G’day everyone. Bumper 45th edition of the update with plenty going on in water markets and a full complement of your other favourites.

Andrew Bomm
Temp prices and allocation outlooks
The Murray below choke premium is starting to take hold, though offset by demand elsewhere possibly linked with the recent rice price announcement. Below choke zones 7 and 11 are trading temp water at around $700 compared with other zones at about the following (though fluctuating a lot):

Murrumbidgee                   $600
Goulburn                          $550
Murray (above)                 $600

Despite a pleasantly surprising 3% Murrumbidgee GS allocation the outlooks for NSW general security entitlement holders remain poor. Under a dry 3 in 4 scenario neither valley is predicted to exceed 10 per cent by February.

Trading islands
With so little available water across the southern MDB, and concentrated allocation demand for permanent plantings on the Murray below the choke, trade between zones and through the choke is likely to be closed for most of the season. Accordingly, we’re likely to see substantial temp price premiums below choke, and a discount for Murray above choke and the Goulburn and Murrumbidgee systems. Given the differing capacity to pay in each zone (horticulture v broadacre cropping/dairy), it could be a $300 plus premium if things stay very dry.

The Victorian Government’s decision to crack down on the loophole allowing trade out of the Goulburn outside IVT limits will exacerbate the difference, though allowing the practice until December will see it being milked hard before then. Apart from the possibility of heavy rain, the unpredictable element will be government agency decisions to shift water between accounts with the effect of re-opening trade. Keep an eye on the MDBA and their use of the Murrumbidgee to deliver water, its effect on the IVT, and potential relief for NSW Murray GS bearing the brunt of transmission losses through the choke. This from their 23 August weekly report:

"Trade will remain closed until the account reduces below 85 GL (not 100 GL as was incorrectly stated in last week’s Weekly Report). This could occur from trade from the Murray back to the Murrumbidgee, and/or from IVT deliveries from the Murrumbidgee to the Murray in coming months.

In response to this change, MDBA is revising its operations planning to account for the increased water available to be delivered from the Murrumbidgee IVT account."

Comprehensive water market report
Water market specialists Aither have put out their annual water markets report. It contains lots of good data on market conditions, and their annual stab at allocation prices under various climatic scenarios.

It’s interesting Aither have lobbed for what appears like an optimistic estimate on temp prices, as they are of the view that the structural issues affecting prices relative to water availability have shifted:

"Prices increased steadily throughout [2018-19], exceeding what would previously have been expected given the volumes of consumptive water available. This suggests that significant structural change in demand is taking place."

In the absence of substantial rain, the rice industry coming out with $750/tonne contracts has probably put a floor of $400-450 under the price in NSW valleys, which can throw out even the best predictive models. For all their analysis and predictions it’s worth checking out Aither’s report here.
Check It Out Here
Okay for many but spring is shaky
Croppers south of Wagga are having a good season, and the potential in some parts of the Vic Mallee is tremendous. The BOM’s longer term spring outlook remains pessimistic, though again the next month (September) is forecast for average in SE Australia.

AV Weather is bullish on October for the Riverina, unlike BOM forecasting a highly likely dry October.

Vale Tim Fischer
Sad to see the passing too early of Tim Fischer. Authentic, dignified, a true gentleman and a wonderful representative of rural Australia.

Funding agriculture
This report from Deloitte is a good read about the challenges and opportunities for the funding of Australian agriculture’s revenue growth. It makes this comment about relying on bank debt to existing farm businesses:

"At around $35 billion (in 2018-19 dollars), Australian farm debt has remained relatively unchanged over the last decade, while profits (excluding capital appreciation) have averaged just 2% of opening capital. This suggests these sources of investment will have limited capacity to drive significant growth in industry production."

It also notes that foreign investment into Australian primary production remains limited, at just 0.6% of total inflows, and that Australian institutional investors aren’t suited to the unpredictability of agriculture.

Check It Out Here

Lay the batting side
There is easy money to be made getting on Betfair and laying off whichever side is about to go out to bat. The fragility of both top orders is so predictable. Just do it at the start of the first two innings of each Ashes test and you’ll be in front.

Environmental services
Oscar Pearse was the guest on a Mecardo podcast recently talking about landholder environmental services and rewarding farmers for such. He makes some interesting comments.
Listen Here

Riverina Ag Network event
The Riverina Ag Network is holding an interesting event in Wagga on the evening of 9 September. Business development expert Tony Eyres will be talking about managing business growth and transition in a risky climate, followed by a couple of social ales. Well worth getting along.

Check It Out Here

ABC editorial
Craig McMurtrie is the ABC’s Editorial Director. He has his DMs open on Twitter so feel free to give him a hoy and ask how their investigation into the 4 Corners water efficiency story breach of editorial standards is going.

Check It Out Here
Just to make us feel a little better here is Viv Richards belting England to all parts during their ’86 tour of the Windies.
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