A DRY start to the season has had an impact on farmer confidence across the state, according to the latest quarterly Rabobank Confidence Survey.
Sentiment particularly edged back in the grains sector, with many of the state's growers dry-sowing winter crops due to lack of season-opening rainfall.
But overall confidence across SA's wider agricultural sector remained at historically-high levels for this time of year on the back of commodity prices - particularly for wheat, canola, lentils, sheep and beef.
The survey, released today, found approximately a quarter (23 per cent) of SA farmers were expecting conditions in the agricultural economy to improve in the next 12 months.
This was down from the 32pc with that view in the previous quarter.
The majority though (67pc) expect business conditions to be unchanged from last year and just 5pc expected them to worsen.
Positive sentiment was largely underpinned by commodity prices, with 75pc of those SA farmers expecting conditions to improve citing markets as the key reason for their optimism - up from 61pc last quarter.
Seasonal conditions were less of a positive driver of confidence this quarter - nominated by 31pc as cause for optimism (down from 54pc last survey).
Among those farmers in the state expecting conditions to worsen, the season was the biggest contributor to a pessimistic outlook.
Rabobank SA regional manager Roger Matthews said despite the dry seasonal conditions through summer and autumn, confidence had held up well.
"I expected farmer confidence could have come back a bit further, given below average rainfall in the year to date and the very dry summer," he said.
He said good falls of rain in many parts of the state in early June would have been very welcome.
With much of the state's crop now in - and Rabobank forecasting SA winter crop plantings of 3.6 million hectares (down 1pc on last year) - Mr Matthews said the rain in the past week was an enormous relief for most given the majority of planting was dry sown.
While seeding conditions have been far from ideal, the rainfall outlook is positive for the months ahead, with the prospect of a wetter-than-average winter.
"Currently the Bureau of Meteorology has pegged at least a 60pc chance for most of the state to receive above-average rainfall over winter," he said.
Seasonal concerns had sentiment in the state's grains sector ease, with the proportion of surveyed grain growers expecting an improvement in business conditions in the coming 12 months falling to 19pc, from 29pc in the March quarter.
Those expecting stable conditions stood at 69pc, while just 6pc reported they were anticipating a deterioration.
Confidence also edged back in the SA sheep sector - albeit to remain strong - with 26pc of graziers expecting business conditions to improve (compared with 49pc last survey) and 70pc expecting little change to present conditions.
"While there has been some additional feeding going on, sheep prices remain high and wool prices have also improved in recent weeks," Mr Matthews said.
The survey, completed last month, found beef producers, though, to be bullish about their prospects, with 46pc expecting conditions in the agricultural economy to improve - more than double the 21pc with that view in the previous quarter.
Mr Matthews said this was "a price story, with beef prices virtually at record levels".
The strong commodity prices across sheep and beef - and also wheat, canola and lentils - are set to underpin incomes in the 2021-22 financial year, with the survey finding 34pc of SA farming businesses were expecting a higher gross farm income across the coming 12 months, albeit down from the 43pc that had that expectation last quarter.
A total of 51pc were expecting a similar financial result to last year (up from 41pc).
Despite reporting lowered confidence levels, graingrowers held particularly strong income projections, with 41pc expecting a higher gross farm income in 2021-22 - up from 31pc in March.
RELATED: SA farmer confidence remains strong
Mr Matthews said the bank was forecasting wheat prices to track about $300/tonne this year, while canola prices were expected to remain elevated.
Lentil prices were also likely to remain supported with news the Indian government is lowering its trade barriers on some pulses.
In terms of investment, 25pc of farmers reported they were looking to increase their investment in the 12 months ahead (from 32pc last quarter), while the majority - at 69pc - were planning to maintain investment at present levels.
"Many farmers have already spent their instant write-offs this financial year, but the tax incentive has provided a boost to what is already a very strong appetite for investment," Mr Matthews said.
"Meanwhile land prices remain high and this is indicative of the longer-term positivity prevailing in SA's agricultural sector.
"Now all we need is continued good generalised soaking rain."
The Rabobank Rural Confidence Survey has questioned an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis, since 2000.
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