More farmers now expect conditions to deteriorate in the next 12 months compared with those expecting conditions to improve, and Rabobank general manager, rural Australia, Peter Knoblanche said the strong rises in sentiment earlier in the year could not be sustained.

The latest survey found 23 per cent of farmers expected conditions to improve in the coming year, down from 28 per cent last quarter.

The number of farmers expecting conditions to worsen increased to 37pc, up from 25pc last quarter.

Mr Knoblanche said despite an improved winter cropping season in most areas, sentiment was weaker in all states except Victoria.

Farm incomes were expected to be adversely affected by the stronger Australian dollar over the coming months.

“Every one cent rise in the Australian dollar against the US dollar strips more than $150 million off the gross value of agricultural production,” he said.

However, there had been generally favourable rain, resulting in a good finish to the winter cropping season in most areas, Mr Knoblanche said.

“While there have been some disruptions to harvesting in some areas, the winter grain crop will be an improvement on the past few years,” he said.

"It is disappointing that farmers won’t be able to take full advantage of this due to the lower farm gate returns for most commodities.”

Of those primary producers surveyed who expected conditions to worsen in the next 12 months, 65pc cited the rising Australian dollar as a major factor.

“Many of the winter cropping areas across the nation will achieve their best production for a few years with the national crop expected to be at its highest level since 2005,” Mr Knoblanche said.

Since the survey was taken, commodity prices have rallied somewhat, driven by improved market sentiment and a broad recovery in risk appetite.

For wheat, gains in international prices and slight downgrades to Australian crop estimates helped support local values, to about $20 a tonne in November.