OIL CROPS OUTLOOK                                          November 13, 1997
November 1997, OCS-1297
             Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is issued monthly by the Economic Research Service,
U.S. Department of Agriculture, Washington, DC 20005-4788.  This report is only
available electronically, except the annual Yearbook issue, which is available
as a published document.  Call 1-800-999-6779 to order.
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Notice: This release corrects the November 12,1997 release, which contained 
several errors in the text and omitted the tables.
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Short World Supplies Spark U.S. Soybean and Product Exports

In late October, heavy snow in the western Corn Belt interrupted farmers'
harvesting activities, although most of the affected areas were nearly finished
with soybeans. As of November 2, 89 percent of U.S. soybeans had been harvested.
The November Crop Production report slightly raised the 1997/98 estimate of U.S.
soybean production to 2,736 million bushels and the average yield to 39.2
bushels per acre. Higher yields in several States, including Indiana, Ohio, and
South Dakota offset lower yields elsewhere, particularly in Iowa and Nebraska.

The 1997/98 marketing year is only 10 weeks old, but with a record harvest, it
is already apparent that another record-breaking year is shaping up. Soybean
crushing is ahead of all previous rates, and mills should operate near capacity
through next winter. The resurgence of soybean oil prices and the drop in the
cost of soybeans has enhanced crushing margins, hiking 1997/98 domestic crush to
an expected 1,500 million bushels.

With very depleted global soybean stocks and attractive foreign crushing
margins, export demand this fall has been very brisk. Like the U.S. industry,
many importers drew down soybean inventories last summer, waiting until the less
costly new U.S. crop was available before replenishing stocks. But further
waiting is not an option, so the pace of exports from the United States has
accelerated. As of October 30, U.S. export shipments (189 million bushels) were
40 percent ahead of last year's rapid pace, and outstanding export sales of
soybeans (298 million) were 7 percent higher. U.S. 1997/98 soybean exports are
forecast to reach 980 million bushels, an all-time high.

Nearly half of the current gain in 1997/98 export commitments (shipments plus
outstanding sales) is due to greater demand from European Union (EU) countries.
U.S. export commitments to the EU were 34 percent larger than a year ago. With
the current rally in soybean oil prices, lucrative EU crushing margins have
developed. EU 1997/98 imports from all sources of 15.5 million metric tons were
projected, up 450,000 tons from last month.

China is the other major force currently driving world demand for soybeans.  To
date, U.S. soybean shipments to China are 626 percent above a year ago. Since
China will have large deficits in both protein meal and vegetable oils, it may
slightly emphasize more imports of soybeans versus meal and oil this year,
although trade in all three commodities will remain strong. USDA forecasts
1997/98 Chinese soybean imports to reach 3.0 million metric tons, up from a
revised 1996/97 estimate of 2.27 million.

Drought on some soybean producing areas of Java reduced the estimate of
Indonesian soybean output 50,000 tons to 1.45 million. Despite the reduction in
supplies and growing demand, projected Indonesian soybean imports are scaled
back to 870,000 tons as the government trading agency moderates its purchases in
response to the country's volatile foreign currency swings. The rupiah has been
devalued more than one-fourth since last summer, which dramatically raises the
cost of imported goods. Indonesia has no crushing facilities, so the supply
reduction curtails the growth in food consumption of soybeans. The United States
is almost the exclusive foreign supplier of soybeans to Indonesia. Growth in
Indonesian soybean meal imports is also expected to flatten in 1997/98, rising
to just 1.05 million tons, from 1.03 million last season.

Based on projections for greater offtake, a smaller increase in U.S. season
ending soybean stocks, to 255 million bushels, is expected. Reflecting a smaller
anticipated gap between demand and supply, the 1997/98 average farm price was
forecast higher this month, to $5.90-$6.90 per bushel.

Soybean Oil Gains Prominence in World Trade

Aside from soybean, rapeseed, and sunflowerseed oil, 1997/98 world production of
other vegetable oils is expected to stagnate. The growth in world vegetable oil
consumption is expected to outstrip the increase in production by about 0.8
million tons this year. Soybean oil will account for 70 percent of the increase
in global oil production. World palm oil production is forecast up a modest 2
percent in 1997/98 (compared with a 7-percent increase the previous year).
Drought throughout Southeast Asia is likely to hold down production of tropical
oils through 1998. On the Indonesian island of Java, cumulative rainfall since
June has been 25 percent of normal. World import demand for soybean oil will
benefit (as well as the soybeans imported to produce it).

As the world's leading producer of soybean oil, the United States stands to
expand its presence in international oil trade. U.S. 1997/98 soybean oil exports
are expected to rise to 2,400 million pounds, up from 2,050 million last year.
Domestic disappearance of soybean oil this year is not projected to repeat last
season's robust offtake, but to moderate around 14,350 million pounds. In
anticipation of these trends, domestic prices for soybean oil have been on the
upswing for several months, climbing to 24.3 cents per pound in October. USDA is
forecasting a 1997/98 average price between 23.5 and 26.5 cents per pound.
Considering the large increase in soybean supplies, this price increase (from
22.5 cents in 1996/97) is noteworthy. Year ending U.S. oil stocks will barely
nudge from the 1.5 billion pound carryover.

American Soybean Meal Dominates Current World Trade

Compared with 1996/97, soybean meal will forfeit its typically predominant role
in determining soybean value, as meal production rebounds and comes into closer
balance with world consumption. In October, the average soybean meal price slid
nearly $50 per short ton from September to $229. U.S. 1997/98 average soybean
meal prices are forecast to drop to $200-$225 per ton, down from $271 last year.
This lower price range and an expansion in U.S. livestock production is
projected to increase domestic disappearance of soybean meal nearly 4 percent to
28.25 million short tons.

Rain delays for the Indian soybean harvest extend the virtual U.S. monopoly of
the current international market a little longer. Record South American soybean
production next year will sharply curtail U.S. meal exports and reduce U.S.
spring soybean planting. But until then, the current scarcity of South American
supplies and growing world demand will catapult U.S. 1997/98 soybean meal
exports. Only 1979/80 shipments totaling 7.9 million short tons would surpass
this year's expected volume of 7.45 million tons.

USDA raised its estimate of Chinese soybean meal imports for 1996/97 to 3.75
million metric tons. For 1997/98, surging soybean meal imports are again likely
for China, which is projected to import 4.5 million metric tons.

However, more temperate growth in soybean meal imports from the EU, the world's
largest import market, is anticipated. Yet, total EU meal consumption is rising,
so the gradual rise in meal imports is attributed to greater substitution with
soybean imports and crush. EU soybean meal imports are projected to increase
modestly from 14.8 million tons in 1996/97 to 15.2 million this year.

Greater Foreign Soybean Planting Anticipated

Comparatively firm U.S. harvest prices have pinched Brazilian crush margins,
trimming the forecast of Brazil's 1997/98 soybean imports from 2.0 million to
1.75 million tons. The government's halving of time permitted for re-exporting
products under the drawback program to 90 days may also slow imports. Projected
soybean exports are similarly reduced, to 7.1 million tons.

However, the shortage of current Brazilian supplies sets the stage for another
surge in 1998 soybean plantings. Soybean planting is just beginning in Brazil,
although dryness in the west-central and wet weather in the major southern
States has prevented much progress so far. Brazilian soybean area is forecast to
expand to 12.8 million hectares, further escalating 1997/98 production to 29.0
million tons.  These additional supplies will permit Brazil to replenish stocks
and improve the outlook for the crushing industry, which is projected to expand
from 20.1 million tons in 1996/97 to 20.6 million this season. Much of the
resulting soybean meal (10.9 million tons) will be shipped abroad.

Given a small 1997 soybean harvest of 11.2 million tons, the current supply
situation in Argentina is just as tight as in Brazil. Argentine producers are
expected to raise harvested soybean area to 6.6 million hectares, largely at the
expense of wheat and corn area. The area expansion would culminate in a record
soybean output of 14.5 million tons. Argentine producers have already planted
around one-third of the intended sunflower area, and soybean planting will
follow as soon as soils dry from recent rains. In Paraguay, favorable prices and
declining production costs are boosting relative returns of soybeans. Soybean
plantings are projected to expand to 1.3 million hectares in Paraguay, raising
production to 2.8 million tons. This would increase Paraguay's 1997/98 exports
to 1.75 million tons, exceeding the 1.5 million tons forecast to be exported by
Argentina.

The next Oil Crops Outlook is scheduled for 4:00 p.m. ET Friday, December 12.

Table 1--Soybeans:  U.S. supply and disappearance
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                   Supply                          Disappearance 
        -------------------------------- ------------------------------------
Year                                                      Seed,  
begin.    Beg.  Im-   Produc-  Total     Crush   Ex-    feed,  Total   End.
Sept. 1  stocks  ports   tion                    ports  residual        stocks
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         -------------------------- Million bushels---------------------------

1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183    9    2,382    2,575     1,436    882    125    2,443    132
1997/98 2/  132    4    2,736    2,872     1,500    980    137    2,617    255
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1/ Estimated. 2/ Forecast.
Table 2--Soybean meal:  U.S. supply and disappearance
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                     Supply                           Disappearance 
        --------------------------------  ------------------------------------
Year 
begin.     Beg.  Im-   Produc-   Total    Domestic   Ex-     Total    End.
Oct. 1    stocks  ports   tion                        ports           stocks
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         ---------------------------1,000 short tons--------------------------

1995/96     223    75    32,527    32,825     26,611   6,002   32,613    212
1996/97 1/  212   103    34,213    34,528     27,221   7,100   34,321    207
1997/98 2/  207   125    35,593    35,925     28,250   7,450   35,700    225
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1/ Estimated. 2/ Forecast.

Table 3--Soybean oil:  U.S. supply and disappearance
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                     Supply                         Disappearance 
           -----------------------------     --------------------------------
Year 
begin.      Beg.  Im-  Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks  ports  tion                        ports            stocks
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         -------------------------- Million pounds---------------------------

1995/96     1,137   95   15,240   16,472     13,465     992   14,457   2,015
1996/97 1/  2,015   53   15,744   17,812     14,242   2,050   16,292   1,520
1997/98 2/  1,520   60   16,725   18,305     14,350   2,400   16,750   1,555
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1/ Estimated. 2/ Forecast.

Table 4--Oilseeds prices received by farmers, U.S.
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Marketing      Soy-  Cotton-  Sun- 
 year         beans   seed   flowers  Peanuts  Flaxseed
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              $/bu.  $/ton   $/cwt   Cents/lb  $/bu.

1991/92        5.58   71.00     8.69    28.30   3.52
1992/93        5.56   97.50     9.74    30.00   4.12
1993/94        6.40  113.00    12.90    30.40   4.25
1994/95        5.48  101.00    10.70    28.90   4.63
1995/96        6.77  106.00    11.50    29.30   5.19
1996/97 1/     7.38  125.00    11.80    28.50   6.21

1996/97
September      7.79  129.00    12.00    27.70   5.89
October        6.95  123.00    11.70    25.80   6.49
November       6.90  117.00    11.90    25.00   6.50
December       6.91  136.00    11.60    25.60   6.79
January        7.13  132.00    11.80    24.30   6.42
February       7.38  128.00    12.20     NA     6.30
March          7.97   NA       12.20     NA     6.66
April          8.23   NA       12.40     NA     6.49
May            8.40   NA       12.10     NA     6.50
June           8.16   NA       11.90     NA     6.03
July           7.53   NA       10.70     NA     6.07
August         7.25  112.00    10.70     NA     5.53

1997/98
September      6.72  113.00    11.30    27.10   5.72
October 1/     6.74  119.00    10.80    25.60   5.36
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1/ Preliminary. NA = Not available.

Table 5--Vegetable oil prices
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                      Cotton-  Sun-       
Marketing    Soybean   seed   flower Peanut  Corn  
 year          oil 2/  oil 3/ oi1 4/  oil 5/ oil 6/ 
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                     Cents/lb.

1991/92       19.10    22.83   21.63  27.30  25.82 
1992/93       21.40    30.07   25.37  27.40  20.90 
1993/94       27.00    30.30   31.08  43.20  26.38 
1994/95       27.51    29.23   28.10  44.30  26.47 
1995/96       24.70    26.53   25.40  40.30  25.55 
1996/97 1/    22.50    25.58   22.65  43.70  24.13 

1996/97
October       21.95    24.55   22.80  41.50  22.67
November      21.80    24.28   22.50  39.20  22.96
December      21.60    24.29   22.30  40.75  22.27
January       22.45    25.21   22.65  43.50  23.39
February      22.41    25.44   23.07  43.88  23.97
March         23.29    26.18   22.70  44.75  24.38
April         23.17    25.10   23.50  45.00  24.60
May           23.68    25.19   23.20  46.20  24.66
June          22.97    25.01   22.33  47.88  24.82
July          21.89    26.53   21.73  48.06  25.34
August        22.06    27.11   22.02  48.00  25.36
September     22.88    28.03   22.95  47.25  25.15

1997/98
October 1/    24.31            24.00  49.63  25.20
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1/ Preliminary 2/ Decatur 3/ PBSY Greenwood MS
4/ Minneapolis 5/ Southeast mills 6/ Chicago

Table 6--Oilseed meal prices
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             Soy-     Cotton    Sun-           
Marketing    bean      seed    flower      Peanut  Linseed
 year        meal 2/   meal 3/   meal 4/   meal 5/   meal 4/
-----------------------------------------------------------
                        $/Short ton
1991/92     189.20  140.50   76.80  154.50  125.25
1992/93     193.75  161.78   89.00  172.90  133.60
1993/94     192.86  164.30   94.00  194.91  139.55
1994/95     162.55  112.02   62.70  128.94   95.85
1995/96     235.90  190.74  123.75  202.70  159.05
1996/97 1/  262.00  200.00  139.50  232.00  170.00

1995/96
October     193.90  153.25   82.88  132.50  131.00
November    204.10  165.00   99.00  175.00  151.67
December    223.60  185.80  122.50  204.00  143.75
January     232.00  208.80  135.00  220.00  142.00
February    228.30  202.80  130.00  215.00  143.75
March       226.57  195.60  123.50  210.00  155.00
April       249.30  220.00  133.00  210.00  174.00
May         244.30  191.25  137.00  212.00  177.00
June        238.80  192.20  135.00  210.00  178.75
July        252.50  201.56  135.00  224.25  174.00
August      261.20  193.10  126.25  227.00  170.00
September   276.40  193.10  125.60  192.80  167.50

1996/97
October     248.50  183.25  116.00  170.00  175.00
November    251.50  196.60  105.00  146.13  166.25
December    250.60  224.50  113.35  172.67  171.65
January     249.20  207.20  125.00  221.00  165.00
February    262.40  183.75  137.50  228.13  156.25
March       280.50  189.10  121.70  225.00  163.30
April       288.60  197.25  124.00  233.75  168.00
May         306.40  193.75  120.00  222.00  188.30
June        287.90  188.44  106.25  235.00  171.25
July        273.60  170.75   84.00  220.00  124.00
August      273.30  176.25   85.00  213.00  126.25
September   278.30  191.25   91.50  210.00  136.00

1997/98
October 1/  229.30  190.85   96.65  210.00  138.15
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1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills

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