On Friday NSW Minister for Water, Nathan Rees, amended the trading rules to enable licensed water users in the Lower Darling to trade temporary water from their accounts into the Murray connected system, including the Murray, Murrumbidgee and Goulburn River systems for the 2008/09 water year.

The Government says the move is designed to free up more water for drought-stricken Murray-Darling farmers and irrigators with permanent plantings.

Under the existing rules, water could not be traded out of the Lower Darling when the management of the Menindee Lakes was in NSW control.

This rule has been relaxed to enable licensed water users in the Lower Darling to trade water from their accounts for the 2008/09 water year.

The Lower Darling water users were allocated some of the flows that reached the Menindee Lakes from the 2007/08 summer floods in Northern NSW and Queensland.

However, in many cases the flows came too late for autumn crops and most of this water was carried over to this year’s water accounts.

Mr Rees said this rule change gives Lower Darling licensees the choice to use this water to irrigate their crops or to sell to other licensees in the Murray and Murrumbidgee River systems.

Tandou has about 10,000 megalitres in water allocations carried over from the 2007/08 season, which may now be traded directly to the various stakeholders on the Murray connected system.

But unless further inflows into the Menindee Lakes occur in the coming months, or there is a significant market price deterioration of temporary water trading in the Murray connected system, it is now unlikely that Tandou will prepare a cotton crop for the coming season.

However, Tandou's permanent plantings have secure allocations for at least the next two seasons.

While this carryover water would normally be utilised for annual crop production, the company says it can realise higher returns by trading these allocations given the impact of the current drought on water availability.