 Hello, this is Fray Nolson, crop economist and marketing specialist with NDSU Extension. This is the soybean market update for the week of October 29 through November 2, 2018. One of the most hotly debated topics by soybean market analysts and traders is how many soybeans will China actually import from the US in the 2018-19 marketing year given the current trade tensions. Any kind of an announcement regarding export sales or shipments of soybeans from the US to China can have dramatic impacts on prices both at the futures market level as well as the cash market level. So to put things in historical context, this graphic shows the use of soybeans in the United States. So where do we ship our soybeans? How do we use them up? The green line represents crushing. Soybeans are delivered to a crushing plant, crushed into meal and oil. The soybean meal primarily is used for domestic livestock feed, but we do export some. The oil is used for human consumption, for food products, as well as for biodiesel and some other industrial use. The red line represents exports. You can see the growth in exports over the last several years. The black line on the bottom represents seed and residual, residual primarily being spoilage and wastage. As you can see the last couple of years, exports represent approximately 50% of the total soybean use in the United States. So where do we ship our soybeans? As most people recognize, China is our number one customer. And if you look back historically, the growth rate in exports from the US into the Chinese market has been expanding up until about 2017-18 marketing year. And again, that's when the tariffs first were put in place. There's often confusion about different terms that are used within the export community. There's actually three terms that you'll often hear. One of them would be export sales, another export cancellations, and the third, export inspections. Now each of these reports, even though they contain different information, can have an influence on prices, in particular in the futures market. So what is export sales? These are the values that represent the quantity of grain sold under contract for delivery at a later date, or sometime into the future. The exporting firm, the company that has actually sold the grain, needs to report the commodity, whether it's soybeans, corn, wheat, the quantity that's sold, usually reported in metric tons, and the destination, or what country was it sold to. So these are contracts that have been signed and agreed upon for the sale and delivery of grain in the future. Now an export cancellation occurs when the contract that was previously agreed upon has been canceled. And again, there can be many reasons these contracts are canceled, sometimes it's simply because prices have adjusted. Now in the contract, there's a cancellation clause, and there's normally penalties or fees that have to be paid, either by the importing company or the exporting company, to compensate for this cancellation. Several years ago there was a high level of cancellation because those fees were relatively minor. Recently though those fees for cancellation have been increased, so it's not as common as it was in the past. And finally, export inspections. Now these are reported when the grain is actually inspected and certified, and then loaded into a vessel, either an ocean-going vessel or a train, and is ready for shipment. So in summary, export sales values represent kind of that international demand for the commodity. We don't know a lot about the timing of delivery, so it's not really a major concern. But we have new export sales announcements, futures markets usually respond to that information because it gives us an idea of how quickly we're selling the crop that's in the marketing system today. Export inspection values represents actually the flow of grain. So that's much more concerned about the timing and the delivery of timing. The cash market really follows export inspections more closely than the futures market does, but both of those contain slightly different information. So let's give a kind of a recap of where we're at. Just to remind everyone, the export sales, these are the contracts for delivering the future. Export sales for soybeans is very seasonal, unlike corn and wheat, which tend to be a bit more stable from month to month to month. Export sales for soybeans are very, very seasonal. This gives a kind of a historical perspective of those weekly export sales, how many metric ton has been sold each week for delivery in the future. As you'll notice, the red bar, which represents export sales for the current marketing year starting on September 1 and running through October 18, we always have a slight delay in reporting values, is way behind normal. This is the time of year that we typically see very large export sales volumes. Unfortunately this year, those export sales volumes are much lower than normal. So let's look specifically at China and the Chinese sales data. This is data from last year at this time. So starting November 1 of 2017, last year, and running through October 12 of 2017. We have three columns of information, the weekly export sales, so this is how much new sales for new contracts each week. And you can see that the weekly totals started to increase as we moved into this October time period. The second column, the column in the middle is accumulated sales. So every time we have a new sale, we add it to the pile. So if you take the sales accumulated from the previous week, so we add the sales for this week, you'll get the new total. If you look at the very bottom row, the accumulated export sales from last year was 4.6 million metric ton. If you add up the column of weekly export sales, add up all those weekly sales, you'll get the total for the accumulated exports. The last column is outstanding sales. The outstanding sales for this time last year was about 8.2 million metric ton. What that represents is not only the sales that were made within this marketing year, but also sales from the previous marketing year with expected delivery this year. So if you notice the very top row, there was 6.5 million metric ton of soybean sales contracts for delivery in this current marketing year that were made previous to that. So they were made in the past. Let's look at the same information now for the 2018 time period. If you notice weekly export sales have been very, very small and minimal. Accumulated export sales are also very, very small relative to this time last year. And outstanding sales have also been very, very small. Now if you notice the outstanding sales, the sales were made before that are brought into this marketing year on September 1 of 2018 was about 1.3, 1.4 million metric ton. And that number has actually been decreasing because there have been some cancellations that have occurred as well. So again, just to put things in perspective, very small or minimal sales this year relative to where we were this time last year. So again, just to summarize, market traders and analysts are following these export sales, export cancellations, and export inspection values very, very closely. But the values do represent slightly different information. So it's important to understand these differences. So as you gain new information as there's new reports coming out, whether it be on the radio or in the print media, that you understand what the implications are and how you can make more informed decisions about what might be happening in your marketing plan specifically for your farm. Hopefully you found this valuable. This concludes the recording for this week. Hopefully you'll join us next week for another update. Thank you.