Weekly Water Update - 3 Mar 2021

Mar 3

Allocation markets continue to trend sideways this last week – the assumed extension of the Murrumbidgee IVT is now occurring and likely to be the last for this water season. We have seen a bump in Murrumbidgee allocation pricing to $60 on the back of final summer crop watering programs however I suspect this demand is now dropping off as final watering is mostly underway for cotton and rice moves to lock up stages. In the coming weeks it is likely that allocation pricing will ease in majority of areas for similar reasons as major harvests move into action and overall supply leads demand towards 30 June

Usage for the year to date has been a topical point this week with some numbers from Water NSW viewed as surprising depending on the location in the broader Basin (some high usage and some extremely low usage…), supply of allocation is still very good which is support for pricing for airspace/carryover as we head towards the closing trade dates. Carryover markets are firming – Murrumbidgee space traded at $120/ML, Murray (above choke) $65/ML, Goulburn $50/ML, Murray (below choke) no space to be found to gauge buyer willingness – I sense their could be quite a significant volume of water carried over on High Reliability accounts which has the ability to materially increase internal Vic spill risks, and which will push carryover pricing further (Vic spill risk is currently 40% which is very high for this time of year compared to historical announcements)

Allocation outlooks for next season will be released for NSW balances on the 15th March, at this point I would expect the departments to be treading carefully at such an early point in time so don’t take a surprise at seeing lowish outlook numbers for G/S. I will provide my assessment of outlooks next week for comparison. The Vic areas have already announced their outlooks and provide the opinion that supply in the southern zones will be strong and coming on when most needed (Nov/Dec/Jan), traditionally the Vic forecasting has been fairly accurate with their assumptions recently

Weather patterns are suggesting a good chance for above rainfall through autumn into winter, whilst rainfall totals are not peaking at this period of the year it does auger well for responsive winter run-off in the new season. See below for the BOM’s modelling, there is a 75% chance of at least 100-200mm (broad I know) in the coming 3 months. These totals are in line with average or median models which would suggest we are in an “average” phase as the MDBA would term, this will be interesting to compare to the NSW DPIE views in 12 days time
Allocation markets:

Murray River - $95-$100, parity in the zones is mostly there albeit the choke trade is still competitive therefore remaining closed and reliant on upstream trade
Goulburn - $95-$100, parity to Murray with Inter-Valley trade now occurring for the coming 6-8 weeks
Murrumbidgee - $60 – as we approach final watering immediate buyer demand is dropping away

Forward water markets are asking $195-$200 in Murrumbidgee, Murray (above choke) with not a significant amount of interest this last week. Lower Murray being bid at $220-$230 with no trading executed as yet at these levels.

Murrumbidgee River Temporary Supplementary (current season) – offering $15/ML – up to 1,000ML
600ML Lower M’Bidgee Zone 3 Temporary Groundwater – OFFERS WELCOME

Weekly Water Update - 23rd March 2021