 This is Frayen Olsen, crop economist and marketing specialist with NDSU Extension. This is the weekly soybean market update for the week of December 10th through the December 16th of 2018. This week we're going to talk about the first purchase of U.S. soybeans by the Chinese government since the tariffs began on July 6th of 2018. Late Wednesday, there were reports that Chinese state-owned grain traders, Coffco and Sinograin, had purchased over 1.5 million metric tons of U.S. soybeans or approximately 55 million bushels from Cargill, Louis-Dreyfus, and CHS. This is according to European grain trader. The same grain trader said that China was seeking to buy a total of 2.5 to 3 million metric tons of U.S. soybeans. On Thursday morning, USDA did confirm the sale of 1.13 million metric tons or about 41.5 million bushels of U.S. soybeans to the Chinese. Also on Wednesday, there was another report quoting a U.S. grain trader that said Chinese state-owned firms had bought at least 12 cargoes for shipment in January to March. Another trader said around 30 cargoes had been traded on a Wednesday afternoon. So there was some disagreement on the exact quantities. The soybeans are expected to be shipped mainly through the grain terminals of the U.S. Pacific Northwest, which was considered the most direct route to Asia based on what the traders' report was. Now, this is important for North Dakota soybeans because if these cargoes were bought for shipment in January, because of the delay in delivery, those shipments, the soybeans that are going to be loaded onto those vessels in January, really need to be within the system right now or very close to the ports to be loaded, which really, in my opinion, makes it very, very difficult for North Dakota soybeans to get into the Pacific Northwest terminals in time for a January loading and shipment. However, if we get into later February, into March time period, there may be some possibility for North Dakota beans to move into the PNW markets. Again, this is my opinion versus what the trader had been quoted as saying. The market response to this news was relatively muted. I think a lot of traders and analysts, including myself, was expecting to see a relatively large improvement or large spike in prices after the announcement of official soybean purchases by China, but that didn't happen. I think part of the response to that is that, first, there was some confusion about the quantities that were purchased, and then the second was that it was a much smaller amount than most traders had expected. This just happens to be a quote from Ted Seafreed from Zainer Group. His quote was, if this is all we're going to get, it is a whopping disappointment, and we're adding at least 20 million bushels to our soybean ending stocks, meaning the carry-over stocks on the USDA-supplied van tables. Quote, we need follow-up sales in short order to keep the momentum higher in soybeans. So again, I think the traders and analysts were a bit disappointed in this first announcement. Hopefully, as we move through time, we'll get some additional sales, which will be really needed to help support soybean prices. Now there were trade rumors floating around several days before this actual purchase. And again, in that trade rumor, set some expectations about the volumes and the numbers we might see when China does buy our U.S. soybeans. I also want to highlight a couple of the things that we're circulating as part of this rumor, the main one being that the U.S. beans would be destined mostly, if not all, for state-owned reserves. And that becomes really important because when China originally put the tariffs on, they stated that any purchases that would be used for state-owned reserves would not have the 25% tariff applied to it. So again, the rumor was that the Chinese would buy anywhere from 5 million metric ton to 8 million metric ton for these state-owned reserves with the potential of an additional 2 million metric ton to be purchased by commercial companies. Now those 2 million metric ton purchased by these commercials would have the 25% tariff applied to it. Again, uncertainty about whether that tariff would be reimbursed to those companies or not be reimbursed. So once again, the price response from all of this was relatively muted. And actually as of the evening of December 13th, prices had actually softened after the announcement. And again, the reason was there was this buildup in expectations that there would be some large purchases, that the volumes would be much bigger than what actually occurred. And as you can see, the price drop not only was for the January contract but also for the November contract. So again, very similar responses for both old crop soybeans as well as new crop soybeans. In addition to all of this trade discussion, USDA did release the December WASDE or World Agricultural Supply Demand Estimates update. Now this is the update to the supply demand tables as done monthly. For December, there are really no changes from the November estimates. But I do want to highlight a couple numbers and again tie into the expectations that the market has about export and export pace. I'd like to focus in on USDA's forecast for total exports for the 2018-19 marketing year. Now that would be for the crop that was just harvested. So we harvested in 2018, it's being sold in 2018 and 19. So the current USDA forecast is for 1.9 billion bushels of soybeans to be exported out of the US. By converting that, that comes up with approximately 51.7 million metric tons. This is a chart of the weekly export sales for US soybeans. Now we've looked at this before, we've talked about it a little bit previously. As you can see, we have typically a very seasonal export pattern for US soybeans. Exporting sales tend to be very, very high during the harvest period of October-November. By the time we get into December, things are starting to shift and drop off a little bit into January and February. And then by March, export sales again drop off for a second time based on the competition we get from the Brazilian harvest. Now the red line that bounces around is the weekly export sales for 2018-19 marketing year which is the current one we're in. And as you can see, that's dramatically lower than the other values that we see at this time of year. Now the big question and the debate going on in the trade right now is what will happen to that export sales volumes as we move into this winter season and more importantly into the summer season. Will this red line continue to follow the seasonal pattern and kind of bounce around where it's at into the February time period? And then drop off very sharply like it historically does or are we going to be able to hold some of those export sales to these other countries we're selling to as well as add some export sales to the Chinese markets? Will that red line continue to bounce around and move higher levels as we move into the summer months? And the answer to that question is really going to have a huge, huge impact on obviously the total export sales and soybean prices. So in order to meet USDA's total annual forecast of 51.7 million metric ton, we'd need to average about 880,000 metric tons of sales each week, 880. Now in order to reach the sales levels we've had the last couple years, we'd have to average a little over a million metric ton or that million metric ton line. So again if sales drop off quickly as we move into spring, this could be very, very damaging for soybean prices. If we get the export sales to hang in there and maintain at a higher level during the winter months, there will be add some price support to the soybean market. So this concludes this week's report. Again please feel free to contact me if you have any questions and thank you for listening.