Veles Water in The News
Collaborative Effort: Teaming up with Veles Water Limited and futures market expert John Dolan, Arbol has structured a deal that tackles the challenges of fluctuating water prices. A New Approach to Risk Management: This trade demonstrates Arbol's use of comprehensive climate and geophysical data to offer effective risk management tools. The option on the NASDAQ Veles California Water Index provides a clear risk/reward profile, helping manage financial exposure to changes in water prices.
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California water prices are at all-time high as a severe drought chokes off supplies to cities and farms across the Golden State. The price of water on the Nasdaq Veles California Water Index touched $1,144.14 an acre-foot on June 27 — up 56% since the start of the year. The index tracks the average price of water-rights transactions in five markets in the state.
The Veles team are deeply saddened by the passing of Patrick Birley on the 25th October 2023. Patrick was an integral part of the team from its inception and provided valuable insight to the workings of financial markets and exchanges. Patrick was a loyal friend and confidant. Rest in peace Patrick, we will miss you.
The volatility of the price manifested itself, in step with the vagaries of climatic conditions. This is evidenced by the Nasdaq Veles California Water Index, which tracks the price of the stock futures contract and which closed at US$513 per acre-foot (a measure equivalent to 1.2 million liters). It reached a peak of US$1,260 in November 2022, under the effect of the drought in California, returning today to around US$180.
Traders can buy and sell futures contracts - agreements to buy in the future for prices agreed today - based on the price of water in California on the Nasdaq Veles California Water Index. Lance Coogan, who developed that concept for water price indexing, describes it as "the volume-weighted average of the actual water transactions that are taking place".
One could, for example, look at water like a speculator, someone playing the odds in California water rights derivatives — a thriving trade now on the NASDAQ. These amount to bets on the price of water, which is largely shaped by supply. Speculators make money either way: By watching where the price and the money go, you can get a sense of where the water supply is headed. When supplies are tight, the price goes up; when supplies are abundant, it goes down. Water on the market works like, well, capitalism. Speculators can make money by correctly anticipating which way the supply is moving. And journalists can find a story either way, because the price signals where the real money thinks things are going.
This city paid $1.1M to keep faucets running through March as the price of water skyrockets in California The Nasdaq Veles California Water Index, which tracks water transactions in the state, showed the price has gone from around $200 in 2019 to more than $1,000 today for the amount of water it would take to fill half of an Olympic-sized pool.
The price of water on the Nasdaq Veles California Water Index, which is used primarily for agriculture, hit $1,028.86 for an acre-foot on Oct. 20 — a roughly 40% increase since the start of the year. An acre-foot of water, or approximately 326,000 gallons, is enough to supply three Southern California households for a year.
On the Chicago Mercantile Exchange (CME), however, water futures based on the Nasdaq Veles California Water Index traded at $1,165 per 1-acre foot, up about 21% from a year earlier.
A drought in California has led to a spike in the state’s water prices, nearly doubling the value of futures contracts for the essential commodity this year and creating opportunities in water-related investments. As of Aug. 24, the Nasdaq Veles California Water Index , which represents the weighted average price of water-rights transactions across five major markets in California and is published weekly, has climbed by roughly 87% year to date to $923.54 per one-acre foot.
As of Aug. 24, the Nasdaq Veles California Water Index, which represents the weighted average price of water-rights transactions across five major markets in California and is published weekly, has climbed by roughly 87% year to date to $923.54 per one-acre foot. The unit of measure represents the amount of water needed to submerge one acre of land in one foot of water, or about 325,851 gallons of water. On the CME CME, +3.03%, water futures based on that index have climbed 90% this year to $942 per one-acre foot.
With low water allocations in many areas of the western U.S. this year, some farmers are having to pay huge premiums to get the water necessary to produce their crops. This is one of the many risks that growers need to manage both financially and agronomically. One tool that might help some of them manage the financial side of the risk is the Nasdaq Veles California Water Index, says Veles CEO Lance Coogan. Coogan… “The index is made up of four groundwater basins and the surface water market. So there are physical transactions that take place in those respective markets, they are all recorded. And it is those transactions, so the actual price, is what is represented in our price. It's a volume weighted average of the actual trades that take place in the market.”
In Memory of Robin Bieber
It is with great sadness and heavy hearts that we are informing you of the passing of our Board Member, Director, Shareholder and friend Robin Bieber. Robin was an early investor in Veles and continually gave his highly valued input over the years. Robin was a market legend, he transformed the oil market from being a bi-laterally traded market, with prices being negotiated around a table behind closed doors, to the open transparent market that it is today. He was regarded as one of the world’s leading technical analysts with his early morning PVM oil report being the catalyst for oil trading the moment it was released on a daily basis. Rest in Peace Robin, we will miss you.
Only 1% of all water is actually drinkable, according to the FAO. And yet, we tend to treat water as though it were an infinite resource, with massive quantities literally being flushed down the pipes every day. In December 2020, CME Group started trading futures contracts on the Nasdaq Veles Water Index, which tracks the spot price of water in California. That may be just one local market in one country and one economy, but it's the first instrument to offer a water price proxy, and given its size, exposure to urban and agricultural use cases, and the growing effect of droughts on water availability, California's water market provides a solid illustration of what scarcity and competing demand drivers do to the price of water.
As droughts and wildfires hammered the U.S. West Coast, California declared a state of emergency in April, and last month asked residents to cut their water use by 15%. As of July 31, California's major reservoirs held just 53% of their historical averages. While the circumstances bode poorly for the verdant lawns and gardens of Hollywood's rich and famous, the new H2O futures market is thriving.
Californians received a double dose of not so happy water news last month; cutbacks were made to water allocations and a key water price index surged higher. Drought fears are heightening due to low reservoir levels and below normal snowpack.
A recently launched water futures market in California drew global attention, from Wall Street to the United Nations. While news of the market has brought both skepticism and speculation, much of the coverage has failed to address some fundamental questions: what actually is a water futures market? How does it work, and who are the players? And most importantly, what are the potential benefits and risks?
Water futures and groundwater trading was the central focus of the most recent meeting of the California State Board of Food and Agriculture. Several panelists and speakers weighed in on how a water trade system like that would impact farmers and ranchers.
A just-launched commodity futures market for the state’s water provides a new tool for farmers, municipalities and other interested parties to ensure against water price shocks arising from drought-fueled shortages.
Said Coogan, “Water is arguably our most precious commodity…” Yet, he “found it hard to believe that no one had quantified water prices and its value previously.” hus began his journey to bring transparency to the price of water and liquidity to investors and end users who will utilize the NQH2O product.
Futures tied to the Nasdaq Veles California Water Index, which measures the volume-weighted average price of water, began trading under the ticker NQH2O on the Chicago Mercantile Exchange on Monday.
Investors will be able to make wagers on the price of water later this year with the launch of futures contracts, which are expected to better balance supply and demand for the commodity and hedge price risks.
The new product, which is subject to regulatory approval, is intended to give agricultural, commercial, and municipal water users “greater transparency, price discovery, and risk transfer,” the exchange said in a release
Future contracts tied to the spot price of water are set to trade on Wall Street for the first time ever this week.
This means farmers, investors and municipalities would hedge against or bet on the future price of water, a resource that is fast becoming scarce in the world.
In September, CME Group Inc vowed to create a new market to help with the risk of these price swings. Last month, the first contract connected to the future price of California’s $1.1 billion water market was inked.