Murray-Darling Basin irrigators will continue to face soaring water prices but new research shows they are unlikely to cop peak costs seen during the Millennium Drought.

The federal government's agricultural forecaster released its water market outlook at its annual conference in Canberra on Wednesday.

Australian Bureau of Agricultural and Resource Economics and Sciences head of farm performance David Galeano said hot and dry conditions in NSW had contributed to high prices in this financial year.

"In recent weeks, we've seen water allocations trading at around $450 per ML (megalitre)," he said.

The outlook provides a range of possible allocation prices for 2019/20 under dry, average, and wet conditions.

If things remain dry, water availability for the southern basin would fall overall, but remain above levels seen during the worst of the millennium drought from 2007 to 2009.

Mr Galeano said ABARES' model simulated an average annual water price of $473 per ML.

"There is a risk that prices in the Murrumbidgee could increase even more than that next year, with the Murrumbidgee import limit estimated to remain in force, unless conditions improve in NSW," he said.

"However, if we do see a shift to wetter conditions this winter, prices are expected to fall quickly and substantially, similar to what occurred in 2016/17."

He said conditions worse or better than included in the modelling remained possible, meaning there was a chance prices could fall outside the predicted range.

Water demand in the lower Murray had continued to grow in recent years, which also drove prices up, Mr Galeano said.