Two-thirds of dairy farmers have told agri-lender Rabobank they expect conditions to improve as the jump in commodity prices at recent auctions flows through to sentiment.
The response from the sector in the Rabobank Rural Confidence Survey is the highest result since October 2007, with 67 percent of dairy farmers more optimistic.
Rabobank New Zealand's general manager for country banking, Hayley Moynihan, said the survey reflected a feeling that the market for dairy had gone past the bottom.
"Since the last survey, in July, three consecutive increases in GlobalDairyTrade results have lifted commodity prices by 25 percent and given those involved in the dairy sector a much-needed boost," she said.
However, there is little sign that this will lift investment spending by dairy farmers, with the majority saying it will remain at the same levels as a year ago.
Some 57 percent of dairy farmers expected the performance of their business to improve over the next year, up from 9 percent in the previous quarter, while 31 percent said they expected their production to increase this year and 15 percent said they expected it to fall.
Overall farmers' confidence rose for a second quarter and is at its highest level since 2013 with a net 35 percent expecting the rural economy to improve, up from a net 3 percent in the previous survey.
The survey was carried out earlier this month, with about 450 farmers questioned.