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The team at Peppin are delighted to collaborate with Andrew for friends and clients.
Merry Christmas everyone,

Here’s the sixth Progressive Agriculture update, I hope you like it. Again, Retro Corner delivers with some 1986 Countdown gold.

Andrew Bomm
Temporary prices
Prices have dropped a little, to around $60 in the Murrumbidgee and $75 for above choke water in the Murray. Keep an eye out for MDBA transfers in the coming weeks – there are likely to be implications for opening IVT and an evening of prices across jurisdictions.

Forward water strategies
Forward water (guaranteed ML for the following season) is currently around $130-$140 for southern NSW valleys. This may seem a little expensive if assuming strong allocations and subdued prices next year, though might represent good insurance for those with forward contracts happy to lock in some supply at a price that can generate profit.

The forward price resembles the expense of the obvious alternative of locking in water above general security carryover limits. That is, by purchasing on the temporary market this season and renting parking space. With the amount of water in the system this year parking space is steep – reportedly around $60-70/ML. Add this to the cost of temporary water and you have a fairly equivalent cost, bit with a degree of counterparty risk with some arrangements.

Longer term forward products are also becoming more common, but prices are had to nail down because of the range of potential access terms and risk allocation applied over the forward period. However, three year products were available early in the season for $150/ML and five year products have been flagged at around $180/ML. I’d recommend contacting Kilter Rural for further information about these products.

Permanent prices remain stable
Last time water was in plentiful supply, entitlement prices dropped significantly. This time, prices have remained stable, despite poor returns for investors and the relatively lower cost of annual purchasing than the opportunity cost of owning entitlement.

This seems to indicate that the market has matured and is taking a longer-term view about returns on entitlement. It may also indicate that once supply becomes constrained again, demand for entitlement will resume the price climb seen in recent years. Given returns on water are superior than most other asset classes, interest from institutional investors is likely to continue to grow. 
 
Neutral climate drivers and some interesting data
As reported in the last update, neutral climatic drivers prevail and the various models are evenly split about what will happen over summer, with the majority going for average rainfall. There is a slight trend to above average temperatures. AV Weather is still calling it wet; it’ll be interesting to see how this matches against the BOM’s dry talk. The big rain late last week has already put paid to that in many places.

Former NSW DPI plant breeder Laurie Lewin analyses weather data for a hobby, using data taken from Griffith, Hay, Finley, Deni and Tullakool. He tells me that it’s been one the colder starts to the summer cropping season (starting 1 October) in the last 57 years. Until the end of November, only once have average minimums at Deni been below this year, and four in Griffith. Maximums are better, but still below the median. Growing degree days at both locations are in the bottom 20 per cent of years.
 
A guide to Yuletide advocacy
We’re into the Christmas period, and many advocacy groups use the opportunity of a quiet news cycle to trot out the same yarns in support of their cause every year. Here are some regular favourites to look out for.

1. The charity sector - “Charity needs are greater than ever and the government needs to do something.”
Regardless of the state of the economy, the unemployment rate, inflation or real wage growth, the charity sector trots out the line that more people than ever can’t afford to get by at Christmas. Surely in some years there is a trend downwards? Although there may be a case to be made this year in an environment of declining real wages, they’re generally gilding the lily to pursue their own welfare agenda.

2. The loony Right - “Muslims are trying to ban Christmas.”
The media loves nothing more than identifying an instance of some well-meaning but foolish left-leaning institution toning down its Christmas celebration, because they incorrectly think it might get up the nose of Muslims. Schools, community clubs or local councils are favourite examples. These reports of misguided PC behaviour then attract howls of protest from right wing loonies that Muslims are trying to sabotage our national identity.

3.  Unions – “Won’t someone think of the workers this Christmas?”
Yes, people work on Christmas Day, and what an opportunity it is for the union movement to run their annual story about holiday penalty rates and how critical it is that they are maintained.

4.  Christian groups – “Christmas is not about consumer waste.”
Finally, a story I can get behind. Too much food and too much plastic stuff that will end in the bin. Like no other time of the year, Christmas exemplifies our wasteful culture. Christian groups try valiantly each year to remind us that getting stuff isn’t important, with mixed success.

5. The business sector – “Christmas is the economic hero we need to sustain the retail sector.”  
This is the inverse of the yarn above. Business groups get wheeled out to speculate about just how active (read: wasteful) we are all being with our Christmas spending; how important it is this year that we keep the retail sector afloat by spending (wasting) as much as we can; and how exciting it’s going to be for business when the post-Christmas sales start and people trample each other for cheap whitegoods.
Seven habits of a financial winner
Ian Robinson has written a good piece about business fundamentals, particularly where finance options are concerned. This is worth a read when on the header or needing to excuse yourself from inlaws. 
Read Here
GRDC podcasts
There is a menu of informative GRDC podcasts available through their Driving Agronomy Podcasts page. Have a scroll through and check out the ones that are most relevant. 
Listen
This week in 1986
This week 30 years ago, you could accurately measure which were the most popular songs in Australia, because people walked into Brashs and bought ‘em on cassette! From this week on Countdown 30 years ago, here are Australia’s most popular songs.
Countdown (Australia)- National Top 10, December 14, 1986
Test match specials
Pakistan are in Australia for a three-test series, and what better way to celebrate Pakistani cricket than with some exotic betting options. Oh wait, Sportsbet aren’t taking bets on run out dismissals? Why ever not? Pass.   
Joel Fitzgibbon
The ALP pulled some cynical moves during the backpacker tax fiasco. If you’re on twitter, make sure you follow shadow agriculture minister Joel Fitzgibbon and keep him accountable for his positions.
Follow Here
Boxing Day test match
27 December: I’ll be at the MCG watching the test. Let me know if you’ll be there!
Follow @progressiveagri on Twitter
Our mailing address is:
andrew@progressiveagriculture.com.au

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