After hovering in the early to mid-$400 per megalitre range for much of November and December, some irrigators have been shocked to see the recent price jump as high as $545/ML in the Murray market.

Further north, trading in the Murrumbidgee exceeded $700/ML, before easing back to mid-to-high $600/ML earlier this week.

Continued dry conditions throughout much of the southern basin have been a major influence on temporary allocation pricing.

The Bureau of Meteorology released its long-term climate outlook for February to April earlier this month, with the report indicating drier than median conditions are set to continue along with warmer days and nights for much of the country.

In mid-January, many irrigation communities in the region experienced nearly a week of consecutive days where the mercury topped 40 degrees, sparking a number of buyers to enter the temporary allocation market to fulfil their immediate irrigation needs. 

While higher priority entitlements throughout the states have performed well this year, system inflows have tracked in the lowest 9 per cent of historical records for the six-month period between July and December.

The NSW Murray water allocation statement (which was released on January 15) revealed the system requires over 200 gigalitres of inflow before NSW Murray general security entitlement will receive allocation in the current water year.

This entitlement was at 49 per cent allocation (about 820GL) at the same time last year.

Dartmouth Dam has maintained around 70 per cent for much of January, but it is forecast that substantial transfers to the Hume Dam (currently 32 per cent full) will continue as the season progresses.

The MDBA is continuing to call significant volumes of water owed to the Murray through the Goulburn inter-valley trade, with the total volume called already exceeding 246GL (more than seven times the volume called to the same point last year.

Each of these factors has influenced the recent movement in temporary allocation pricing.

Purchasers are acting in the market for varied reasons, with some buying allocation for immediate requirements, while others have started to position themselves to carry water over in to the 2019-20 water year.

Ruralco Water says it is difficult to state what will happen with the price of allocation water as the season progresses.

However, it is advisable that those needing to purchase temporary water should consider securing a portion to hedge against any future increase.

It has been a number of years since temporary allocations have consistently trading at the current market price.