Home' The Murray Pioneer : October 24th 2014 Contents www.murraypioneer.com.au Friday, October 24, 2014 NEWS 13
Permanent Entitlement Type
SA Class 3A Irrigation Entitlement
NSW Murray High Security
NSW Murray General Security – Below Choke
NSW Murray General Security – Above Choke
NSW Murrumbidgee High Security
NSW Murrumbidgee General Security
Vic Murray High Reliability – Zone 7
Vic Murray Low Reliability – Zone 7
Vic Goulburn High Reliability
Vic Goulburn Low Reliability
Comment: Permanent markets remain undersupplied across the southern
basin, with very few sellers in the market. Demand remains strongest in South
Australia, where participants in the 3IP program continue to chase water higher.
Demand for Victorian Murray and NSW High Security entitlements is strong with
prices continuing to move higher.
Permanent Entitlement Market
At current prices, the outlook for temporary water trade certainly has the attention of
irrigators. To understand where the price might go it’s necessary to consider trading
opportunities and the supply/demand outlook across the Southern Connected Basin. In this
way it’s possible to show that allocations in the NSW Murray can have an effect on prices in
While trade from NSW to Victoria is currently restricted to relatively small volumes, trade
is allowed from NSW to SA and from SA to Victoria. As a result prices for temp water, after
adjusting for fees, are broadly similar across the Southern Connected Basin. Prices have
harmonised further as a result of the opening of trade from the Murrumbidgee to the NSW
As such, prices will be subject to supply and demand forces arising across the entire Southern
Connected Basin. On the demand side, permanent croppers water usage will be relatively
constant. However, annual croppers are faced with a recurring decision about whether they
use or sell their water.
In that respect, rice and cotton croppers have just worked through this decision and the
high water prices at the time have caused some famers to not crop and sell their water. This
decision is now behind us and the ongoing drivers of allocation supply (at least until summer)
will be allocation announcements.
In Victoria allocations to HRWS are at 100% and allocation to LRWS in any meaningful volume
is unlikely in the short term. As a result, the principal supply drivers will be allocations to
the Murrumbidgee and NSW Murray. As the outlook for the Murrumbidgee is for only limited
increases (from currently levels of 40% to 48% by 1 February 2015), it’s the forecast for the
NSW Murray that is of interest.
On 15 October the NSW Office of Water forecast significant increases to allocations which, if
realised, could put downward pressure on prices of temporary water. The forecast, with 50%
probability, is for allocations in the NSW Murray to reach 100% by 1 December. The Office of
Water also forecast that allocations will reach 67% by the same date with 75% probability.
However below average inflows to dams have resulted in an increase of only 6% being
announced on 1 October for General Security entitlements on the NSW Murray and only a
further 5% on 15 October. Allocation increases would need to average about 20% over each
of the next three announcement windows to reach the forecast 100% level at 1 December.
Even to reach the 67% target, allocation increases would need to average 9% at each
To put some historical context around
the current allocation figures of 39%
for NSW Murray and 40% for the
Murrumbidgee River, the following
table shows the historical allocation
level at 15 October each year, for each
river system, with the final allocation
level for that year in brackets.
Looking at the results for the NSW
Murray in the 2010/11 and 2011/12
years (where allocation levels at
1 December were 64% and 100%
respectively) there is obviously still
time for significant increases to occur
such that the forecast target could be
met. However in the context of current and forecast weather conditions, the forecast of 100%
allocation to General Security entitlements is looking very unlikely and even the 67% allocation
forecast looks to be difficult to achieve.
In contrast the forecast allocation levels for the Murrumbidgee River, while low, still appear
In Victoria, if dam inflows remain below historical averages, the probability of a declaration of
low risk of spill increases. This declaration would then result in more water being available for
sale as water in spill accounts becomes available for use or trade. In addition, the possibility
of allocations against Low Reliability Water Shares remains, although it would be lower with
decreased dam inflows. If allocations were made to Low Reliability Water Shares, this would also
increase the supply of water available in the market.
In summary, it appears likely that markets will soften in the immediate aftermath of cropping
decisions. If forthcoming allocations are lower than forecast then this could push prices up. Peak
summer demand will support prices further whereas a low risk of spill declaration in Victoria
could cause prices to soften.
Allocations and Storage Levels
South Australian Rainfall Totals (mm) September 2014
Product of the National Climate Centre
LIVE TRADING PLATFORM
For all your water market information and prices go to our LIVE
trading platform at www.ruralcowater.com.au
We currently have buyers paying excellent prices - contact your local
water expert to discuss the current market opportunities today.
0439 014 820
Telephone: 08 8586 4278
Local Service, National Strength
Current Spot Price
SA / VIC Delivery
Forward Allocation - 2015/16 Delivery
Temporary Allocation Market
Comments: Victorian allocation markets remain firm, with limited sellers in the
market. Ongoing dry conditions across the southern basin are forcing buyers to meet
high sell prices. The lifting of the trade restriction between the Murrumbidgee and
NSW Murray has seen prices fall in the Murray as buyers have improved water from
the Murrumbidgee, bringing both markets into line with each other.
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