SA farmers draw comfort from ‘season-defying’ harvest and solid prices

Sentiment in South Australia’s rural sector has continued to improve in the first quarter of the year, as the state’s grain growers reflect on a season-defying 2018/19 harvest, the latest Rabobank Rural Confidence Survey has found.

The first quarterly survey for 2019, found farmers’ confidence levels had risen from last year’s 12-year low, with overall rural sentiment now back in positive territory.

Rabobank regional manager for South Australia Roger Matthews said while the 2018/19 season had been patchy for the state, grain growers who did obtain decent yields would have been buoyed by the solid grain prices.

The survey, completed last month, found the percentage of the state’s farmers with a negative outlook on prospects for the agricultural economy in the year ahead had halved to 22 per cent (from 45 per cent last quarter), while those expecting conditions to improve held relatively steady at 27 per cent (previously 31 per cent).

Almost half of those surveyed (47 per cent) said they anticipated similar conditions to last year.

Mr Matthews said solid grain prices had been the main positive for the state’s grain growers, who had experienced a mixed season, though some areas had harvested yields above what had been expected.

“In some regions, such as the lower Eyre Peninsula and the South East, we saw yields at average, and perhaps even better than average. However, for much of the rest of the state, the growing season was patchy and yields, while at times surprising, were still well below averages,” he said.

“For the state we saw 5.3 million tonnes total crop, which, while better than expected, is almost half what we received a couple of years ago.

“On the price front though, with wheat stocks at their lowest in 10 years, it is expected that prices will remain above average throughout 2019 until new crop starts coming in toward the end of the year.”

While the percentage of grain growers with a positive outlook remained similar to last quarter (32 per cent, compared with 31 per cent last survey), the number with a negative view of the year ahead had plummeted to 13 per cent (from 61 per cent previously). The majority (51 per cent) expected stable conditions.

The survey found overall for South Australian farmers, the anticipation of better seasonal conditions in 2019 was the main driver of improved sentiment this quarter, with 55 per cent of those farmers with a positive outlook citing this as the key reason for their view.

Rising commodity prices were another significant factor behind the positive sentiment, nominated by 43 per cent of those who were expecting an improved year ahead.

Mr Matthews said the ongoing dry conditions in eastern Australia were supporting higher prices in grains and livestock.

“The significant dry conditions seen in much of the east coast has meant the continuance of low feed stocks and greatly reduced sheep and beef herds,” he said.

“Producers here have been able to take advantage of the flow-on effect of this, which has seen domestic crop and livestock prices well above the global averages, with RaboResearch forecasting these higher price points to last throughout most of 2019.”

/Public Release.