Entitlement prices stay high: Aither report

Record highs for water entitlement prices continue: Aither


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Southern Murray-Darling Basin irrigation entitlement prices remained at record highs, during 2016-17.

Irrigation entitlement prices across the $14 billion southern Murray-Darling Basin (MDB) remained at record highs last year, according to Australia’s leading water markets advisor, Aither.

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Aither has released its yearly Water Markets Report, which summarises water trading activity and trends. Director Chris Olszak said entitlement prices stayed high, despite the low returns in selling allocations in 2016-17 because of wet seasonal conditions.

 “The growth in water entitlement prices over the last four years has been driven by long-term interest from investors and corporate agricultural enterprises, resulting from opportunities for land use change in cotton and nuts,” Mr Olszak said. “Aither estimates that water availability in 2017-18 will be between 5,500 and 6,250 gigalitres (GL) for consumptive use,” Mr Olszak said.

“Southern MDB water allocation prices opened the year around $170 per ML but declined steadily across the year to close on 30 June 2017, at about $40 per ML.”

Given the high level of supply, Mr Olszak expressed surprise allocation prices had opened so strongly.

Aither reported southern MDB allocation prices initially ranged from approximately $110 to $160/megalitre (ML). “Based on Aither’s modelling, unless very dry conditions prevail through spring and summer, we expect these prices to ease,” Mr Olszak said.

The fourth annual Aither report also highlighted the increased sophistication of water market participants, with new products like leases, allocation forwards and carryover products helping both buyers and sellers manage risk. “For the 2016-17 water year, the total value of trade in the southern Murray-Darling Basin was approximately $612 million in entitlements.”

PRICES EASE: Chris Olszak, Aither director, expects high opening prices for water to ease.

PRICES EASE: Chris Olszak, Aither director, expects high opening prices for water to ease.

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