Rabobank’s quarterly Rural Confidence Survey has found graziers are upbeat, after surging wool prices.

It also found that while low wheat prices put a dent in grain grower confidence, this has been buffered by a bumper harvest.

The survey found the majority of the state’s farmers are expecting the agricultural economy to remain stable in the year ahead, with 60 per cent anticipating similar conditions to last year.

Rabobank southern Victorian and Tasmania regional manager Hamish McAlpin said farmers were poised for a good year, particularly those in the beef and sheep sectors.

He said grain farmers had benefited from excellent growing conditions through the spring.

“Grain silos are overflowing after the bumper harvest and hay sheds are full, giving producers ample fodder reserves well into next season and in some cases the following season as well,” he said.

Although seasonal conditions remained a positive driver of Victorian farmer sentiment this quarter, commodity prices were the largest driver of confidence.

“Although lamb prices remain very strong, it is the wool market that has been the star performer in recent months, with the Eastern Market Indicator continuing to reach new highs,” Mr McAlpin said.

However, he said the outlook for grain prices was not as positive given the abundance of grain throughout the world.

“The markets have been more positive for oilseeds and pulses, benefiting those with a weighting of non-cereals in their crop rotation, while the high grain yields have certainly offset some of the price pain,” he said.  

Rupanyup's Sunnydale White Suffolk Stud owner Andrew Weidemann said the strong wool market had a flow on effect. 

“Strong wool prices flows on to sheep prices,” he said.

“There are people who have been in the wool industry for a long time and they are now getting rewards for their efforts.”

Fox and Lillie wool marketing manager Eamon Timms said it was the wool starved mills of China that were driving the demand.

“The scale of the increase caught many exporters by surprise,” he said.

Official shipping figures for January show more than 100,000 bales of wool left for China in January, a jump of 30 per cent on last year’s trading volume.

“Some users outside China are continuing to watch the show in amazement,” Mr Timms said. “They say their clients around Europe are struggling to pay the new prices for fabric.”