March 26, 2007

 

Australian farmers' confidence rebounds after rains
 

 

Farmer confidence levels in Australia have rebounded sharply following promising summer rains and a predicted return to normal seasonal conditions after a severe drought in 2006, according to a quarterly survey issued Monday by Rabobank Australia Ltd.

 

The increased confidence is the largest jump in the survey's seven-year history and comes after a period of sustained decline in sentiment since August 2005, it said.

 

The quarterly survey of more than 2,000 farmers in February and March shows confidence returning to a level last seen following the break of the previous drought in 2002, and found 45 percent expect the agricultural economy to improve over the next 12 months, well up from 15 percent in the previous survey, it said.

 

Only 20 percent now expect the agricultural economy to decline in the next 12 months, compared with 65 percent in the previous survey.

 

Rabobank General Manager Rural Australia Peter Knoblanche cautioned that the strong rebound in confidence seen in the latest survey should not be mistaken as a sign that Australian farmers had recovered from drought.

 

"Most farmers are still anxiously waiting on a good autumn break with significant follow-up rain, which is going to be essential for them to have a reasonable season ahead and to impact on confidence levels in the longer term," he said in a statement.

 

Irrigators - particularly those in cotton, dairy and horticulture - are still suffering from low dam storage levels and significantly reduced water allocations across most states, he said.

 

Rabobank's Food & Agribusiness research unit reported that Australian rural commodity prices overall excluding sugar are at their highest level since 2002-03, buoyed by strong global wheat and corn prices, which have reached their second highest levels on record. Cattle prices also have rebounded in recent weeks.

 

Consistent with the increase in overall confidence, farmers' income expectations and investment intentions have also increased, the bank reported.

 

Sentiment was stronger across all sectors with the exception of sugar, with significant increases observed among grain, beef and sheep producers, it said.

 

A fall in the international price of sugar is continuing to negatively impact on sentiment among producers, who expect conditions to worsen over the next 12 months, it said.

 

Australia is a major global supplier of many farm products.