NAB survey: strong confidence in dairy and beef despite deteriorating conditions
The National Australia Bank (NAB) has released results of the June 2011 post farm gate agribusiness survey. The results show strong confidence in commodities on the back of high global prices and solid production prospects, despite the lingering effect of floods, the high Australian dollar and shaky consumer confidence.
High global prices, reduced concern about the impact of floods and a good seasonal outlook has improved confidence in crops, while global prices have also maintained buoyant confidence in dairy and beef.
The survey has also found that confidence in fibres, wool and cotton remain high.
Despite the high confidence, conditions have continued to deteriorate through the June quarter. The index currently sits at -16, its lowest level since June 2009.
“Driving the result was a sharp fall in employment and a more modest decline in profitability,” says the report.
“One of the key themes to emerge from the quarterly results was the continuing impact of the floods. Similar to the non-farm economy, a weaker than expected recovery from the floods appears to have hit post farm gate agribusiness conditions in the quarter, continuing to impact supply chains in some regions.”
“Additionally, the high AUD has managed to hurt final prices for trade-exposed sectors while consumer confidence remains weak.”
According to the report, the survey found a high degree of optimism among respondents, with 43 per cent saying that they expect to increase capex over the next twelve months and 42 per cent expecting increased profitability.
The survey respondents include approximately 900 small/medium to large sized Australian companies. They are mainly from the food manufacturing industry but also wholesaling, services and a small number of firms in other sectors.