Weekly Water Update - 26 Nov 2020
Last Friday’s MDBA announcements have definitely changed the balance of allocation markets in the week following, an obvious “shock” announcement which saw the Murrumbidgee market effectively double that Friday afternoon…it has provided an interesting back drop when considering both the timing of the announcement and the lack of detail within the communication which could warrant a closer look,
A couple key topics to cover across the trading areas, firstly allocation announcements:
Allocation announcements next Monday, Murrumbidgee could receive anywhere between 10-15% as a result of carryover balances now taking effect with some entitlement holders ability to accept the allocation increases…thus amplifying the overall allocation in the General Security pool, it’s a high likelihood that we make it to 100% allocation over the summer which shouldn’t surprise too many
The NSW Murray market may only see a minor increase 1-3% given inflows the last fortnight
Vic Murray will likely pick up 5-8%, my view here is the market has priced itself in to receive 95% allocation or better so I wouldn’t expect material price movements on an allocation announcement alone in this part of the river
Secondly, Inter-Valley Trade orders
Murrumbidgee so far is ordered to deliver 30GL in December which will open trade sometime prior to Xmas (if you would like to discuss participating in the IVT event call me to discuss), if this is a once off event then we likely revert back to a position similar to where we were at last week with water likely to hold around $80-$100, if the event continues into January and February then we could see water hold at $100-$120 – so far this event is a once off as we know it
Goulburn valley is also delivering on its IVT arrangement with 27GL to be done by end of this month and a further 40GL in December, no furthers order beyond this date but likely to continue into the new year
So for the lower Murray, it’s unlikely that there will be any price impacts as a result of IVT scheduling until the new year at least, the volumes ordered are more likely to be charged with ensuring deliverability during peak ordering and pumping from irrigators
Thirdly, the season and summer
What has been a cool spring by our own standards is going to end with record heat to officially get into summer, La Nina influenced patterns are now probably more likely in the new year as the monsoonal activities take effect
Late Rice plantings have been accelerated in both the Murrumbidgee and Murray systems which will place increased demand on the summer crop, both these areas of the river are well supplied for temporary water so this shouldn’t be a major impact
Lower Murray regions and Horticulture, expect to see demand build continually from now on as permanent crops are moving forward and coupled with heatwave conditions will see allocation buyers come into the market
To summarise, the Murrumbidgee will probably be in a holding phase until further information is shared on the IVT arrangements (will it be a one-off or continue into summer), upper Murray will plateau somewhat as Rice plantings wind-up, Lower Murray could see some upward movement in the coming weeks driven by weather and seasonal timing – the IVT implications as currently announced are probably not a major influence (but could be in the new year)
Permanent markets have been quiet overall of late – Murrumbidgee High Security exchanged at $6,800wet this week and there is plenty of stock available. General Security continues to be difficult to find across all trading areas and will likely appreciate further from the reported $2,300 offered this week for a parcel.
Dam Levels:
Top Opportunities – All Enquiries Welcome
300ML Lower Murrumbidgee Zone 2 Groundwater DRY – $4,500
800ML Lower Murrumbidgee Zone 3 Groundwater DRY – Make an Offer
70ML Murrumbidgee High Security - $7,000 ono
Permanent markets buyer interest of note in the following zones:
Murrumbidgee General Security – offering $2,300 wet
Murray (above choke) General Security – offering $1550 wet
Intra-season Forward allocation for Dec-Feb delivery in Murray Valley for both above and below choke areas – CALL to discuss
Deferred deliveries available in Murrumbidgee and Murray (above choke) - CALL