CEO REPORT - Waterfind · CEO REPORT – Q3 2014/15 WATER YEAR . Water Policy News . On 10 March...

CEO REPORT

AUSTRALIA

Q3 UPDATE | MAY 2015

CEO Report | Quarterly UpdateWaterfind Australia

Q3 2015 | II

CONTENTSQUARTERLY OVERVIEW................................................................................................................1

Adelaide Office Launch ..............................................................................................................1

International Rural Women’s Conference .......................................................................................1

Our New Website .......................................................................................................................1

Weekly Water Report .................................................................................................................1

Upcoming Events.......................................................................................................................2

On Farm ...................................................................................................................................2

Round 5 ...............................................................................................................................2

CEO REFLECTIONS ......................................................................................................................3

CEO REPORT – Q3 2014/15 WATER YEAR ......................................................................................4

Water Policy News ....................................................................................................................4

National Temporary Water Markets ..............................................................................................5

National Permanent Water Markets ..............................................................................................9

Prospects for the Third Quarter of the 2014/15 Irrigation Season ................................................... 11

LIST OF FIGURESFigure 1 National Average Temperatures 2013–2015 .................................................................................... 5

Figure 2 National Rainfall and Dam Storage Levels 2010–2015 ...................................................................... 5

Figure 3 Australian Rainfall Deciles in February-April 2015 ............................................................................. 6

Figure 4 Murray-Darling Basin Rainfall Deciles in March & April 2015 .............................................................. 6

Figure 5 National Temporary Water Trading Volumes 2010–2015 .................................................................... 7

Figure 6 Correlation Between National Temporary Water Prices and Allocation Levels 2009–2015 ....................... 8

Figure 7 Southern-Connected MDB Temporary Water Trading Prices 2014–2015 | Price per ML ........................... 8

Figure 8 National Permanent Water Market Trends 2010–2015 ....................................................................... 9

Figure 9 Correlation Between Permanent Water Prices and Allocation Levels 2008–2014 ..................................10

Figure 10 National rainfall outlook for May to July .........................................................................................11

Figure 11 What El Niño Means ....................................................................................................................12

Figure 12 Waterfind Forward Market Completed (red dots) and Active Orders (green dots) Plotted Against the Live Spot Allocation Market Price in the Southern Connected MDB ...........................................................14

LIST OF TABLESTable 1 Q3 Weighted Average Temporary Water Prices in Selected Markets ........................................................ 9

Table 2 Q3 Weighted Average Permanent Water Prices in Selected Markets .......................................................10

Table 3 Allocation outlooks for the major irrigation districts for the start of 2015/16 season ................................13


Q3 2015 | III

Are you prepared for next season?

PERMANENTTEMPORARY FORWARD CARRYOVER

WHAT DO I DO NEXT?

Register your interest online for ‘region specific’, live water market information

www.waterfind.com.au/zone-7

Calculate your water needs using our online calculatorwww.waterfind.com.au/calc

Get online and trademy.waterfind.com.au

Call or SMS a broker1800 890 285 or 0421 260 610


Q3 2015 | 1

QUARTERLY OVERVIEW

Adelaide Office Launch On Thursday 19 February, more than 50 distinguished guests attended Waterfind Australia’s Official Adelaide Office Opening.

Waterfind’s Head Office was officially opened by The Hon Jay Weatherill MP, Premier of South Australia. The Premier spoke at length about the importance of successful Small to Medium Business in the South Australian economy and articulated the need for the state to set aspirations and goals:

Waterfind demonstrates the aspirations for our state: thriving, successful and inspiring. We need companies like Waterfind that will inspire young people to want to live and work in our state, to contribute to its wealth and growth.

The successful event provided our valued clients with an insight into the workings of Waterfind, with guided tours and demonstrations of our highly efficient systems and processes.

ABOVE | From left, Alister Walsh - Chief Executive Officer, The Hon Jay Weatherill MP, Premier of South Australia, Pauline Rooney - Waterfind Chairman and Tom Rooney - Waterfind Founder.

International Rural Women’s ConferenceOn 24 March, Alister was honoured to present at the International Rural Women’s Conference on the Synergy Between Water and Food Security. His presentation addressed:• The evolution of water trading in Australia• How water resources are shared• The challenges facing food security• How Australia is addressing these challenges

through strategic water management• Waterfind’s role in this process.

Alister also had a chance to meet with some inspiring women in agriculture who are making significant contributions to regional Australia.

Our New WebsiteFor more than 6 months our Marketing and IT teams have been working hard on developing our new, mobile friendly website. This process started with a targeted client feedback program where we visited and contacted some of our customers to survey them about our existing web presence.

The insights that were afforded us during this process were invaluable in the redesign of our site.

We were pleased to launch our mobile friendly site in February, and have already received positive feedback from many customers.

If you haven’t visited our new website, go to www.waterfind.com.au and see why we’re so proud of our new online look.

Weekly Water ReportFollowing the launch of our new website, Waterfind also revised and relaunched the weekly newsletter as the Weekly Water Report.

This new report contains all region-specific content that was in the newsletter, and also provides information from our Entitlement Performance Report.

Users can now determine exactly what is in their Weekly Water Report via their online login.

Following a customer survey, we were better able to understand our customers’ needs, and they were all different! So now you can tailor the news that matters to you.

If you haven’t already tried this new feature, login to your Waterfind account, click on the Market Info tab and modify your newsletter to suit.

http://www.waterfind.com.au


Q3 2015 | 2

Upcoming EventsWaterfind is attending a range of upcoming Field Days and conferences. If you’re going attend any of the listed events, come and say hello to our friendly team. We will be happy to answer any questions and help you with your water requirements.

Name Date Location

Irrigation Australia - Regional Conference

27 May Penrith NSW

Mareeba Field Days 27-28 May Mareeba QLD

On FarmWaterfind’s On-Farm area has been busy continuing to deliver Round Three and Four of the Commonwealth’s On-Farm Irrigation Efficiency Program.

At present we are three quarters through the delivery of 19 Round Three projects and about to commence 22 projects which make up Round Four. On March 18th, 2015 we submitted an application to again be a Delivery Partner for the fifth and final round of the On-Farm Irrigation Efficiency Program.

The Commonwealth is providing up to $125m in Round Five for irrigation projects located in the Murrumbidgee, NSW Murray and the Lower Darling. Judging by the level of interest in Round Five we have no doubt that the On-Farm Irrigation Efficiency Program will continue to deliver on-going farm efficiencies whilst returning significant water savings to the environment.

Round 5Waterfind lodged The Round 5 Funding Submission with the Commonwealth on March 18, 2015. We do not anticipate any communication from the government about this Round for about 2-3 months.

If you have any questions about Waterfind’s On-Farm program please call Bridget Ransome or Jenny Newman on 1800 890 285 or email [email protected]

Market ClosuresAs a result of market closures, Waterfind’s markets will be closed on the dates listed below. Please contact us before these dates to secure your water before the end of the season.

Waterfind’s markets will reopen in early July and we will ensure our clients are updated via our website closer to this date.

Victoria DATE

Internal 24 JuneInterstate to/from SA 17 JuneInterstate to/from NSW

Private Diverters Closed 24 April

Irrigation Districts (MIL, WMI, MI, Coleambally)

Closed 22 April

Irrigation District (West Corurgan) Closed 20 April

New South Wales DATE

InternalIrrigation Districts (MIL, WMI, MI) 9 JuneIrrigation District (Coleambally) 22 MayIrrigation District (West Corurgan) 20 May

Intervalley (Murray & Murrumbidgee)Private Diverters to Private Diverters Closed

26 MayTo/From Irrigation Districts (MIL, WMI, MI, Coleambally)

Closed 22 May

To/From Irrigation District (West Corurgan)

Closed 20 May

Interstate to/from NSW & SAPrivate Diverters Closed

24 AprilIrrigation Districts (MIL, WMI, MI, Coleambally)

Closed 22 April


South Australia DATE

Internal 24 JuneInterstate to/ from Vic 17 JuneInterstate to/from NSW

Private Diverters Closed 24 April

Irrigation Districts (MIL, WMI, MI, Coleambally)

Closed 22 April


Other DATE

Northern NSW 10 JuneNSW Groundwater 10 JuneQLD 19 June


Q3 2015 | 3

CEO REFLECTIONS

In my comments in Waterfind’s Annual CEO Report published in December 2014, I reflected on the resilience and ingenuity of irrigators as well as the integrity of our water resource management systems that assist irrigators to deal with our variable climate. In recent years we have seen significant aggregated improvements in water use efficiencies, not only through irrigators own efforts but also through the Government’s Water efficiency programs. The benefits of these investments will ensure the security of efficient production within these regions for decades to come.

As both irrigators and Governments focus on efficient delivery and use of water and other productivity gains, the businesses and industries that support the agribusiness also need to continue to innovate and invest in the future.

To this end Waterfind launched our new innovative website earlier this year. Our main goal was to ensure our clients, irrigators and other water users have immediate access to accurate and relevant information required to be able to make informed decisions, as well as the ability to act on those decisions when and where they need to. One of the major strengths of Waterfind is our ability to develop and mature our own market with an internal IT team as opposed to relying on external IT providers. This has provided us with the capacity to build and mature what I believe is the benchmark Water Exchange. Our IT and Marketing teams are to be commended for the vital work that they have put into to our latest website enhancements.

As we look towards the 2015/2016 water season, many systems are currently forecasting for lower levels of allocation availability. Irrigators are strategically planning ahead by activating carry over capacities and purchasing additional water to take into the new water season. We have also seen re-engagement of the Waterfind forward market, which was launched in March last year. The forward market has greatly assisted many of our clients in securing a strong market price for their water ahead of future delivery as well as providing allocation risk management opportunities for purchasers. As we plan for the next season we have seen increased activation of our forward markets across a wider range of valleys with forward contracts secured in the Queensland and Northern New South Wales markets, as well as the Southern Connected System where most of the activity occurred last year.

I trust that you find useful this snapshot of the current conditions and insights of the Australian Water Market and I wish you all the best in your planning and preparation for the 2015/2016 season.

We look forward to supporting you in your endeavours in the season ahead.

Alister Walsh

Chief Executive Officer Waterfind Australia


Q3 2015 | 4

CEO REPORT – Q3 2014/15 WATER YEAR

Water Policy News On 10 March 2015, the Australian Government announced that the legislation to cap water buybacks to 1,500 GL as part of the implementation of the Murray-Darling Basin Plan will be brought forward. The Government has targeted the return of 2,750 GL to the river system and committed to delivering the Basin Plan by 2019. Underpinned by the buyback cap, the Commonwealth has prioritised water infrastructure programmes in delivering the recovery targets, by providing $2.3 billion across forward estimates to deliver new on-farm infrastructure and water efficiency programs to farmers across the Basin. Of the 1,500 GL, 1,162.3 GL (in average annual yield) of the Basin Plan target was recovered through purchases by 28 February 2015. This suggests that there will also be buybacks in the future since a maximum of 337.7 GL can still be recovered through water purchases under the cap.

On 4 April 2014, a statutory review was announced for the Personal Property Securities Act (PPSA) 2009 (Commonwealth). Currently under the PPSA, personal property is defined as any form of property other than land, buildings or fixtures that form part of it, or a right (such as water rights), entitlement or authority. This means that currently a security interest for the Personal Properties Securities Register (PPSR) cannot be registered against a water entitlement. However security interests can be registered under state Torrens title registers or other schemes, such as rights under Irrigation Infrastructure Operator schemes. The interim report of the PPSA review suggested that water rights should be brought within the Act.

The Final Report was tabled before Parliament on 18 March 2015, in which Mr Bruce Whittaker concluded that:

Rights relating to the ownership and use of water are a topic of considerable sensitivity. For that reason, rather than propose specific changes, I propose to recommend that Government engage in a discussion of these matters with the States and Territories, with a view to exploring whether water access entitlements that comply with the requirements of the National Water Initiative (NWI) should remain outside the Act, but that the Act should apply to all other water rights in the same way as the Act applies to personal property generally.

This means that privately held water entitlements would continue to be excluded from the PPSA given that there is a state title register that complies with the NWI objectives, but water rights held under IIO entitlements might be brought within the Act. The review does not propose immediate changes to the Act but further consultation between the States and Commonwealth is likely to occur in the near future.

In addition to water trading related legislation changes, a significant nomination occurred on 22 January 2015 when the Australian Government announced the Hon. Neil Andrew AO as the Chair of the Murray-Darling Basin Authority (MDBA). Mr Andrew, a South Australian irrigator, replaced Chair Craig Knowles, who completed his four year term at the end of January. Waterfind welcomes Mr Andrew’s appointment, and believes that his extensive expertise in both public sector governance and irrigated agriculture will be highly beneficial for the MDBA as it continues the work of implementing the Murray-Darling Basin Plan in the coming years.


Q3 2015 | 5

National Temporary Water MarketsOn a national level, the third quarter of the 2014/15 season broadly continued the second quarter’s trend of above average temperatures (Figure 1). However, in April 2015 the average temperatures returned to below average levels.

Figure 1 National Average Temperatures 2013–2015

Except for strong rainfall in December, January and April, national rainfall levels have been below or well below average throughout the season. Subsequently, our National dam storage levels are at the lowest levels since the Millennium drought concluded (Figure 2).

Figure 2 National Rainfall and Dam Storage Levels 2010–2015

Regional variances apply; for instance, the majority of the southern east coast of Australia received average or above average rainfall in the last 3 months (and before that in January), however the major irrigation districts of the Murray Darling Basin (‘MDB’) missed the rainfall in March, as demonstrated in Figures 3 & 4. In contrast, irrigation districts got very strong rainfall in the Southern Connected Murray-Darling Basin after mid-April.


Q3 2015 | 6

Figure 3 Australian Rainfall Deciles in February-April 2015

Figure 4 Murray-Darling Basin Rainfall Deciles in March & April 2015


Q3 2015 | 7

Dry conditions and lower water availability kept the demand for temporary water high during the third quarter of the irrigation season 2014/2015, while the heavy rainfall in April reduced the demand slightly (Figure 5). As catchments in Northern New South Wales entitlements received little or no allocation at all, demand has been driven primarily by the Southern-Connected MDB throughout the season.

Within the Southern-Connected system, a major share of demand for temporary water this season has come from irrigators in Victoria, especially from the Murray, below the Barmah Choke and Goulburn systems. For instance, temporary water trade into the Victorian Murray below Choke (Zone 7) has increased by 112.9% (209.4 GL) this season (July to March), compared to the 2013/14 season.

In NSW, drier than average seasonal conditions at the beginning of the summer crop planting window initially limited the area sown to summer crops (e.g. rice production is forecast to decline by 18% and cotton production by 47% in 2014-151), and reduced the demand for temporary water. However, strong rainfall in NSW and Queensland in December 2014 and January 2015 recharged soil moisture and improved yield prospects of crops already planted. In areas where the planting window was still open, summer rainfall opened the possibility for further planting of summer crops, again increasing the demand for allocation water.

1 ABARES Australian Crop Report - February 2015.

Figure 5 National Temporary Water Trading Volumes 2010–2015

The national temporary water market continued to record the highest average prices since the Millennium drought. The high prices are a combination of high demand for temporary water and lower allocation levels compared to previous irrigation seasons (Figure 6).


Q3 2015 | 8

Figure 6 Correlation Between National Temporary Water Prices and Allocation Levels 2009–2015

In the Southern-Connected MDB temporary water prices first peaked in January. Historically, prices have declined after the mid-summer peak, however this season the market rebounded again in March resulting in the highest temporary water prices of the season so far (Figure 7). However, after strong rainfall in the Southern Connected Murray-Darling Basin after mid-April prices started to fall, ending up at $115/ML at the end of April. The drivers for this unusual price behaviour stem from high demand and dry conditions around major irrigation areas in Victoria. For instance, during March 2015, temporary trade increased by almost 65% (16.8 GL) into Zone 1A in the Goulburn System compared to March 2014.

Figure 7 Southern-Connected MDB Temporary Water Trading Prices 2014–2015 | Price per ML

On a regional level temporary water prices reflect the differences in water availability and demand across irrigation districts in Australia. Table 1 presents average prices for the third quarter of the irrigation season in selected markets.


Q3 2015 | 9

Table 1 Q3 Weighted Average Temporary Water Prices in Selected Markets

STATE REGION PRICE $/ML

NSW Murrumbidgee River 119.2NSW 10 Murray 120.4NSW 11 Murray 119.8NSW Border Rivers 236.7NSW Macquarie Valley 254.6NSW Lachlan Valley 133.7NSW Gwydir Valley 305.5NSW Namoi Valley 253.4NSW Lower Gwydir Groundwater 127.9NSW Lower Murrumbidgee Groundwater 30.0VIC 1A Goulburn 126.1VIC 4A Campaspe 118.1VIC 6 VIC Murray - Dart to Barmah 120.6VIC 7 VIC Murray - Barmah to SA 124.4SA River Murray Class 3 121.6SA McLaren Vale Groundwater 963.3

QLD Mareeba-Dimbulah WSS 49.2QLD Bundaberg WSS 39.4QLD Nogoa Mackenzie WSS 94.9

Note: Figures in the above table represent Waterfind contracted price. Previous editions of the Waterfind CEO Report have quoted settled prices, which do not accurately reflect the current state of the market.

National Permanent Water MarketsDuring the third quarter of the 2014/15 season, national permanent water market trading activity was steady and consistent with the trading volumes experienced during previous seasons (Figure 8).

Figure 8 National Permanent Water Market Trends 2010–2015

According to the latest Rabobank Rural Confidence Survey, Australian farmers have started 2015 on an optimistic note, with rural confidence at its highest level in four years. The confidence was reflected in farmers’ stronger income projections and expansionary investment intentions. In line with this, Waterfind


Q3 2015 | 10

has also experienced growing interest and demand for permanent water in many regions, which highlights the increased confidence amongst irrigators and the agricultural industry.

Underpinned by the increased confidence and reinvestment in agriculture, as well as the lower water availability compared to seasons 2010–2013, average prices in the national permanent water markets during 2014/15 season have been consistent with the upward trend which started in the latter half of the 2013/14 season (Figure 9). The depreciation of the Australian dollar enhanced trading conditions for Australian exported commodities, which can also be seen as a driver in the permanent water market, supporting increased entitlement prices and confidence in the irrigation industry2.

Figure 9 Correlation Between Permanent Water Prices and Allocation Levels 2008–2014

The Commonwealth’s buyback tender in Southern NSW has had a minimal impact on entitlement prices. It has been suggested that water licence holders are more inclined to use water markets because they can achieve better prices compared to government tenders, as illustrated during the peak years of the buybacks.

Table 2 presents average permanent water prices in selected markets for the third quarter of the irrigation season.

Table 2 Q3 Weighted Average Permanent Water Prices in Selected Markets


NSW Murrumbidgee River HS 2,250NSW Murrumbidgee River GS 1,100NSW 10 Murray GS 950NSW 11 Murray HS 2,125NSW Macquarie Valley GS 960NSW Lachlan River GS 430NSW Namoi Valley HS 4,000NSW Lower Macquarie Groundwater Zone 1 950VIC 1A Goulburn HR 1,900VIC 1A Goulburn LR 260VIC 6 VIC Murray - Dart to Barmah HR 1,670VIC 7 VIC Murray - Barmah to SA HR 1,950QLD Bundaberg MP 650

2 Using the ABARES forecast of farm export earnings of $40.3 billion in 2014–15 and the assumed exchange rate of US83 cents, a further depreciation of the Australian dollar by US1 cent is estimated to directly increase the value of farm exports by around $490 million (all other factors remaining equal)


Q3 2015 | 11


QLD Mareeba-Dimbulah MP 1,000SA River Murray Class 3 2,150SA McLaren Vale Groundwater 8,130

Note: Figures in the above table represent Waterfind contracted price. Previous editions of the Waterfind CEO Report have quoted settled prices, which do not accurately reflect the current state of the market.

Prospects for the Third Quarter of the 2014/15 Irrigation SeasonThe Bureau of Meteorology (‘BOM’) 3 month rainfall forecast suggests that May to July is likely to be wetter than normal over most of the Australian mainland, except in the tropical north and Tasmania (Figure 10). However, the remainder of 2015 might be drier due to El Niño, which is expected to become the dominant influence on Australian climate during the second half of the year. On 12 May 2015 the BOM announced that the tropical Pacific is in the early stages of El Niño, and therefore the Bureau’s ENSO Tracker was raised to El Niño status. El Niño is often associated with below-average winter and spring rainfall over eastern Australia, and above-average daytime temperatures over the southern half of the country.

Figure 10 National rainfall outlook for May to July


Q3 2015 | 12

Figure 11 What El Niño Means

www.bom.gov.au

USUALLY EL NIÑO DEVELOPS IN

AND STARTS TO DECAY IN SUMMER

WHEN DO THEY OCCUR?

SPOTTING AN EL NIÑ0

increases near the Date Line

weaken, and sometimes reverse

changes across the Pacific; higher in the west, lower in the east

TYPICAL IMPACTS

DECREASESIN EASTERN AUSTRALIARAINFALL

INCREASES IN SOUTHERN AUSTRALIA (DAYTIME TEMPERATURES)

TEMPERATURE

INCREASED BUSHFIRE RISK

FEWER TROPICAL CYCLONES

LATER START TO NORTHERN WET SEASON

MORE HEATWAVES

LONGER FROST RISK SEASON

REDUCED CHANCE OF WIDESPREAD FLOODS

LESS CHANCE OF INDIAN OCEAN HEATWAVES

STRONGER SEABREEZES

OTHER IMPACTS

in the tropical Pacific Ocean warm,both at the surface and below

O N O U R C L I M AT E

ON AVERAGETHEY OCCUR EVERY

3 5 YEAR

S

2009–10WAS IN

EL NIÑO OF THE HOTTEST YEARS ON RECORD WERE IN AN EL NIÑO YEAR OR THE YEAR FOLLOWING

1982 1997

EVERY EL NIÑOIS DIFFERENT

EL NIÑO WINTER AND SPRING RAINFALL

RED = DRIER THAN NORMAL BLUE = WETTER THAN NORMAL

THERE HAVE BEEN

EL NIÑO EVENTS SINCE 1900

H A V E B R O U G H T WIDESPREAD D R O U G H T

7

OUTOF7 106OR AS LONG AS 2

EL NIÑO EVENTS CAN LAST FOR AS LITTLE AS

MONTHS YEARS

THE LAST

EL NIÑOIN AUSTRALIA

Source: Bureau of Meteorology, 2015.


Q3 2015 | 13

As temporary water prices will continue to be closely linked to water availability, a wetter than normal May-July period would mean that the market is likely to soften slightly during the last quarter. However, allocation outlooks released by the Resource Manager for Northern Victorian Water Systems and NSW Office of Water indicate:• Relatively low starting allocations for the 2015/16 season (Table 3);• End of season demand for temporary carryover is likely to be high in the systems where carryover is

available; and • Temporary water prices are not likely to drop dramatically during the last quarter of the 2014/15

season.

The Commonwealth Environmental Water Holder (‘CEWH’) has announced that it currently has no plans to trade water allocations or permanent water entitlements during the April-June 2015 quarter. However, this intention may change in response to requirements identified as part of the 2015-16 planning process and an update to the trading intentions for the last quarter will be undertaken if and when required.

The CEWH hasn’t traded any water since March 2014.

Table 3 Allocation outlooks for the major irrigation districts for the start of 2015/16 season

On 1 July 2015 By 1 September 2015 By 31 October 2015

Likely

Murrumbidgee HS 95%NSW Murray HS 80%Lachlan HS 100%Macquarie HS 100%

9 in 10 Probability of getting 9 in 10 Probability of getting 4 in 5 Probability of gettingMurrumbidgee GS 9% Murrumbidgee GS 14% Macquarie GS 0%NSW Murray GS 0% NSW Murray GS 0% Lachlan GS 0%VIC Murray HR 36% VIC Murray HR 40%Goulburn HR 36% Goulburn HR 46%Campaspe HR 44% Campaspe HR 53%

1 in 2 Probability of getting 1 in 2 Probability of getting 1 in 2 Probability of gettingMurrumbidgee HS 13% Murrumbidgee GS 35% Macquarie GS 20%NSW Murray GS 0% NSW Murray GS 1% Lachlan GS 18%VIC Murray HR 41% VIC Murray HR 49%Goulburn HR 43% Goulburn HR 75%Campaspe HR 53% Campaspe HR 100%

Historically, the end of the water year signifies high season for permanent water prices, as many water users are securing permanent entitlements in preparation for the next season. Waterfind expects that the interest and demand for permanent water will remain high, and permanent water prices are likely to steadily rise during the last quarter.

When considering temporary water prices beyond the 2014/15 season, the Waterfind Forward Market has proven to be a reliable price indicator for the Southern-Connected MDB market. Waterfind’s Forward Water market provides a price indicator for the upcoming season; in the last quarter of the 2013/14 season (March - June), Forward Orders were executed at $95-100/ML for delivery at the start of the 2014/15 season (Figure 12).


Q3 2015 | 14

By locking in prices with forward contracts, irrigators are able to purchase water below the eventual spot market price.

The Forward Market also provides price certainty and security to vendors who commit to forward contracts at the time when the allocation prices on the live spot market end up lower than the contracted Forward Order prices.

Figure 12 Waterfind Forward Market Completed (red dots) and Active Orders (green dots) Plotted Against the Live Spot Allocation Market Price in the Southern Connected MDB

As shown in Figure 12, Waterfind has already contracted several Forward Orders for the 2015/16 season at $130-160/ML. This indicates that irrigators are preparing next year’s programs in light of expected lower water availability, and therefore the baseline for temporary water prices in the Southern-Connected MDB at the start of the next season are likely to be substantially higher than at the start of the 2014/15 season. Waterfind expects strong demand for Forward Market opportunities to continue during the last quarter of the season.


Q3 2015 | 15

CONTACTTel 1800 890 285

Fax 1800 890 248

Web waterfind.com.au

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