 Hello, this is Frayn Olson, crop economist and marketing specialist with NDSU Extension. This is the weekly soybean update for the week of February 4th through February 10th, 2019. This week we're going to have another update on the South American production estimates. On Friday, February 8th at 11 o'clock a.m. central time, USDA will release a series of reports that the market analysts and traders will be watching very, very closely. One of those is the February update for the World Agricultural Supply and Demand Estimates or WISD report. Now the WISD report is the USDA's forecast for not only U.S. production and consumption, but also global production and consumption for the major agricultural products we produce in the United States. Now the different traders and analysts will be watching for two key updates. Number one, what is the change in forecast for South American soybean and corn production for both Brazil and Argentina, as well as any kind of updates that USDA may have in domestic soybean crushing demand or total soybean exports. Now there's three other reports that traders and analysts will be watching that were originally scheduled to be released in January, but were not released because of the government shutdown. And so they'll also become available on Friday, February 8th. One of those is the Winter Wheat and Canola seedings report, which will give us an update of the survey conducted last fall of farmers that are planting both winter wheat and canola. We'll get an update of how many acres were planted. We'll get the final official crop production annual report, which will give us the final production numbers for corn, soybeans, and wheat in the United States for both harvested acreage yields as well as total production for the year. And then the grain stocks report, which is in a quarterly update or every three months a survey update of grain stocks in both commercial and on-farm storage as of December 1. This is a table of the pre-report estimates by private analysts for South American corn and soybean production for both Argentina and Brazil. The top row provides the average of all of the estimates by these private analysts, of all those reported. The second line is the highest that was reported in the survey, then the lowest estimate that was reported in the survey. The USDA 2018 production, or the last cropping year, what USDA had reported for total production for comparison, as well as the USDA report out of December. Again, we didn't have a January report, and of course we don't know what the February 8th report is going to tell us yet. I'd like to focus in a little bit on the far right hand side looking at Brazilian soybeans. This will be one of those numbers that the traders and analysts will focus on very, very quickly to see what kind of an update we had. Now, the average trade estimate is for about 117 million metric ton production out of Brazil this year. This compares to last year's number of about 120 million metric ton and December estimate from USDA at 122 million metric ton. The range is relatively narrow, 119 million metric ton to 115 million metric ton, and these range of estimates have slowly been slipping over the last several months. We had originally expected a very, very large production out of Brazil, but because of some weather problems, which we'll take a look at in just a moment, this average estimate for total production out of Brazil is slowly dropping. This is a map of the major soybean production regions in Brazil. The darker the green color, the more soybeans are produced in that area. As you can see, Margrosso, which is the state in the northern growing regions, is the largest soybean producing region in Brazil. However, there are other states that have significant production as well, including Goyos, Margrosso de Sul, Paraná, and Rio Grande de Sul. This is a satellite image of the vegetative index for crops grown in Brazil. Now this image is for the departure from average, which means we're looking at what the crop conditions are right now, or the vegetative index now relative to a 25 year average. If you notice the scaling on the bottom, you see anything in green, whether it be light green to dark green, is averaged to above average. As you'll get into the beiges and browns and reds, it's below average. Now this is for all crops grown, not just soybeans. We have to keep that in mind. But as you can see, in general, the weather has been favorable for South American crops. There are a few areas that are showing some stress, but they're relatively small. Now this vegetative index image was captured for January 21 through January 31. So there's always a little bit of a delay in getting the information and preparing it. And it has continued to be hot and dry in some of the core growing regions, especially in central and southern Brazil. This is a computer generated map of the estimated soil surface moisture in Brazil. Now when we refer to surface moisture, we're talking about the top meter, approximately three feet of soil. If you notice the scaling on the bottom, anything in the browns or beiges is considered low. Anything in the light green or dark green is considered adequate or surplus. As you can see, in the northern growing regions of Montegroso, soil moisture conditions have been relatively good, and that's been the case throughout the growing season. So the expectation is the yields coming out of Montegroso are going to be adequate. However, as we move into those central growing region and parts of the southern growing region, we have some areas of brown and beige starting to show up, which indicates that there is some deficit in the soil moisture conditions. And that's really where we have the concerns about yields. So it would be not that all be surprising to hear that the yield reports out of the northern part of the country are going to come in at very good. But then as the harvest continues to move south, those yield reports will start to drop off. This is a computer generated estimate of the subsurface soil moisture conditions in Brazil. As you can see in the scaling on the bottom, anything in the yellows or beiges or browns are considered to be dry. Anything in the blues or greens is considered to be adequate or surplus. If you look in the northern growing regions in Montegroso, there are some areas of subsoil conditions that are in the yellow or beige area, but most of it's in the blue and green region. Again, that northern growing region has had adequate soil moisture throughout the growing season. We're not expecting any major problems. But as you transition to that central part or the central growing region, you start to see a lot more of those drier conditions even at the subsoil level show up. This could potentially lead to some issues not only for soybeans, but potentially for the second crop or safrina corn crop as well. So if the dry conditions remain, if they don't get some additional recharge, does this crop in particular corn crop have the ability to go deeper into the soil profile and start tapping into moisture levels in the subsoil to maintain yield? It looks as though that region may have more of a challenge than other parts of the country. This is a map of the soybean production region in Argentina. Once again, the dark green represents more soybean production. I'd also like to point out that the production zone in Argentina is relatively small and compact compared to the soybean production regions in Brazil. And this has some implications for variability in total production out of Argentina relative to Brazil. Again, because of this very compact, smaller region, if the weather conditions are favorable, Argentina tends to have very high yields and high total production. However, the weather is adverse or has some kind of problems, the entire soybean producing region is usually impacted by that. So, again, Argentina has more variability in total production than Brazil does. This is a satellite image for the vegetative index for crops grown in Argentina. And again, this is for all crops, not just for soybeans. The image is also for the departure from average. Once again, anything in the green is average to above average. Anything in the yellows and browns is below average. Now, as you can see in general, Argentina is having a better production year this year. Last year they had a lot of funding, a lot of crop damage late in the year. The current vegetative index suggests that they are having a better year and that they're at average or slightly above average for the 25-year history. This is the computer-generated estimate of surface soil moisture conditions in Argentina. You'll notice that that core soybean producing region in the central portion of the country has adequate to surplus soil moisture. Again, planting progress is a little bit slow this spring, but weather conditions have been favorable for crop development since then. This is the computer-generated estimate for subsurface soil moisture conditions in Argentina. Once again, anything in the blues or greens are considered adequate to surplus. Anything in the yellows or browns are considered deficit. As you can see, that major soybean producing region also has adequate subsurface soil moisture conditions, so there's really no significant problems showing up at this point. So to quickly recap, the yield and total production forecasts for Brazilian soybeans have slowly been dropping over the last two months, primarily because of hot, dry weather conditions in that central and southern growing regions. When we look at Argentina, they had a little bit of a slower start in planting progress, but their conditions have been a bit more favorable. Now, the current expectations, they'll have average to slightly above average production, but again, they're not as far along within the growing season, so there's still time for issues to appear. When we turn to soybean harvest in Brazil, Mato Grosso, which is that big soybean producing state in the north, is estimated to be 37% complete with harvest versus an average of about 18% at this time of year. So again, they had very early planting, had very favorable weather conditions, their harvest is ahead of average. When we turn to potterna, which is in the southern part of the region, again, that's one of those areas that's had the hot, dry conditions. It's estimated that 25% of their soybean harvest has been completed, versus nothing at this time last year. But just as a reminder, this time last year, they had very, very wet conditions in potterna, and so harvest was delayed because of that. When we look into the future in the weather forecast, at least short-term weather forecast, there is some scattered rains that are forecasted for next week, but it may not be enough to really impact both soybean yields and or second crop corn yield forecasts. We'll just have to wait to see. And on a final note, senior U.S. and Chinese trade officials will meet in Beijing next week, trying to reach an agreement before the big March 1, 2019 deadline, when tariffs, the U.S. tariffs on Chinese goods will increase one more time. So we'll have to be watching for any kind of updates coming from those negotiations. So this completes this week's update. Please feel free to call or email if you have any additional questions, and thank you for listening.