Rabobank’s quarterly Rural Confidence Survey, which was released on June, 12, reveals confidence is at its lowest level in five years.

Rabobank regional manager for central New South Wales Toby Mendl said due to the poor seasonal conditions, they expected rural confidence to fall in this quarter to fall.

“While we certainly expected the rural confidence index to fall this quarter due to the poor seasonal conditions in the state, the scale of the drop to a five-year low reflects that it is coming off a relatively high base following a run of good seasons and generally strong commodity prices,” he said.

The quarterly survey, completed last month, found nearly half of the state’s farmers, 46 per cent, expected conditions in the agricultural economy to worsen in the coming 12 months, double the 23 per cent with that expectation in March this year.

Those expecting an improvement in the agricultural economy stood at just 14 per cent, down from 20 per cent, while 33 per cent expect similar conditions to last year (down from 54 per cent).

Mr Mendl said the survey results were climate driven, with 93 per cent of farmers with a pessimistic outlook citing the dry season as the key reason conditions were likely to worsen.

“The whole of New South Wales has endured a dry summer and autumn, with above-average temperatures exacerbating conditions, as soil moisture profiles are very low across most of the cropping belt,” he said.

Grain and cotton growers were particularly concerned about poor seasonal conditions, Mr Mendl said, with all surveyed growers expecting conditions to worsen blaming the season for their pessimistic outlook.

The NSW grain sector has taken the biggest confidence hit, with 44 per cent of growers having a negative outlook, up from just five per cent in the previous survey.

Just 61 per cent of cotton growers expected conditions to deteriorate, although this figure was in line with the last quarter’s survey results.

Mr Mendl said with no break in the season, nearly all of the New South Wales winter crop that was in the ground had been dry sown, but the pace of plantings was slowing as farmers awaited rain to fulfil planting intentions.

“And with the planting window starting to close, rain in the next few weeks will be critical,” he said.

Mr Mendl said the dry weather had curtailed canola plantings, with Rabobank forecasting NSW canola plantings to be down by 17 per cent on the previous season, with growers looking at wheat and barley with its later planting window and relatively strong prices.

“Feed barley prices are particularly strong, recently hitting their highest level in nine years, driven by strong demand from livestock producers,” he said.

With feed prices likely to increase further, and the lucerne hay market already going up, Mr Mendl said feed prices would impact livestock feeding decisions, but wouldn’t be the key determinant.

“Graziers are looking to feed their core breeding stock, as a lot have the liquidity to do so, given the returns for wool, mutton and lamb,” he said.

The latest survey found while confidence was down among sheep graziers, they remained the most positive commodity sector in the state, with 54 per cent expecting similar economic conditions to the last 12 months.

Mr Mendl said confidence in the state’s beef sector had taken a bigger hit, with 52 per cent of surveyed beef producers expecting conditions to worsen.

“While beef prices have come off, and light cow prices have fallen out of bed, beef prices remain above the five-year average, enticing many to hold on to their breeding stock as the challenge to buy back in following a break in the season is likely to be significant,” he said.