A recent lift in Fonterra's milk payout forecast has helped to restore some optimism among dairy farmers.
That's in contrast to the sheep and beef sector, where farmer confidence has taken a hit from the impact of drought and the big drop in lamb prices.
The latest quarterly Rabobank Rural Confidence Survey found that overall farmer confidence has shown some improvement from the lows of last year, with 28% of farmers expecting the agricultural economy to improve in the next 12 months, up from 18% last quarter.
That was due to the more optimistic outlook of dairy farmers.
Rabobank New Zealand chief executive Ben Russell said more than half of dairy farmers are expecting an improved performance in the coming year, up from 35% in the previous survey.
And more dairy farmers are expecting an improvement in the agricultural economy over the next 12 months.