Growers see lower prices on horizon
RURAL confidence in North Queensland has pulled back as the region experiences another lacklustre wet season, according to the latest quarterly Rabobank Rural Confidence Survey.
After posting strong confidence levels in the second half of 2016, sentiment among NQ producers dipped this quarter to a net reading of 10 per cent, down from 40 per cent, the survey found.
Regional manager for North Queensland Trent McIndoe says while some parts of northern Australia have had a really good wet season, not all have received the falls they hoped for.
“The coastal parts of far north Queensland have done OK, but in the central parts of the north, both inland and coastal, it has been very patchy.”
Both sugar cane growers and beef producers revised down their expectations for the 2017 year.
Mr McIndoe said while both commodities remained overall in positive territory – with more farmers expecting conditions to improve rather than deteriorate – the decline in confidence reflected the expectation of easing prices.
For sugar, while confidence had pulled back, the sector remained positive about the price outlook with 100 per cent of sugar cane producers surveyed across Queensland nominating commodity prices as reason for their confidence in 2017.
“We’ve seen near contracts on the ICE #11 pull back to $19.55 USc/Ib after reaching four-year highs last October, but there is still a lot of volatility in the market and also some decent fundamentals keeping that price fairly buoyant,” Mr McIndoe said.
“We have seen both beef and sugar producers lock in some good prices in 2016 and now as the end of financial year begins to loom many will be looking at tax effective ways to invest in their business using this improved cash flow,” he said.
“For sugar producers in particular, they may have held off on buying plant and machinery while the price was more subdued so they’ll now be making those purchases, ” Mr McIndoe said.