Confidence is returning to Australia’s farming sector following a mid-year dip in sentiment, as more favourable livestock markets and beneficial rain in some cropping areas fuel renewed optimism.

The third quarter Rabobank rural confidence survey, said sentiment among the country’s agricultural producers has rallied heading into spring, although farm sector confidence remains just shy of net positive levels – with still slightly more farmers holding a pessimistic outlook than those expecting a better year ahead.

Farmers began the year with a surge in optimism, but sentiment had fallen by mid-year due to the worryingly late – and in some cases no autumn break for winter cropping regions, especially in Western Australia and South Australia. 

However, beneficial rainfall in the west and along the eastern seaboard put the brakes on sliding seasonal confidence this quarter.

And improved prices for sheep and beef producers also supported optimism about the agricultural economy ahead.

Farmer confidence improved in every state, although only NSW and Tasmania recorded net positive sentiment (with more farmers expecting conditions to improve than deteriorate).

Confidence also lifted in all commodity sector surveyed, except for cotton.

Rabobank group executive for country banking Australia, Marcel van Doremaele said more promising market signals, particularly in the livestock sectors, along with positive seasonal conditions and production outlooks in many parts of the country, had resulted in farmers taking an overall more bullish view this quarter.

“Although some parts of the country are still grappling with the impacts of unusually dry weather through autumn and winter, it’s encouraging to see the patchy start to this year’s season have been corrected in many farming regions, especially in WA where seasonal conditions looked dire last quarter but have really turned around,” he said.

“Farmers are still managing challenging conditions in southwest Victoria and across South Australia which continue to put pressure on winter crops and feed for livestock.

“And grain growers in these regions are particularly holding hope for good spring rainfall to finish crops following the very dry winter.

“The ENSO (El Niño Southern Oscillation) outlook remains at La Niña watch – meaning there are signs La Niña may develop later in the year and the potential for a wetter spring has held promise during the survey period, which has helped confidence track back up.”

Mr van Doremaele said shifts in key commodity markets had also helped to boost farmer confidence this quarter.

“Livestock producers are more optimistic after improvements in cattle and sheep prices, and there are also positive signals for dairy production.

“Grain and cotton farmers however face more bearish conditions with global drivers putting downward pressure on prices,” he said.

“There are also encouraging economic drivers underpinning farmer sentiment, including interest rates, with market forecasts of cuts in the official cash rate next year.

“In addition, the high cost of farming inputs, such as fertiliser, has also been easing, which is especially critical to farmers’ ‘bottom lines’, taking into account the impact of depressed grain markets.

“So, some easing of economic pressures, combined with useful winter rainfall for those regions which received it, has seen many farmers are tracking towards the end of the year with a more positive mindset.

“Others though do remain glued to the outlook and in need of a wet spring to finish crops and replenish feed reserves to ease pressure on feeding livestock.”

The Q3 survey also found those Australian farmers expecting the agricultural economy to improve in the coming 12 months had increased to 23 per cent (from 15 per cent with that view in the previous quarter).

And fewer respondents (27 per cent) were now expecting conditions to worsen (down from 36 per cent).

A similar number to last quarter (47 per cent) had a stable outlook on the year ahead, anticipating the agricultural economy to remain the same.

Key drivers for optimism in the sector were found to be a positive outlook on commodity prices (nominated by 32 per cent) and good seasonal conditions (31 per cent).

While drought remained the leading worry for farmers – nominated by 31 per cent – this was down on 37 per cent with that concern last quarter.

There was also less concern about rising input costs (cited by 29 per cent, down from 35 per cent) and falling commodity prices (22 per cent, dropped from 32 per cent).

Interest rate worries remained stable quarter-on-quarter, although there was increasing concern about the threat to live export, following the announcement in July the live export of sheep will end in May 2028.

Tasmanian farmers are the most optimistic in the country, with net confidence levels jumping to 40 per cent, up from -16 per cent just three months ago.

NSW is the only other state to climb back into net positive confidence levels, lifting to one per cent from -11 per cent in the previous quarter. While many Victorian farmers are still managing unusually dry seasonal conditions in parts of the state, a reasonable season in northern regions helped to drive a lift in farmer confidence. A quarter of Victorian farmers are now hopeful conditions will improve, pushing net confidence levels from -31 per cent to -4 per cent this quarter.

Queensland’s rural confidence climbed thanks to solid seasonal conditions and rising commodity prices.

Net confidence now sits at -4 per cent, up from -13 per cent, supported by expectations of typical seasonal rainfall conditions in coming months.

South Australia’s rural sector reported the lowest sentiment in the country – subdued by below-average winter seasonal conditions – but net confidence still lifted from -38 per cent to now sit at -27 per cent.