 Hello, this is Fray Nolson, crop economist and marketing specialist with NDSU Extension. This is the soybean market update for the week of November 19th through November 25th. This week, I'd like to look at how U.S. soybean prices compare to world market prices. This is a chart of soybean prices in U.S. dollars per bushel at the U.S. Gulf export terminals in blue, the U.S. PNW or Pacific Northwest terminals in red, and Paternagoa Brazil in black. Paternagoa Brazil is one of the major ports for Brazilian soybean exports. This chart shows daily soybean prices at each of these three terminal locations. The prices represent the bid to buy soybeans from country elevators. So it's the inbound price for the export or export terminal, not the price loaded onto an ocean-going vessel. As you can see, historical prices at each of these locations tend to be very close to each other and move together over time. Also note that the US PNW or the red line tends to be a little higher than the other locations. This is due to differences in handling costs and the cost of ocean freight to move soybeans from the export terminal to the importing countries, primarily China. This next slide is the same price information, but only includes the past 14 months, so we have the same line colors. Once again, earlier in the year soybean prices at each of the export locations were very similar and moved together until about mid-June of 2018. In mid-June soybean prices at the Gulf ports began dropping, the blue line, and the basis bids from the US PNW disappeared, the red line. This again was due to the announcement that China would impose 25% tariffs on US soybeans. The tariffs formula began on July 6, 2018. US Gulf prices have been below Paranáguar, Brazil since about mid-June, but the price spread has also varied over time. On October 15th, the spread was about $2.28 a bushel. By November 15th, the spread was about 92 cents a bushel. The difference between the US Gulf and Paranáguar, Brazil is due to, A, the Chinese tariffs on US soybeans, resulting in heavy purchases from Brazil, B, lower US soybean prices have led to increased soybean sales to other countries like Mexico or the European Union, and then, C, there are some differences in handling costs and ocean freight costs between these different locations. This slide shows prices for soybeans in US dollars per bushel at the US Gulf, once again in blue, Paranáguar, Brazil, in black, and three different port locations in China, one along the southern coast near Vietnam, one on the central coast, and one in the northern coast near Japan. So again, this chart shows the prices over the past three years. Please note there's very little difference in the price of soybeans at the Chinese ports over time, so there's very little variability, and there's very little differences by location, so they all tend to move up and down together. The major source of price variability over time is due to shifts in exchange rates, the US dollar versus the Chinese yuan. This next slide shows the same information, but concentrates on the last 14 months. Once again, you can see soybean prices at the alternative Chinese ports have changed very little, even though soybean prices at US and Brazilian export locations have changed significantly. This is due to the Chinese government's policies of price controls establishing a minimum price for their agricultural products. So what does this mean for local basis levels in North Dakota? Once again, local basis levels reflect the supply and demand conditions in your local area, and it's trying to regulate the flow of grain over time, inflow relative to outflow. This is a chart of the daily spot market basis levels for a variety of states that produce soybeans. The specific locations were chosen to reflect a typical or normal soybean growing region in each state. The chart shows the last three years of information, and please notice even though there is considerable variation over time for each location within each state, there is a general pattern that's common across all the different locations. This is the same graph, but only showing the past 14 months. I know this is a really busy chart, so let's remove some of the locations and focus on the northern plains. This is the same 14 month chart, but I've removed several of the states. Please notice that the basis levels in North Dakota, which is the red line on the bottom, began dropping in mid-July after the Chinese tariffs were imposed. Also notice the local basis levels for South Dakota, which is the brown line, and Nebraska, the purple line, also began to drop in July. This is because the PNW export terminals primarily buy or purchase their soybeans from North Dakota, South Dakota, and Nebraska. The basis levels in Iowa, which is the bright blue, really didn't begin dropping until late August, when the basis in the US Gulf, which is the dark blue line on top, began dropping. I'd also like to point out the basis levels in Minnesota, which is the black line. Now this location is very close to soybean crushing plants. Notice that the basis levels for this location were very stable relative to the other locations. So the presence of a processor, like an OLC crushing facility, an ethanol plant, or large feed mill, tend to stabilize basis levels because there's more consistent and predictable local demand. I know this location may not be really representative of other parts of Minnesota, but I did want to include it and show some of the impacts on local demand and local basis levels. There's a few key points that I'd like to use to recap this week's recording. First, there's not a single world price for soybeans, just like there's not a single price for US soybeans. We need to be careful about comparing US prices to world prices and make sure that comparison is correct. Does the soybean price being quoted represent the price at an export location or at an import location? Transportation costs can make a difference. Is a price quoted for soybeans delivered to a port as an inbound price or is it loaded onto an ocean-going vessel as an outbound price? There's a lot of factors that can impact world soybean prices and can make this comparison very difficult. Second, there have been some small shipments of North Dakota soybeans into the PNW export terminals. These deliveries are really to fulfill commitments for exports into Japan, Taiwan and Thailand, and they've been very very small and limited. Third, most of the North Dakota soybeans that are reaching export markets are moving through St. Louis, Missouri. The soybeans are moved by rail from North Dakota into St. Louis, transloaded onto a barge, and then moved into the Gulf exports. This means North Dakota basis levels now are more impacted by what's happening in the Gulf basis rather than PNW. And these basis levels are lower, local basis levels are lower, due to the larger shipping times as well as the higher transportation costs. This concludes this week's report. Thank you for listening and have a great Thanksgiving holiday.