High dollar, weather combine to sap farmer confidence

THE high Australian dollar and mixed seasonal conditions have dragged Queensland farmer sentiment to new lows, the Rabobank Rural Confidence Survey reveals.

Released on Tuesday, the survey showed that while coastal producers had a relatively good season, further west in the Sunshine State, conditions remained dry.

On top of the high dollar and low commodity returns, these less than inspiring results saw the number of farmers expecting conditions to deteriorate further rise from 34% last quarter to 49% in the January quarter.

Just 16% of the 4500 primary producers surveyed expected any seasonal improvement between April and June this year, up slightly from 13% last quarter.

The remaining 35% expected conditions to remain similar to last year, down from 50% in the December quarter.

"Seasonally speaking, Queensland is a state divided in two - the coastal strip is experiencing a bumper season, following the rain event from cyclone Oswald and subsequent falls which have filled up every water reserve along the coast, yet over the range it is a different story, with the further west you go the drier it gets," Rabobank Queensland and Northern Territory manager Brad James said.

"The Gulf country virtually missed out on the wet season, with little prospect of good rains until the next wet comes around."

Concerns over the future direction of commodity prices weighed on sentiment, with 53% of those expecting conditions to worsen over the next 12 months attributing this to commodity prices - up from 40% last quarter.

The high Australian dollar remains a major cause for concern - raised by 25% of respondents - while one in four farmers also saw input costs as having a dampening influence on their business.

The drier conditions in the west of the state also had a bearing on confidence levels with 24% of respondents citing this as a concern, up from 16% previously.

Topics:  rabobank

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