• NAB’s second Agribusiness Banker Survey found that agribusiness conditions remained negative in Q1 2019. The index fell from -19 (the number of bankers who said conditions were weaker out-weighed those who said it was stronger) in Q4 2018 to -20 in Q4 2019.
• All three components of the Agribusiness Conditions Index remain negative. Trading conditions improved a little (-14 compared to -18 last quarter), but profitability (-31 compared to -29 last quarter) and employment (-14 compared to -9 last quarter) both weakened.
• Agribusiness confidence jumped nationally, up from 0 to +20. The increase largely reflected a big improvement in Queensland, parts of which saw considerable rain in the quarter, while Western Australia remained buoyant. New South Wales and Victoria remained pessimistic however.
• Seasonal conditions remain a key driver of the survey results and for their divergence across Australia. Conditions remained weakest in NSW, which has endured severe drought in large parts of the state and strongest in WA, which has come off a very good season. Conditions improved in Queensland, but deteriorated in Victoria.
• By industry, conditions were strongest in wool, followed by fisheries and horticulture. Interestingly, both wool and lamb saw conditions decline in Q1, although this was driven largely by New South Wales and Victoria, suggesting that seasonal conditions may have been the underlying cause. Dairy was once again the weakest sector.
• In addition to conditions, NAB bankers were also asked to identify their strongest and weakest performing customers, which were then matched to the industry they operate in. In net terms, the strongest were in wool, mixed cropping and livestock and lamb and mutton, while dairy and (unexpectedly) horticulture, were weak.
• It is important to note that in some industries identified as weaker performing, a large number of bankers also identified them as their strongest. This was most apparent for broadacre cropping and cattle.
• Looking ahead, we will be closely watching the progress of the season and its impact on conditions and confidence. The break has arrived, albeit very late, in the south and we would expect to see some impact on Victorian and South Australian conditions. However, if the drier than average three month outlook from the Bureau of Meteorology transpires, conditions could suffer.

Read more in the Agribusiness Banker Survey Q1 2019 and tune into our podcast with NAB Agribusiness Customer Executive, Neil Findlay, and NAB Agribusiness Economist, Phin Ziebell, where they discuss the results of the Q1 Agribusiness Survey.