The 21-year-old Queensland representative, who has played most of his 49 NRL games as a winger, trained on Monday in the centre position Farnworth made his own before joining the Dolphins at the end of last season.
The Cobbo move will cause a backline reshuffle, with Jesse Arthars, Deine Mariner and Corey Oates likely to vie for the two wing positions.
Walters, in his first press conference of the year, confirmed the Cobbo switch.
"It is the plan to move him into that role. He is probably a bit more natural there in the centres than on the wing and so far he has been really good there," Walters said.
"We will find out more when we start playing and he starts doing all the things the great centres do.
"Selwyn is young and still maturing with his fitness levels and strength and they will get better as the year goes on, but his footy IQ is very good which you need in that centre role.
"Particularly defensively, that is where I feel he is going to be a good asset."
Walters said replacing Maroons and Australian prop Thomas Flegler, who also joined the Dolphins at the end of 2023, would create a healthy competitive environment.
Prop Keenan Palasia, who also played in last year's losing grand final side, will need to be replaced in the top 17 after joining the Gold Coast.
Xavier Willison, 21, is in the mix after shining in his rookie season before a syndesmosis injury. Experienced pair Martin Taupau and Corey Jensen will also be in contention.
"Those three guys sat out last year's grand final and they will put themselves in the frame in the next six weeks and into round one," Walters said.
"We encourage our younger players to come through and work hard and learn from guys like Patty Carrigan and Payne Haas who are pretty well entrenched in the side."
There are also high hopes for 19-year-old prop Ben Te Kura.
"Another good, young talent of ours who has come back in pretty good shape," Walters said.
"We expect him to be playing some NRL at some stage this season."
The Broncos kick off their NRL season in Las Vegas on March 3 against the Sydney Roosters.