Water market update: June quarter 2020

​​Tim Westwood and Mihir Gupta

This water market outlook provides ABARES latest view on water market allocation prices in the southern Murray-Darling Basin for 2020–21. It is based on the March Water Market Outlook, using revised allocation announcements and seasonal conditions. Four representative scenarios (wet, average, dry and extreme dry) are presented.

The next water market update will be available in August 2020 which will include end of year water accounting and initial opening water allocation announcements from state water agencies for 2020–21.

Allocations

Since March, forecasts of water allocations have increased under all scenarios for Victoria and NSW, but have been revised down in the dry and extreme dry scenarios for the SA Murray.

Figure 1 Water allocations levels 2020–21 scenario forecasts
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Note: Historical average calculated from 2001–02 to 2019–20. Allocation levels for 2019–20 as at 15 May 2020. Sources: NVRM; NSW DPIE; SA DEW

Water prices

Prices in 2020 have fallen dramatically since January 2020. The higher expected allocations for 2020–21 in NSW and Victoria has resulted in forecasts for prices in 2020–21 being revised down in the wet and average scenarios. Conversely prices in the dry and extreme dry scenarios have generally been revised upward primarily due to the downward revision to SA Murray allocations in those scenarios.

Table 1 ABARES water allocation prices ($/ML) 2020–21 scenario forecasts
Region 2019–20 Year-to-date average 2020–21 Wet 2020–21 Average 2020–21
Dry		 2020–21 Extreme Dry
 NSW Murrumbidgee 589 180 324 638 722
 VIC Goulburn-Broken 522 179 260 524 700
 NSW Murray Above 536 270 399 604 680
 VIC Murray Below 674 316 423 764 1,070
 NSW Lower Darling 100 22 193 389 473
 SA Murray 657 316 423 764 1,070
sMDB average 597 236 354 656 842

Note: 2019–20 year-to-date average calculated up to May 2020. Prices for the sMDB are weighted by volume of allocations. Sources: ABARES estimate; Waterflow

Figure 2 Allocation price scenarios, in the Vic. Murray below Barmah choke – 2017–18 to 2020–21
Water prices were over $900 per ML in November 2019, but have decreased significantly since, to below $400 per ML in May 2020.
Sources: ABARES estimate; Waterflow

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Document Pages File size
Water market outlook – June 2020 PDF  2 1 MB
Agricultural commodities: June quarter 2020 - Commodities - data tables XLS  12 186 KB
Agricultural commodities: June quarter 2020 - Statistics - data tables XLS  32 592 KB

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