 Hello, this is Fray Nolson, crop economist and marketing specialist with NDSU Extension. This is the weekly soybean market update for the week of December 3rd through December 9th, 2018. This recording was made on December 5th, 2018 and will provide a brief update on the trade tensions between the U.S. and China. This past weekend, U.S. President Donald Trump and Chinese President Xi Jinping met at the G20 summit in Buenos Aires, Argentina. After the meeting, the White House released a statement saying that this was a highly successful meeting, but there's very few details that are currently available. One of those details we do know is that President Trump has agreed to keep the tariffs on $200 billion worth of Chinese imports at the current 10% rate rather than increasing the tariff rate to 25% on January 1, which was one of the threats that was made coming into these negotiations. The general agreement coming out of the meeting in Buenos Aires sets a 90-day deadline for the two countries to create some kind of agreement on how to handle the key differences between the two countries, like forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. The deadline started on Saturday, December 1, 2018 and is scheduled to end on March 1, 2019, however, there were some indications that might be extended if progress was being made. The White House statement after the meetings said that, quote, China will agree to purchase a not yet agreed upon but substantial amount of agricultural, energy, industrial and other products from the United States to reduce the trade imbalance between the two countries. China has agreed to start purchasing agricultural products from farmers immediately. As of this morning, December 5, there was a new statement from the Chinese government acknowledging the 90-day negotiating window and saying that negotiations do have a clear timeline and a roadmap and that China aims to quickly implement, quote, an agreed upon consensus. Also released today was a statement from the Chinese Supreme Court that announced tough new punishments for infringing on intellectual property rights. Now, the statement is actually dated on November 21st, but it was just released to the public today. This new Chinese statement did not officially mention purchasing agricultural or other products or any kind of tariff reductions on the imports of U.S. autos or negotiating about intellectual property protection, technology transfers or other structural issues. However, the Chinese officials have suggested that increased purchases of U.S. farm and energy products like soybeans and natural gas were part of the discussions. So it's still really unclear whether China will remove the tariffs on U.S. soybean imports as part of this initial agreement at the G20 summit. Recently, U.S. Secretary of Agriculture Sonny Perdue said that China will probably resume buying U.S. soybeans around the 1st of January of 2019. So far the response by the grain futures markets has been a bit cautious. There were quite a few analysts, including myself, that were suggesting if there was positive news coming out of the G20 summit, we'd likely see a pretty big rally in the soybean markets and that hasn't happened. I do think the main reason for that is we're getting these differing statements coming out between the U.S. and Chinese officials. And so the markets are looking at kind of taking a go slow attitude until we find out more specifics about the agreement and how this might progress. So this quote unquote increased purchases of U.S. agricultural products implies that the Chinese will buy U.S. soybeans, but it could include a wide range of agricultural products, including pork, some beef products, ethanol, DDGs, sorghum, and possibly even some spring wheat. I do expect soybean futures markets to increase fairly quickly once there are some confirmed U.S. export sales to China. Now local cash markets will also increase, but basis levels may, and I want to emphasize may weaken more or become more negative. The answer will really depend upon the amount of Chinese purchases, whether they're going to be small amounts or they're going to be fairly large amounts, the level of farmer selling after the announcements, and more importantly the timing of these grain shipments. This is the chart of the January 2019 Chicago soybean futures market. This chart was prepared as of Wednesday morning, December 5th. Now the January soybean futures contract is the one that the local elevators will use to price, spot market soybean deliveries at your local elevator. I've added the blue lines to this chart which represent support and resistance lines. These are psychological barriers as prices move up and down, and it's a common technique or tool that's used by analysts to try and put in pricing points. Where do prices start to go up and at what point will they stall and return down lower or as prices are falling, at what point do they stabilize and come back up again? As you can see, we've had a slight rally coming off the last couple of weeks in the January soybean futures. The first psychological barrier that we run into is at approximately 925 on the futures. The next formal psychological barrier is at about 975, so that's quite a trading range. So if we do have some kind of major announcement, soybean prices will likely go through that 925 mark, and then the question is how high will they go? I would consider 950 as the next psychological barrier that the futures market's going to have to deal with. If we can move through the 950 mark, 975 becomes the next target. This is a chart of the November 2019 Chicago soybean futures. This is the futures contract that your local elevator is going to use to try and price harvest delivery 2019 soybeans, so if you're trying to price some new crop soybeans, this would be the chart you need to focus on. Once again, I've added the blue lines, which are those psychological resistance levels, the support and resistance levels that a lot of analysts and traders will follow. As you can see, the current prices are above that first market level at about 952. So we're kind of in a trading range between about 950 and about 970. Again if we have some major news, some major export sales to China, the first price level that we'll need to target would be 970. After that we can break through, and we've got quite a trading range between 970 and 1005. Again I would suggest something in that 990 range would be another psychological barrier that we need to be concerned about. As I wrap up this week's market update, I have a few suggestions, a few things that I want you to think about. It looks as though we're starting to make some progress on trade negotiations between the United States and China, which means that soybean prices as well as other commodity prices are going to be extremely volatile as new information and new news comes out. What I'm suggesting is that you try and set some pricing targets or some pricing points now while you have time to prepare a strategy. It's really, really difficult to put a strategy together when market prices are moving all over the place and extremely volatile. The previous slides I've tried to prepare some target pricing points, those that are commonly used by other traders and analysts, to help you with that decision. The second is once you've chosen those pricing points, also try and decide how many bushels would you be willing to sell at each of those pricing points. Again this will help put a strategy together and implement that strategy when the time is right. And the final suggestion is actually place the orders ahead of time. Again I do expect prices to be extremely volatile and it's very, very difficult as a farmer to chase the market to try and catch up to what's happening. So if you place the order ahead of time, let the market come to you. The odds of you being a successful trader are much, much better. So you can do this by either making some cash sales at the local elevator. Again, placing the order ahead of time saying if the cash price gets to this level, I want to sell X number of bushels. You should also be able to work with your local elevator and sign either a futures fixed or hedge to arrive contract. It's the same contract just goes by different names. With the local elevator will you set or lock in the futures price but leave the basis open so you can set the basis at later time. Or if you're more comfortable and you're working with a broker or some kind of market advisor, you can sell futures contracts. But again, place the orders ahead of time, let the market come to you. This concludes this week's market update. Please feel free to contact me if you have any questions and thank you for listening.