 This is Frayn Olsen, crop economist and marketing specialist with NDSU Extension. This is a soybean update for the week of February 11th through February 17th, 2019. This week, I'll provide a brief analysis of the USDA reports. On Friday, February 8th, 2019, USDA released four important reports that the market traders and analysts were anticipating. One of them was the February update for the World Agricultural Supply and Demand Estimates, or WASDI report. We also received the Winter Wheat and Canola seedings report, the annual crop production report, and the grain stocks report. Now those last three reports were originally scheduled for release in January, but were delayed because of the government shutdown. I'd like to focus in on the information from the WASDI report as well as the grain stocks report. This is the supply and demand table for U.S. soybeans prepared by USDA. We'll be focusing in on the values in the far right-hand column that represent the 2018-19 marketing year and the February updated numbers. We'll be comparing that column to the middle column, which represents 2017-18 marketing year, which was last year, as well as the 2016-17 marketing year, which was two years ago. The first values that I'd like to focus in on are the revisions for harvested acreage and national average yield. Based on the annual crop production report, harvested acres for soybeans were reduced about 200,000 acres relative to the December forecast. The national average yield was also reduced about .5 bushels per acre relative to the December estimates. From a marketing perspective, the adjustment in the national average yield is more significant than the adjustment in harvested acreage. That percentage change is more important. This figure shows the national average soybean yield in the U.S. from 1988 through 2018. That's the red line that bounces around through the middle of the graph. The straight blue line that runs up diagonally is the trend line yield. Now think of the trend line yield as the average yield that's been adjusted for technology. When we compare the national average soybean yield of 51.6 bushels per acre relative to trend line, that's about 3.4 bushels above average, or approximately 7%. If you'll notice, the last 5 years in a row, our national average yields have been above trend line, with 2016 being 5 bushels above trend line. If you multiply the harvested acreage times the national average yield, you'll get the estimate or forecast for total production, approximately 4.5 billion bushels. Now total production was reduced 56 million bushels from the December report, but is still a 3% increase over last year's numbers. This represents the sixth record production year in a row for U.S. soybeans. Now let's take a look at soybean usage. This graph provides historical perspective on the three major categories of soybean use that USDA tracks. One of those is crushings, the green line, which represents domestic crush. We take U.S. soybeans, we crush it in oil and meal. The red line represents exports, and the black line on the bottom is seed and residual. The little dotted lines on the far right hand edge represent the current USDA forecast for each of those values. If you'll notice, crushing usage has been slowly increasing since the early to mid 2000s. Exports have grown very rapidly from the mid 2000s, and seed and residuals tends to remain relatively stable. Now let's focus in on the numbers. First let's look at crushings. Crushings are forecast to increase about 1.7% from last year, and was increased about 10 million bushels from the December forecast. Exports are forecast to decrease approximately 12% from last year, and will reduce 25 million bushels from the December estimates. The current export forecast is about 415 million bushels below the June estimate that was made by USDA before the Chinese export tariffs were in place. So let's drop down to the bottom line and look at ending stocks. Ending stocks represents the amount of grain in storage, or available, just before harvest of the next year. The 2018-19 forecast for ending stocks is 910 million bushels, which is more than double the available supplies at the end of the 2017-18 marketing year. Now there's a lot of market analysts that will not only look at the absolute values in bushels, but also look at it in percentage terms. They use the stocks to use ratio. Mathematically, that's the ending stocks divided by total use, or what percentage of our needs will be in reserve in cases or problem next year. Now the stocks to use ratio for the last marketing year, 2017-18, was 10.2%. The current forecast for 18-19 is 22.2%. If we look back at the estimate for 2018-19 in June before the tariffs went on, USDA was forecasting a stocks to use ratio of 8.7%. This graph shows similar information about the stocks to use ratio, but going back further in time. So let's focus in on those blue bars. Each one of those blue bars represents the stocks to use ratio for a particular marketing year, beginning in 1985-86, and running through the current forecast for 2018-19. And again, it's scaled on the far right hand side. As you'll see, the red line, which represents the 2018-19 forecast, is well above historical averages. It's not a record high level, but it's much higher than we've seen in many, many, many years. Now again, there's two reasons for this. Number one, we've had record production, and number two, our usage or exports have been well below average because of the tariffs put on by the Chinese government. One of the other key reports that we got on February 8th was the December 1 grain stocks report. Now I'm going to focus in on the soybean stocks values, but every three months, USDA does a survey of approximately 82,000 farm operators across the U.S. and does a full reporting of all known commercial grain storage facilities, about 8,500 facilities, and asks how much grain do you have on inventory or in storage as of December 1. The green bars represent on-farm stocks of soybeans. The gold bars represent off-farm stocks or commercial stocks of soybeans. As you can see, the values for 2018 are record high levels, not only for on-farm, off-farm, but also total stocks. Now again, this is not surprising given the fact that we've had record production and our export pace has been slower than normal. This figure shows soybean stocks as of December 1 in North Dakota. Once again, the green bars represent on-farm stocks. The gold bars represent off-farm stocks or commercial inventories. As you can see, again, 2018 we have record levels of not only on-farm, off-farm, but total stocks. Again, not surprising, we had relatively good yields within the state and our export pace out of the state after harvest was relatively slow. So let's do a brief recap. USDA did make some minor adjustments to the soybean, corn, and wheat supply and demand estimates. But there were no major price adjustments or price shocks after the reports came out. Primarily because the values in the reports were very similar to what the private analysts and traders were expecting. Now total soybean production was reduced, but it was reduced more than total use relative to the December estimates. Soybean ending stocks also were reduced relative to December, but they are estimated to be more than double last year's values. So these large soybean inventories will impact both spring and summer grain flows and pricing opportunities as well as potentially 2019 planting intentions. We'll talk about the 2019 planting intentions in a future recording. So this concludes this week's report. Please feel free to contact me if you have any questions and thank you for listening.