Quotes attributable to Mr Williams
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Today Aither released their tenth annual Aither Water Markets Report. It summarises water trading activity and trends in the 2022-23 water year and provides insights into the outlook for 2023-24.
Aither’s Water Markets Advisory Lead, Ben Williams, said that “wet conditions continued across the southern Murray-Darling Basin in 2022-23, increasing water supply and reducing irrigation water demand. This led to water allocation prices tumbling, with the annual volume weighted average price 62% lower than last year and the second lowest since records began”.
A third successive year of wet conditions brought extensive rainfall across the southern Murray-Darling Basin, resulting in record inflows to storages and the worst flooding in the Murray system for 50 years. The conditions affected on-farm activity, leading to both crop quality and harvest issues.
Historically high water availability and opening allocations to entitlements saw allocation prices open at their lowest level since 2013-14. Prices continued to trend down across the year, finishing 80%-94% lower by June 2023.
Looking ahead, “very strong opening allocations and the highest volume of water in storage on record mean low water allocation prices are set to continue in 2022-23. Despite the possibility of an El Niño developing, the good times for irrigators look set to last at least this year”, said Mr Williams.
Whilst entitlement prices appreciated slightly through the first half of the year, the last four months saw entitlement prices begin to soften. The Aither Entitlement Index dipped in 2022-23, experiencing a rare decline of -4%. Following a decade of 21% compound annual growth, and despite reaching an all-time high in February 2023, the 2022-23 water year marks the first time the AEI has fallen annually since 2012-13. The decrease reflects that water entitlement values are not immune to economic challenges, including interest rate increases, flagging commodity prices, and supply chain issues.
Looking ahead entitlement markets are likely to remain soft until there is an improvement in economic conditions. However, delivery of the Basin Plan remains the wild card. Entitlement prices are likely to rise if the Australian Government becomes an active market participant attempting to recover entitlements to meet Basin Plan targets.
