Exporters in Australia are stockpiling cotton in anticipation of further easing ties with Beijing. Despite this, Australian farmer confidence has only marginally improved due to concerns about commodity prices and input costs. The latest Rabobank Rural Confidence Survey shows that national confidence has increased from -25 percent to -22 percent. Approximately 13 percent of farmers expect conditions to improve in the next 12 months, while 35 percent expect conditions to worsen. Fewer farmers are concerned about falling commodity prices and rising input costs, but there is an increased worry about government intervention. Some farmers attribute this as a reason for apprehension about the future of the trade.
Farmers with a positive outlook are optimistic about rising commodity prices. Tasmania and Western Australia are the only states with a decline in confidence. Commodities such as cotton have seen increasing optimism among growers, despite the overall decline in confidence. Buyers are also stockpiling Australian cotton in Chinese warehouses, expecting a three-year ban by the Chinese Communist Party (CCP) to be lifted as diplomatic ties between the two countries improve. Chinese mills were prohibited from buying Australian cotton since October 2020, but diplomatic ties have recently thawed. The Labor government of Prime Minister Anthony Albanese has expressed a desire to ease trade sanctions, and Albanese plans to visit China by Christmas.
Concerns about commodity prices and the seasonal outlook have led more Australian farmers to anticipate a decrease in gross farm income in the year ahead. Only 14 percent of farmers expect an increase in income. Additionally, farmers are becoming more cautious about their investment plans, with a decline in net investment intentions. Fifteen percent of farmers plan to increase investment, while 22 percent plan to reduce investment. However, the majority of farmers (62 percent) intend to maintain investment at existing levels. Overall, farmers are factoring in interest rates, softer commodity prices, and the seasonal outlook before committing to investment projects.