Key highlights

• NAB’s third Agribusiness Banker Survey brings a somewhat more encouraging headline figure for agribusiness conditions but continues to show serious concerns in New South Wales and to a lesser extent Queensland. Conditions stood at -11 in August, still negative but an improvement from -20 earlier this year. Conditions are now positive in Western Australia, South Australia and Victoria, but remain negative (and weakening) in New South Wales and Queensland.
• Of the three components of the Agribusiness Conditions Index, two remain negative. Trading conditions continued to improve (now +1, up from -14 last survey) and profitability remained negative (although up to -10 from -31 last survey). Employment went backwards, down to -25 (compared to -14 last survey).
• Agribusiness confidence fell back to -2 following a fairly positive read last survey. Queensland fell back from a very high read while confidence in New South Wales went through the floor, likely in response to a generally poor winter crop in the state, with the clock ticking for rain ahead of summer crop planting.
• Seasonal conditions remain a key driver of the survey results and for their continued divergence across Australia. Conditions remained weakest in NSW, which continues to endure drought in large parts of the state. Western Australia eased somewhat, with rain needed soon to keep the crop going.
• By industry, conditions were strongest in lamb and mutton, followed by mixed cropping and livestock. Lamb prices were hovering around record levels when this survey was taken. Wool dropped to third strongest place (from first), likely reflecting the recent fall in wool prices and concerns around the US-China trade war. Dairy remains the weakest sector nationally, but saw a big pick-up this survey. Victoria – which accounts for around two-thirds of Australia’s dairy industry – saw conditions increase from -75 to 0 amid strong opening prices for 2019-20.
• Looking ahead, we will be closely watching the progress of the season and its impact on conditions and confidence. The autumn break was good – albeit late – in Western Australia, South Australia and Victoria, but failed in New South Wales. Spring rain (or lack of it) will likely be a major driver next survey.

Read more in the NAB Agribusiness Banker Survey August 2019 and tune into our podcast with NAB Agribusiness Customer Executive, Neil Findlay where he’ll discuss the results of the Q2 Agribusiness Survey.