July Water Market Impacts

By | 05/07/2017

Here are a handful of news stories which have impacted the water market recently. I’ve tweeted about most of these stories before, so please follow @Water_Broker on Twitter.

Darling Buyback

The Flood in the Darling 1890

William Piguenit, The Flood in the Darling 1890.

Recently, Websters Ltd (formerly known as Tandou) sold 22 GL of Darling River water to the Federal Government for $78 million. This works out to $3 545 per ML, which is well above market price.

Here are the latest trades of Lower Darling high security water. $3 545 per ML is quite a step up.

19-JUN-2017 53 ML @ $1 600/ML
22-JUN-2016 10 ML @ $1 820/ML
04-JUL-2014 164 ML @ $1 544/ML
04-JUL-2014 556 ML @ $1 544/ML
04-JUL-2014 312 ML @ $1 544/ML
04-JUL-2014 124 ML @ $1 544/ML
23-DEC-2014 250 ML @ $1 700/ML

Soon, there will be no need for Menindee Lakes. Broken Hill has used Menindee Lakes for its water supply since the dams were completed in the 60s. However, an alternative water supply is being built. The NSW government is at the end of the planning stage for a 270 km pipeline from the Murray River to Broken Hill.

Websters operations were downstream of Menindee lakes and they were the largest irrigator along the Lower Darling. With less need for irrigation, Menindee Lakes may be dried. Rather than sending water down the Lower Darling, there are fears not much water will flow past Bourke. This is to support cotton farms in the North. If this happens, lower Darling irrigators won’t be able to pump and they may be disconnected from the water market.

Source: Farmers fear the Darling’s down and out

Environmental Water Hoarding and Carryover

Water Hoarder

Commonwealth and Victorian environmental water holders used 74 GL of the 438 GL they were allocated last year. There is less need for environmental water during wet years, like the last one, so environmental water is sitting in the storages. This unused water is taking up space that could have been given to irrigators. The Weekly Times ran a detailed article on this.

Under the carryover rules for Victoria, carryover may be pushed into the “spillable account” which is lost if the dams spill. Environmental water hoarding increases the risk of losing “spillable account” water. To find out if your Victorian carryover is in the spillable account, please see this guide. (Bear in mind it was written when there was a spill announced, so disregard that part.)

The Commonwealth Environmental Water Holder is developing a web portal to make it easy for us to view details on environmental water.

From time to time environmental water holders sell temporary water. If they do, this will impact the market by bringing down prices. On the other hand, if Victorians lose their spillable account water, this will impact the market by bringing up prices.

Private Carryover Estimates

My estimate puts Goulburn carryover at 480 GL and Victorian Murray at 350 GL.

NSW DPI estimates up to 750 GL will be carried over in the NSW Murray and 650 GL in the Murrumbidgee.

South Australia did not allow carryover into this year.

Water Infrastructure

Goulburn-Murray Connections Project

The Victorian government has announced $100 million of winter works to modernise the irrigation infrastructure in the region. This is part of the ongoing “Connections Project”.

Source: Major Goulburn-Murray Water Works This Winter

Rubicon Export Deal

Shepparton based Rubicon has signed an export deal worth $200 million. Rubicon manufactures automated irrigation technologies and this deal will see their technologies put to use in Chinese irrigation districts.

Source: Rubicon in multi million dollar Chinese deal

$10 Million Machinery Auction

Irrigation gear and machinery was the focus of an auction in Queensland worth $10 million. This was equipment left over from the Curtis LNG Surat Basin Project.

Weather

July to September is forecast to have below average rainfall for this time of year.

We will have an 80 % chance of warmer than average days and nights.

In the medium term, conditions won’t be so bad. On 20 June, the BoM cancelled their El Niño forecast and the new forecast is ENSO neutral for the rest of 2017.

 

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.