 Hello, this is Frank Olson, crop economist and marketing specialist with NDSU Extension. This is the weekly soybean update for the week of March 19th through March 24th of 2019. This week I'll provide a brief update on the current trade negotiations between the United States and China and the implications for soybean prices. For the past several weeks, U.S. and Chinese trade negotiators have been continuing their talks via conference calls and web conferencing. It was recently announced that the chief U.S. negotiators, both U.S. trade representative Robert Lighthizer as well as U.S. Treasury Secretary Stephen Mnuchin, will travel to Beijing on March 28th and 29th to continue their face-to-face negotiations. It was also announced that, later on, the chief Chinese negotiator, Vice Premier Liu He, will travel to Washington, D.C. in early April to continue these negotiations. The expectation is, once these chief negotiators get face-to-face, that additional progress will be made. There have been a variety of reports released trying to indicate the timing or the timeline for some kind of an agreement between the U.S. and China. The Wall Street Journal reported the talks between the U.S. and China are in their final stages, with a target date for an agreement by the end of April. Earlier, the South China Morning Post reported that a meeting between President Trump and President Xi may need be pushed back into June. And the one consistent message is this enforcement mechanism to ensure that the Chinese fulfill their side of an agreement remains the key issue that needs to be negotiated. This week, President Trump said negotiations are coming along nicely. But says if an agreement is reached, the U.S. tariffs on Chinese goods may remain for a substantial period of time because China has had problems living by certain deals. I believe what President Trump is referring to is the terms of the agreement that China made as they entered the WTO several years ago and that some of those provisions have not been followed through on. So again, bringing up this concern, if the U.S. and China do reach some kind of an agreement, will China follow through on those terms? Now President Trump statements are slightly different from other statements coming out of the Trump administration, which says they want to have the option to impose tariffs on Chinese goods if they don't abide by the terms of an agreement. So again, slightly different language are the current tariffs going to stay in place until the Chinese prove that they're going to follow through on the agreements, or will the existing tariffs be reduced or eliminated after an agreement is signed and then be reimposed later on if the Chinese are not following through on those agreements. Late last week it was announced that China had purchased 23,846 metric tons, or approximately 52.6 million pounds of U.S. pork. This is despite the current 62% import tariff on U.S. pork entering China. Now the speculation is that these purchases were due to reduced pork supplies within China due to the African swine fever. So just to bring everybody up to speed, so far there's been 111 confirmed cases of African swine fever in China spanning 28 provinces. So this is a very large and very widespread problem across China. It's not just an isolated pocket. The current estimate is that there's been a 16.6% drop in the entire hog herd from February 2018 to February 2019, or the 12-month period, which is very substantial when given the size of the Chinese hog industry. In addition, current estimate is that there's been a 19.1% drop in the sow herd or the breeding herd from February 2018 to February of 2019. Again, very substantial, and this has implications not only for short-term pork supplies, but also then longer-term how long will it take to rebuild the breeding herd and what does that mean for imports of soy and the crushing into soy meal for the hog industry? Again, what's the demand base for soy and soy products within China? So what's been the market response by traders with all this new development and new news? Well to be very honest, most market traders are getting a bit tired of the rumors of increased Chinese grain purchases, and again there's been a lot of rumors floating around. In the past, we've seen slight price recoveries when these rumors came out, but that's not happening anymore. Most traders now are waiting to see if confirmed Chinese purchases of U.S. grains before there's any price movement or price recovery. In previous announcements, China has promised to purchase an additional 10 million metric ton of U.S. soybeans, and some of that has been happening. So if we look at this most recent marketing year from September 1 of 2018 through the most recent USDA export sales numbers of March 14, 2019, China has purchased 11.2 million metric ton. Now we compare that number to the same time period last year from September 1 of 2017 through March 15, 2018, China had purchased 28.5 million metric ton. So again, current purchases well behind the pace that we've seen in the past. So again, I don't expect any major price recoveries or major lifts in the marketplace until there's actual confirmed purchases that China has bought additional U.S. grains. Now one of the other things that's starting to move into the market place is some concerns about this wet spring weather. Again there's been a substantial snow as well as rain, not only in the northern plains, but also in the Midwest. There's obviously been flooding not only in Nebraska, but also in Iowa, which is raising some concerns about potential planting delays come this spring. The current expectation is we're going to see a reduction in soybean plantings and increase in corn plantings. Now if the spring weather doesn't play out very well and we get behind, will U.S. farmers switch from planting additional corn acres into rebounding and planting more soybean acres? Again, we're going to have to wait to see how the weather plays out and what the implications might be. I'd also like to provide a brief update on how U.S. soybean export sales have been progressing. Again, we've seen this in the past. The lines in the background, the multicolored lines in the background is the historical weekly export sales for U.S. soybeans. The red line is the current 2018-19 marketing year export sales. As you can see, the red line is falling well behind the pace that we normally see. Now more recently, we have seen additional purchases by China, which has been improving our export sales numbers. But again, we have to have continued export sales throughout the rest of the marketing year to be able to reach the targets that USDA has put forward. The red dash line on the right-hand side of this graph represents the average weekly soybean export sales that will be required to meet USDA's total export targets. So in the last WASDE report of the World Agricultural Supply and Demand Estimates, USDA forecasted a total export sales numbers for U.S. soybeans. Now given the sales pace that we've had so far, what do we need to average throughout the rest of the marketing year to be able to reach that forecasted total? And that's that dash line that represented on this graph. So is it possible for U.S. export sales to average those levels? Yeah, it's possible, but we're going to need a little bit of help. The Chinese are going to have to continue to come in and buy U.S. soybeans throughout the rest of the summer for us to really meet that target. So let me provide a really quick recap. As I've said before, the timing and the structure of a trading remit between the United States and China will have an important impact on both old crop or 2018 as well as new crop 2019 soybean prices. And again, timing is going to be very important. It's very unlikely that China will come in and make large purchases of U.S. ag products like they have promised to do until after an agreement has been signed. So when will that be agreement be signed? Will it be in late May? Will it be in June? Again, from a marketing standpoint, this is going to have a pretty substantial impact on price movements throughout the summer. So what I'm really recommending is please set some price targets for additional sales. It looks like this trade negotiations may last a bit longer than we first originally expected and therefore you're going to have to set some pricing targets as well as some timing targets to be able to meet your cash flow needs as well as make sales at prices that you feel are acceptable. One caveat or one wild card in all of this of course is the weather and the weather conditions during spring planting. Now that may provide some short term pricing opportunities especially for corn if we have some late planted corn or if there are some delays in corn planting. Again, the concern would be rather than an increase in corn acreage with a decrease in soybeans, we may not see that largest shift. It would be positive for corn potentially negative for soybeans. Now on the flip side, if the weather does turn, we have adequate soil moisture, we have a really nice spring, planting progress is very strong. We actually may see an additional increase in corn acres and additional cotton soybean acres. So again, the weather conditions and the timing of planting progress may provide some pricing opportunities but again they're going to be very very short lived. So please set your pricing objectives, make sure you put some orders in place so that when those pricing objectives are met you've been able to make some sales. This concludes this week's update. Please feel free to contact me if you have any additional questions and thank you for listening.