New Zealand farmer confidence has rebounded but remains in negative territory, Rabobank said in releasing its fourth and final Rural Confidence Survey for 2019.

Improved confidence among farmers from all sector groups saw the overall confidence reading rise to minus 12 per cent in the latest quarter, from minus 33 per cent in the previous survey.

The latest survey – completed late last month – found the number of farmers expecting the rural economy to improve in the next 12 months increased to 21 per cent from eight per cent in the last quarter, while the number expecting the rural economy to worsen fell to 33 per cent from 41 per cent.

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Rabobank New Zealand chief executive Todd Charteris said improved farmer sentiment had been fuelled by stronger outlook for commodity prices.

Farmers' expectations of their own farms' business performance were marginally up on last quarter, led by a strong jump in confidence among sheep and beef farmers
Investment intentions remained robust and relatively unchanged from last quarter with horticulturalists recording the strongest investment intent.

Charteris said recent market developments had resulted in an improved outlook for New Zealand's key agricultural exports.

Since the last survey in September, dairy farmers have been buoyed by continued strong commodity prices.

Fonterra last week lifted its farmgate milk price to $7.30 a kg, which would be the fourth-highest price in its history, and has raised its earnings in the first quarter.

The forecast range shifted up to $7.00 to $7.60 per kg, up from a previous forecast range of $6.55 to $7.55 per kg, and lifted the mid-point by 25c to $7.30/kg.

The outlook for beef prices continued to improve.

Charteris said the recent surge of Chinese demand for New Zealand beef was a result of the pork supply shortfall created by African Swine Fever.

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"Similarly, sheepmeat pricing is expected to continue at elevated levels next year with demand forecast to remain strong in our key sheepmeat export markets."

While confidence had lifted from last quarter, there were still more farmers adopting a pessimistic stance over an optimistic one, and the key reason for this was uncertainty created by government policy, he said.

"Among the one-third of farmers expecting the agricultural economy to deteriorate, 91 per cent cited government policy as the key reason for holding this view," Charteris said.

"We've seen government policy feature as the major concern for farmers across recent surveys, however, this percentage is an increase on recent quarters and the highest proportion of farmers citing government policy as a concern in the survey's history."

Charteris said while a range of government policies were likely to be causing unease among farmers, this spike was likely attributable to recently proposed freshwater reforms –released in October – and new bank capital requirements.