Dairy, water markets

Dairy season 2017: Wade in with caution

7 June 2017

PETER HUNT, The Weekly Times
June 7, 2017 12:00am

TEMPORARY water prices are forecast to range from $40 to $70 a megalitre next season following average rainfall and inflows across the Southern Murray Darling Basin.

That’s the broad 2017-18 forecast from independent water economists at the Aither consultancy, using their own water allocation pricing model.

While end-of-season pricing has hovered around $20-$25/ML on the Murray system, forward pricing shows sellers are demanding about $90/ML for temporary water for delivery next season, with buyers offering $70-$80/ML.

The large disparity between current and forward pricing is linked to the cost of carrying water over into the new season, plus a risk premium. Tagged costs include a $10/ML storage fee, plus about $30/ML in annual entitlement costs on high security entitlements.

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