Water market update – June 2023

As the 2022-23 water year comes to an end, Marsden Jacob’s Simo Tervonen uses Waterflow? data to examine the year that was and offers insights for the 2023-24 water year.

Reflecting on 2022-23

Over the past 12 months, the southern connected Murray-Darling Basin (MDB) temporary water market prices have continued to soften (see figure 1). Trade limits and end-of-season trade closing dates have resulted in segregated markets and price differences between trading zones.

Water storages across the southern MDB remain close to full, and plenty of unused allocation remains on water users’ accounts.

Figure 1

2023-24 trade indicators and outlook

The outlooks for the 2023-24 season (examples in Figure 2) forecast that on 1 July plenty of new season’s allocation will be available to use or trade. It will be interesting to see what the opening prices in the spot allocation market are going to look like.

Figure 2

Depending on the location, forward parcels have been recently contracted at $100-130 per ML for early season delivery in 2023-24. Over the past decade, the forward market has generally become a useful price predictor for the new season. However, unique Waterflow? data (Figure 3) shows that in the Murrumbidgee, the prices achieved through the forward market have been well above the eventual allocation market price during the past two seasons.

Figure 3

Supply and demand drivers

Whether the above pattern occurs in the Murrumbidgee for the third year in a row will depend on a range of supply and demand side drivers. For instance, while storage levels are still healthy, the rainfall?outlook?for the next three months suggests that drier conditions may be ahead, indicating high demand for water in the new year.

With the Murrumbidgee market, the inter-valley trade (IVT) limit will also continue to impact the temporary water prices. Though out-trade was closed for most of 2022-23, changes in water demand can result in swift changes in the direction of trade and, in turn, restrict in-trade.

Water market update by Simo Tervonen using Waterflow?: June 2023

Thanks to the water market intermediaries who are increasing the transparency of Australian water markets by providing data to Waterflow??(in alphabetical order):?Elders,?H2OX, Key Water,?National Water Brokers,?Ruralco Water,?True Blue Water Exchange, Water Partners ?and?Wilks Water.

Have you checked the water market lately??Waterflow? makes it easy with the most comprehensive water market coverage in Australia. And it's all free for registered users.?Visit?https://www.waterflow.io/

Got suggestions??How we can make Waterflow? better? What markets should we cover next? Are you interested in providing data? Let the Waterflow? team know:[email protected].

About Waterflow?.?Waterflow? is your up-to-date, free, independent source of water market information for the Murray-Darling Basin. Waterflow? brings together water market information from eight leading water brokers, industry bodies, and data sources into a single, easy-to-use platform.

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Stuart Maclachlan