Good Morning
January retired with a whimper while February commenced with the same whimper, though a shade warmer and a touch dryer:
Mid-C Composite Weather Forecast
The 6-10 is bone dry, something we haven’t seen for weeks, but the 11-15 holds hints of another major storm system, though anything that far out in the forecast horizon comes with a very low probability. The rest of the WECC is equally dry aside from a nice storm in the Rockies today. What is for certain is normal to above normal temperatures which won’t help anyone’s long position. The River Forecast Center won’t support that long position either, they are up to their usual bag of tricks – low-ball the front end of the 120 day forecast than restate upwards the front as the week unfolds:
River Forecast Center 10 Day versus STP
Looks like the STP will be revised upwards today, at least for the first 10 days of BOM, which is the exact same tactic deployed for the last couple of months. Don’t expect the April-May to show much change, if anything it might be lower. The latest Water Supply forecasts have slipped a bit:
Though last week was wet it was warm wet, at least from the RFC’s persepective, and now the the Apr-Sep TDA has dropped 1%, though both GCL and TDA remain 1% above what was used in the official Jan forecast (incorporated in Jan Flood Control). Given little precip forecast over the next ten days we prognosticate no change in the Feb Flood Control, at least as of today.
Outlfows at Bonneville have been robust, even equal to last year’s big water:
Corps of Engineer Discharge for Generation Summary
These robust flows should be watched closely as last year’s water year started strong and ended in $300 cash prices in June. Not saying we are seeing the same thing this year but any excess discharge in February is water not flowing in June-July.
Our outlook remains bearish but is tempered by the 10 days of below normal precipitation and further tempered by low prices. It’s safe to say that a strong water year is priced into the Mar-July forecasts and any extended dry weather will put bid-side pressure on the market. Unfortunately it is a “watching paint dry” kind of market where patience will be rewarded and impetuousness punished.
Mike