Water price hits three-year low

Irrigation water prices are at a three-year low

Water
GREAT SEASON: Water prices are at their lowest in three years.

GREAT SEASON: Water prices are at their lowest in three years.

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Summer rain has seen water prices tumble.

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Irrigation water prices have tumbled to their lowest level in three years, following useful summer rain.

H2OX business development manager Craig Feuerherdt said water prices were well down on last season, across all systems.

Prices were sitting on $50-$100 a megalitre for the first time since February 2018.


"Prices have been driven by good seasonal determinations, mild conditions and decent rainfall," Mr Feuerherdt said.

"The volume of allocated, but unused, water is very high.

"Even when considering a large autumn watering program, a significant volume of unused water will remain at the end of the season."

He said H2OX anticipated prices would remain steady for the next few weeks, before softening as the end of the season approached.

KeyWater's Anthony McCloskey said the price appeared to be holding.


"There is a very good chance intervalley trade will reopen from the Murrumbidgee, and the Goulburn is expected to open again, if not this month, next month," Mr McCloskey said.

"Rain is obviously an important part of it, sentiment plays a role; when people think its going to rain, they ease off on their buying regardless of whether it rains or not."

He said it had been a "kind" spring and summer, so that water use may have been lower than anticipated.

"There is a pretty good balance between supply and demand at the moment," he said.

The cost could affect carryover.

"The amount of water around seems to be limiting the amount of carryover space, or perhaps the price of water means people are happy to carry it over, rather than rent their carryover space," he said.

The amount of water available, and its affordability, flowed back into communities.

"Money is being earned on farm; there was a good winter crop and that has limited the amount of summer crop that went in," he said.

"A lot of country that might have gone into fodder or corn hasn't."

The Murray-Darling Basin Authority said the southern Basin had experienced a wetter than average summer so far due to La Nina.

MDBA head of river management Andrew Reynolds said in early February, northern storages were sitting at 28 per cent full, while southern dams held 57pc.

Mr Reynolds said because of the unseasonal summer rain that the southern Basin had received, the risk of a delivery shortfall was now considered low but would remain a serious watch point in years to come.

Speculator warning

Tongala irrigator Peter Hacon said low water prices gave producers a chance to reduce losses and get back into the black.

"It's in that middle area, where it is almost viable for cereal growers to look at," Mr Hacon said.


"If it corrected a bit more, it would bring them back in a more major way.

"But it gets to a point, while it's reasonable price now for some commodity production, will they then bank it at that price?"

He said some producers might want to hold it against low security.

"We don't want to get it to the stage where people are gaming the system, banking water, by buying it at that price and hoping it will be dearer next year," he said.


"The current rules we have at the moment don't stop that happening."

He said irrigators would hold back if they felt there would be an autumn rain.

"It's trending in the right direction for agricultural production," he said.

"So what we need to do is make sure it goes towards agricultural production, rather than those speculators wanting to game the system.


"We need policy when it gets to these price levels to ensure it can be used for agriculture."

Bridget Goulding, Katunga, said the price was "fantastic" for her Holstein dairy operation.

"My husband Tim and I are dairy farmers and do buy a lot of our water," Ms Goulding said.

"It's great for us, but for those speculating, it will be a bit ordinary and quite rightly that's how it should be."

She said for every milk producer, six to nine people were employed in ancillary industries.

"Everything will get started up for autumn," she said.


"At the right price, and done correctly, the cheapest feed is always grass.

"The cheapest water, unless it's rainfall, should be water through your wheel."

Ms Goulding said the farm would be sown to annual ryegrass and grazing oats.


"It will be what we normally do, but water will be a more favorable price," she said.

"Water is not a commodity to be treated like the stock market and to make big money out of, water is for growing food and keeping communities alive."

She said they might also increase their 150-strong herd.

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