Forum told speculators have small role in water trading

By Geoff Adams

Speculators were dismissed as a major influence on water prices in an online forum hosted by the Rural Press Club of Victoria last Thursday.

Waterpool Trading chief executive Peter Lawford acknowledged there were some speculators in the market but said it was only a handful.

“The market, I believe, is mature enough and big enough across the entirety of the market so that these guys have very little influence on the outcomes of the market,” he said.

“Our evidence is that they don't. I know there is a lot of talk, that these guys drive the market, but we don't see it.”

Mr Lawford was one of the panel who spoke in the ‘Unplugged’ water forum. Also speaking were Congupna grain grower Craig Reynolds and Tallygaroopna dairy farmer Geoff Akers, with Aither water consultants founding director Chris Olszak

“Craig and Geoff are speculators. They are speculating on the rain,” Mr Olszak said.

He said there was a point to be made around definition.

“Every irrigator is a speculating on what is going to happen in the future, and having to make decisions based around uncertainty and risk.

“Anyone who makes a prediction around what the price will be, is kidding themselves, unless they can read what is happening with the weather.

“Overall, supply and demand dictate what is happening with the market. There are a lot of buyers and sellers, so a handful will struggle to have an impact.”

The commentators were all interested in what will emerge from the ACCC report, which is being prepared on water market trading.

Asked about having one water body managing irrigation and water delivery along the Murray River, Mr Reynolds said while he might not see one body as the answer, he would like to see more consistency throughout the Murray-Darling Basin.

Mr Olzsak said with the long history of states managing water there would need to be a strong case mounted to introduce change.

Responding to a question from Country News about the impact of environmental water recovery on prices, Mr Olszak said the water recovery by governments had reduced the consumptive pool by 20 to 30 per cent in the southern basin and had a material impact on allocation and pricing.

Katunga dairy farmer Bridget Goulding, who was listening to the forum, pointed to issues of transparency in the water market.

Mr Akers agreed that more transparency was needed in the market, but it's not about having everyone know what every irrigator is doing with their water.

Mr Reynolds also believed that transparency needed to be applied to brokers, so for example, sellers could see if brokers were buying the water for themselves.

The Rural Press Club is running a series of webinars, open to the public, on agriculture.