” Mr van Doremaele said.

“Although there’s abundant supply in Russia and Ukraine, export logistics through the Black Sea are the challenge which, in the short term, is supportive for world wheat values.

“These ongoing Black Sea disruptions also provide some support for canola,” he said.

“Australian growers are keeping an eye on how disruptions to supply chains for Ukrainian rapeseed and sunflower oil, as well as global energy and vegetable oil demands, play out in terms of canola pricing.”

Confidence lifted across the nation

Rabobank group executive for Country Banking Australia, Marcel van Doremaele.

The survey found that garmer confidence has lifted across the nation this quarter, supported by optimism about commodity markets and seasonal conditions.

Input cost pressures remain a concern to surveyed farmers, but there was some relief around farm input prices and availability despite ongoing geopolitical influences on supply chains, Rabobank said.

Improved sentiment has translated to stronger investment intentions for the next 12 months, the bank said.

Rabobank said despite continuing tensions in the Middle East and Black Sea regions and the knock-on impact to agricultural supply chains and markets, the Q3 survey shows national farm sentiment has begun to recover, climbing to a net reading of -19pc.

Though still at net negative levels, this is a marked improvement from the -48 per cent recorded in Q2, which was the lowest reading since 2006.

While the portion of Australian farmers who anticipate conditions in the agricultural economy will improve in the coming 12 months rose just slightly in the latest quarter – to 12pc, from 10pc last survey – this was offset by a significant fall in those who expect conditions to worsen (now 32pc, down from 58pc).

Rabobank said just over half of they survey respondents expect business conditions to stay relatively unchanged – 52pc up from 28pc last quarter.

Every state recorded a lift in sentiment, and confidence improved – albeit not evenly – across all commodity sectors. An expectation of positive commodity prices was found to be the leading cause for optimism this quarter, cited by 48pc of farmers, Rabobank said.

Good seasonal conditions followed, nominated by 29pc. Although elevated input costs are still the chief concern for Australian farmers, this had eased somewhat from last quarter – nominated by 54pc of respondents, down from 60pc. Rabobank said there was also reduced concern about energy security (fuel price and shortage) – down to 14pc of farmers, from 26pc. Worry about the impacts of war remained stable at 14pc.

Mr van Doremaele said the improvement in sentiment this quarter reflects a period of improved seasonal conditions across several regions and some relief to concerns about supply costs and availability.

“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.

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,’’ he said.

“Domestic urea supply is now sitting in a more comfortable position, reducing the risk of fertiliser shortages and easing concerns around local supply constraints heading into the end of the season.”

Despite the forecasts of a strong El Nino, Mr van Doremaele said, the survey results – completed in August – saw reduced worry about drought, with a quarter of farmers nationally nominating negative seasonal conditions as a concern, compared with a third last quarter.

“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,” he said.

Source – Rabobank.