Market Commentary 13th February 2018

  • Some light rain was experienced around the ranges in the last week but didn’t contribute anything to storages. Temperatures this week are expected to be a bit milder around the low-mid 30s along the Murray and into the Riverina.
  • Seasonal determinations for all southern catchments will be updated on Thursday.
  • The Northern Victoria Resource Manager should release the first 2018-19 outlook on the 15th February.
  • Once again, allocation prices have remained relatively steady in most markets. Murrumbidgee saw a $10/ML jump in price last week indicating there are some supply constraints. The monthly volume weighted average allocation price for each system is shown in a chart below.
  • The Fast Break newsletter produced by Agriculture Victoria provides a great summary of the various climate factors influencing Australian climate. The outputs from 12 climate models indicates an “average” year can be expected.
  • Inflows into the Murray system during January were 154GL well below the median of 194GL. January has been hotter than average. The volumes in storage in the Murray system are currently around long-term average.
  • The BOM have updated their streamflow forecasts for the February-April period with most sites in the southern basin forecast to have media-low flows.
  • The Victorian Environmental Water Holder (VEWH) intends to sell 15GL of allocation before the end of the season.
  • The Murray-Darling Basin plan has been front and centre of the media over the last week.
    • The MDBA put out a media release last Tuesday expressed concerns about the calls to cease implementation of the Basin Plan. It correctly states that “the Basin Plan was neither expected nor intended to deliver immediate results. It is simply not possible to repair 100 years of damage to such a vast river system overnight—or even within five years. That is why the Basin Plan is a long-term plan, the benefits of which will continue to accrue over the next 50 to 100 years”.
    • The Australia Institute questioned the changes to estimated flow impacts on the Menindee Lakes and SA claiming the “…changes appear to be based more on political convenience than best available science”.
    • MP David Littleproud gave an impassioned speech in parliament attacking the ALP and Greens for supporting a dis-allowance motion against the northern basin review and Sussan Ley said there’d be no doubt the plan would be withdrawn if additional water was to be taken from irrigation communities.
    • The MDBA made a further media release late last week responding to the Australia Institute claims stating there were incorrect and reiterating that the assessment completed by the MDBA was rigorous.
    • And yet another media release announcing Allan Holmes, Lisa Corbyn, Garry Smith and Martin Dolan will be members of the Independent Assessment Committee (IAC). “The establishment of the IAC … will hold the MDBA to account in fully and proactively discharging its compliance roles and responsibilities under the Murray–Darling Basin Plan. The IAC will provide advice – which will be publicly available – on the MDBA’s compliance strategy and approach, program design and agency capability”.
    • And then the Greens put forward a dis-allowance motion, initially supported by Labour however they have since backed away from it. A vote will take place next week.
    • And the final bit of news before going to press is that NSW & Victoria are having a press conference this morning at 10am to “discuss the future of the Murray-Darling Basin Plan” with the implication that they may walk away from the Basin Ministerial Council.
    • The real challenge with implementing the basin plan is how the remaining water without adversely impacting irrigation communities. Irrigation communities understand the importance of providing water to the environment. The real challenge is finding an appropriate balance. Surely it is time the Commonwealth looked at alternate solutions to sourcing water which would create a win/win situation for the environment and irrigators!
  • The Goulburn IVT remains closed preventing allocation being traded into the Murray system. The negative balance is currently at 31.3GL (down from 49.4GL last week). Another big week with the IVT dropping 18GL closer to opening although in the last few days the volume has wavered around the 31GL mark. The 2,800ML per day flow down the Goulburn River is anticipated to continue into this week with a further 600ML flow going down the Campaspe untilt he end of February.
  • The Barmah Choke has effectively closed with only 195.5ML of allocation able to be traded downstream.
  • Trade into the Murrumbidgee will remain closed until the IVT reaches 15GL. The balance remains unchanged at 6.8GL. With the current demand for allocation in Murrumbidgee keeping the prices high, it is unlikely the IVT will open any time soon.

Product Availability 13th February 2018

Demand for parking space is increasing.
Contact us if you are looking to buy or sell.

Entitlement leases available in all zones and classes

Entitlement sale and lease-back opportunities

Forward Sales for 2018-19 delivery in all systems
2GL in Murrumbidgee at $170/ML
Volumes in Goulburn at $150/ML

Multi-year Forward Sales also available

Allocation markets

Market $/ML Move
Goulburn $80 Steady
Murray 6 $108+ Steady
Murray 7 $108+ Steady
Murray 10 $110 Steady
Murray 11 $110 Steady
Murrumbidgee $130+ Up
SA $110 Steady

Entitlement markets

Market HS/HR GS/LR Move
Goulburn $2,900 $350 Steady
Murray 6 $2,850 $350 Down
Murray 7 $3,400 $350 Steady
Murray 10 $1500 Up
Murray 11 $4,000 $1450 Steady
Murrumbidgee $3,800 $1650 Steady
SA $3,400 N/A Steady