Decent rainfall across much of the country in the first three months of 2008 lifted spirits but did little to improve business conditions for Australian agribusinesses.
Lagged effects from the drought and declining demand from interest-rate-hit consumers sent trading conditions and profitability backwards in the quarter, according to the NAB Quarterly Agribusiness survey.
But the tough conditions have not dented farmers’ confidence in their prospects for the year ahead, with the 12 month profitability outlook increasing six points to be 32 points above the line separating positive from negative sentiment.
Confidence moved to positive levels in all commodity sectors, with confidence in wheat up 48 to 49 index points, confidence in beef up 22 to 19 index points, confidence in cotton up 20 to seven index points and in sugar up 21 to 11 index points.
Across the broader economy, there was a slight uptick in the private sector in March despite the worsening credit squeeze.
Reserve Bank of Australia data released today shows the amount of credit provided to the private sector rose by 0.8% in March 2008, following a rise of 0.6% over February. Over the year to March, total credit rose by 14.9%.
But if the Australian economy is showing some signs of resilience, there can be little doubt the credit squeeze is continuing to take a heavy toll on the US economy.
Home foreclosures in the US jumped by 23% in the first quarter of 2008, according to RealtyTrac data, and are now at double the level they were a year ago.
One in 194 households in the US defaulted on a mortgage payment in the first three months of the year, while almost 650,000 homes were foreclosed.
House prices in the US have also slumped, with the Standard & Poor’s/Case Shiller home price index showing average values dropped 2.6% in February to their lowest level in more than five years.
On the markets today, the announcement of a takeover bid for Origin Energy has helped the S&P/ASX200 all but reverse a drop of almost 100 points sustained in the first 10 minutes of trading.
Shares in Origin Energy jumped nearly 40% to a record high of $14.60 after British energy business BG Group announced a takeover bid for the company this morning, before coming back to $14.42 at midday.
As a consequence, by midday the S&P/ASX200 is down just 0.2% on yesterday’s close to 5597.4 and looks set to move into positive territory shortly.
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