Good Morning,
Apparently, the Corps released the Flood Control on Monday, though we checked a couple of times each day and it was not there. One alert reader pointed this out to us just now. He said you needed to hit “refresh” to make it appear, though when I checked the report, it immediately opened to 2017, an hour earlier, to 2016; suggesting to me that it was not on there earlier this morning. Conspiracy theories aside, let’s look at the numbers.
WY17 TDA Apr-Aug Anomaly
The “official” number used was 97% of normal; we would agree with that value as of Jan 5, using the ESP 5-day-QPF median values. Historically, how would that year look?
Luckily, there are four years with nearly the same anomaly and those returned end of April Coulee elevation values ranging from 1236 to 1243; strong consensus. Now let’s look at this year’s draft requirement:
Whoa, Nelly … 1256.4′? Apples seem to have become grapefruits. So much for the past being a predictor of the future. One possible explanation, however, would be the expectation to perform the drum gate work this year. Look in the second table at 2016 – 1254.6′. That was a drum gate year, very close to this year’s projected end of April forebay. If the Bureau knows its going to do the work, it also knows it can’t let the forebay go above that level, though it can draft below.
What does all this mean from a hedging/trading perspective? Our thoughts follow:
- The number is wrong, and it will be lowered before all is said and done
- Assuming drum gate happens
- Some of the April draft, or late March, will be shifted into the first few weeks of March, or possibly end of Feb.
- Coulee is at 1281 today; that means 25′ to pull over the next 60 days; with significant low-level snow this may become problematic when that low-level snow melts
- Clearly bearish March, but we’re bearish Feb, so just confirms our sentiment
- This is a bigger water year than indicated by the draft; water not evacuated in March-April is now available for May-June, rendering those two months highly at risk.
- 1st 15 days of May will have to pass inflows up to an elevation of 1256′; if the runoff starts early (late April), then early May will be a meltdown. If it stays cool, then there will be a big deferral of energy into June (ala 2008, if you recall)
None of these charts are compelling buys or sells; the off peak at $8.00 is probably reasonably priced without knowing when runoff will start. The onpeak at $17 for the May-June package is likely to be high, but no one knows which month is rich, plus it sold off already. At this point, too much uncertainty to stake a career-defining trade upon; we’d wait and watch and hope the market over-buys or over-sells.