Water Market reacts to Second “Dry” year

End of year temporary transfer water is edging higher in the face of dwindling supply caused by consecutive years of drought and hot growing conditions. Emerald Land and Cattle Company water trading specialist Kerry Hayes explained that the prices paid for temporary water has ranged from $100-$180 during the water year with various trigger points all spiking upwards.

There is now a general expectation that even though Sunwater has indicated an announced allocation of 100% for the 2015-2016 water year, the combination of drier years with little “carryover” will keep temporary water at higher levels. Regular sellers still have costs of over $30 per megalitre, so nett returns are still quite low based on permanent allocation values.

“These sorts of economics have created renewed interest in purchasing permanent allocations again” Mr Hayes said. “The recent buying of water by a large farm organisation and the macadamia growers that have recently purchased in the area are also adding to the demand correction”
“Water has been making $1500 per megalitre on a regular basis and with 6-7000 megalitres changing hands in the last 12 months we have gone from an oversupply situation to a limited one.”

As the new macadamia industry develops and economics pushes double cropping, we can expect water prices to start moving upwards Mr Hayes said. The next 3-5 years are looking promising for the region and the regions water reliability and climate are major attractions for agricultural expansion.

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