Flooded Basin dilutes market

Flooded Basin dilutes market


Opinion
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There are plenty of sellers in the market happy to divest themselves of water.

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ANNUAL water markets in the Southern Basin continue to see low prices across the board.

There are plenty of sellers in the market happy to divest themselves of water. Given country is still inaccessible in many places, uncertainty remains about the potential scale of summer crop plantings.

There are plenty of sellers in the market happy to divest themselves of water. Given country is still inaccessible in many places, uncertainty remains about the potential scale of summer crop plantings.

In the NSW Murray temporary water has sold for $50 a megalitre, and the price has fallen as low as $35 in the Murrumbidgee. Both have rallied a little in recent days.

In the current wet environment there is very little demand and plenty of sellers in the market happy to divest themselves of water.

Spring irrigation has been unnecessary this year and demand from dairy has been suppressed. Looking ahead, uncertainty remains about the potential scale of summer crop plantings, given country is still inaccessible in many places.

In the Murrumbidgee, looming cotton plantings are likely to be down as deadlines come and go in the wet weather. Seasonal water demand for cotton will be below previous expectations and many growers will be in the market selling water.

In contrast, recent fine weather and later planting windows have given rice growers added confidence of planting close to a full program. If the weather holds up rice will be a large demand factor in the market and may buoy prices, especially in the NSW Murray.

Although entitlement holders will have full allocations, many irrigators now grow rice with little or no permanent entitlement, sourcing supply from temporary markets.

Those with a long term view will be considering options for purchasing water now and carrying into next season.

However, with so much water in the system, finding a place to park water for access next year may be challenging.

Another cautionary issue remains the number of trade restrictions in place. Buyers with a view to next year will have concerns about the ability to move water to their most desirable zone, either for trade or use.

Even if trade restrictions do lift at some point, the pent up demand to transfer water across valleys will be significant, and many may find themselves disappointed when the door quickly closes. These factors pose additional disincentives to purchase, and are likely to be an extra contributor to prices being so low.​ 

  • Jack Bennetto is H2OX’s business development manager.  Andrew Bomm is an independent consultant at Progressive Agriculture.
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