OIL CROPS OUTLOOK                                              March 12, 1997
            Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is published monthly by the Economic Research Service, U.S.
Department of Agriculture, Washington, DC 20005-4788.  OCS--0397.  
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HEAVY BRAZILIAN SOYBEAN EXPORTS EXPECTED SOON

Brazilian soybean farmers are about to rescue the world from uncomfortably low
oilseed supplies.  Despite a reduction in forecast harvested soybean area in
Brazil, continuing good weather and higher input use is producing record
expected yields.  Brazilian 1997 soybean production is forecast up this month
to a record 27.0 million metric tons, from 26.5 million last month.  This is
up 13 percent from last year's revised output of 23.7 million tons.  Harvest
is in full swing in the western areas and will commence in major southern
states within 2-3 weeks.  The Brazilian harvest is reported 15 percent
completed, nearly double last year's pace.  With increasing maturity and a
drying weather pattern, the pace will soon accelerate.

Brazilian soybean exports for 1996/97 were forecast up to 5.2 million tons
this month, or 58 percent above last season.  Exports this year would rank
behind only 1993/94, which an analagous marketing year in which U.S. supplies
plunged.  The elimination of Brazilian export taxes favors increased soybean
exports at the expense of the crushing industry.  Very profitable world
prices, ample Brazilian supplies, and recent improvements in transportation
infrastructure should also considerably advance the soybean export pace from
previous years.  A newly operational system barges soybeans from northern Mato
Grosso down the Madeira and Amazon rivers, where they are loaded onto 
ocean-going vessels.  This will reduce high transportation costs from deep in
the interior (compared to trucking to Paranagua) and expedite foreign
shipments. Similar projects are progressing throughout the country but will not
be functional this year.  Such ventures will also take some pressure off
Brazil's busiest port at Paranagua, which had a serious bottleneck a year ago.

On the other hand, Brazil's 1996/97 crush is forecast down this month to 20.5
million tons, nearly a million tons less than the previous year.  With more
stable interest rates, the attractiveness of the drawback system (which
imports soybeans for crushing and immediately exports the products) has been
diminished.  Forecast 1996/97 soybean imports for Brazil were reduced to
600,000 tons this month, less than half last season's volume.  Retention of a
12-percent tax on intrastate soybean shipments exacerbates the situation, as
Brazilian farmers are reluctant to sell to crushers in other states when they
can get a higher price abroad.  Consequently, Brazilian soybean meal exports
are now forecast at 10.8 million tons, down from 11.4 million last month. 
Yet, domestic consumption of soybean meal continues to grow, aided by the
country's improved investment climate.  Capital improvements in the poultry
and pork processing sectors have raised Brazil's per capita meat consumption
and export capacity.  Brazil's 1996/97 soybean oil exports are also curtailed
(to 1.45 million tons) as more is exported in the form of unprocessed
soybeans.

Expected 1996/97 soybean production in Paraguay is increased to 2.7 million
tons, from 2.4 million tons in 1995/96.  Many farmers switched out of cotton
and rice to plant a record area to soybeans.  And, with near ideal weather
conditions that have boosted yields, production is at an alltime high for
Paraguay.  Nearly two-thirds of the production (1.75 million tons) will be
exported, ranking Paraguay just behind Argentina as an exporter of soybeans.

Unlike Brazil and Paraguay, prospective soybean production for Argentina
remains unchanged.  The provinces of Santa Fe and Cordoba have not been
favored by rainfall to the same degree.  These are not major soybean producing
regions, but their output, coupled with a higher proportion of second-crop
soybeans, will limit Argentine yields.  The dry spell occurred subsequent to
the reproductive stage for the majority of soybean fields, allowing for good
(but not record) yield potential.  Harvesting will begin in late March. 
Increasing Argentine crush capacity and the strength of the world protein meal
market is raising projected Argentine crush to 10.85 million tons.  Fewer
supplies available for export and harder competition from Brazil reduce the
export forecast 500,000 tons to 2.0 million tons.  Given ample product
supplies, record volumes of soybean meal (8.5 million tons) and soybean oil
(1.8 million tons) are expected to be exported in 1996/97.

At the expense of exports, Argentine sunflowerseed crush was raised 500,000
tons to 5.1 million.  Foreign protein meal demand has been strong compared to
world oil demand.  This has suppressed crushing margins in importing countries
and favors trade in the products over the seed.  Increased Argentine
sunflowerseed oil exports were expected, particularly to India and Pakistan,
where sunflowerseed oil has been attractively priced compared to palm oil. 
The increase in sunflowerseed meal consumption in the EU has also deterred
imports of mid-protein substitutes such as corn gluten feed.  U.S. corn gluten
exports, the principal source of EU supplies, are forecast down nearly 10
percent.

Given its own small rapeseed harvest, the EU is deficient in indigenous
supplies of both vegetable oils and protein meals.  So, the EU will import
more soybeans in 1996/97--to 14.6 million tons, versus 14.2 million tons in
1995/96.  But, total EU soybean meal consumption is also trimmed, cutting
forecast EU soybean meal imports to 15.4 million tons.  Soybean meal imports
are being limited by high prices, cheaper competing feeds, and a larger
proportion of supplies derived from crushing of soybean imports.  This
portends a slowdown for meal exporters, especially U.S. crushers.

Production of Chinese oilseeds for 1996/97 is forecast higher, with a 
quarter-million-ton increase in rapeseed and a half-million-ton improvement for
soybeans.  The strong internal demand means that the increases will be
consumed wholly within China.  This will not, however, completely stanch the
flow of imports into the country.  Although at one time there were indications
that China may implement tariff rate quotas, annual restrictions were never
announced and imports continued uninterrupted.  Current marketing year soybean
imports are expected higher, to 1.9 million tons.  The United States has
already shipped 1.4 million tons of this amount.  Chinese soybean meal
purchases have slowed, however, shifting the focus onto soybean oil imports.

Record Mexican soybean imports of 2.75 million tons are anticipated this year,
up 100,000 from last month's forecast.  Import commitments from the United
States are up one-fifth from a year ago.  As a result, Mexican crushers are
mostly fulfilling protein feed requirements with larger domestic supplies,
which is restraining meal imports.

Timely rains across northern India in January helped improve conditions for
India's rapeseed.  This will result in record high yields for India, although
they are still among the world's lowest.  The 1996/97 production forecast
rises to 6.3 million tons, surpassing the previous year's record of 6.2
million.  The bulk of the current rapeseed harvest has just started, enabling
crushers to largely satisfy the country's vegetable oil needs until June, when
imports will again become necessary.  Rapeseed oil will remain India's
predominant edible oil this year (1.9 million tons), ahead of peanut oil.  And
a very good cottonseed output helps counter this season's disappointing Indian
soybean harvest.  But, despite producing more oilseeds than ever this year,
India will have to raise vegetable oil imports again to meet thriving consumer
demand.  India is poised to eclipse Pakistan and trail only China as the
world's largest importer of vegetable oils.  This trend has become a political
problem, pressing India to find ways to expand domestic oilseed production.

CONTINUING ROBUST DOMESTIC SOYBEAN DEMAND SENDS PRICES SOARING

There was no letup in soybean crushings in February.  An alltime high U.S.
soybean crush is expected in 1996/97, at 1,420 million bushels, which is up 10
million from last month's forecast.  

Projected U.S. exports are shaved back to 900 million bushels, given the
comparative strength of domestic versus foreign soybean crush and as
escalating prices choke off new sales.  Greater supplies out of Brazil also
add to pressure on U.S. soybean exports this spring and summer.  While U.S.
shipments to date are 110 million bushels ahead of a year earlier, outstanding
sales are one-fifth less, suggesting an even sharper seasonal drop.

Strong demand, both domestic and foreign, has pushed soybean prices up.  U.S.
farm prices for soybeans in February were nearly 40 cents per bushel above a
year earlier.  Strong year-to-date prices and higher prices necessary to
ration demand for an adequate stock carryout necessitated raising the 1996/97
average price projection from $6.75-$7.25 to $6.90-$7.30 per bushel.

Trying to catch up with demand, expanded crushing and meal imports push
projected 1996/97 U.S. soybean meal supplies to 33.85 million short tons. 
Surprisingly strong domestic soybean meal disappearance (up 4 percent 
year-to-date) lifted the 1996/97 forecast to 27.0 million tons, up 200,000 tons
from last month.  Ample supplies of corn and profitable livestock prices have
moderated the impact of very high soybean meal prices this season.  However,
the year-to-year increase would still be a modest 1.6 percent.  Soybean meal
prices rose above $260 per ton in February.  U.S. protein meal prices haven't
risen this high since 1988/89.  That year's price spike was caused by a supply
shortfall, unlike this season's demand-driven price.  Based on higher demand,
the 1996/97 average soybean meal price was forecast up again, to $235-$255 per
short ton.  But as exports and domestic consumption weaken by summer, monthly
meal prices should (barring weather problems) soften somewhat.

An increase 1996/97 expected soybean oil production to 15,460 million pounds
corresponds to a larger crush.  Domestic disappearance of soybean oil has
increased a surprisingly robust 6 percent so far in 1996/97.  Much of the
growth has been in salad and cooking oil consumption, which is up 18 percent
(October-January) from a year earlier.  USDA raised its forecast for domestic
disappearance 150 million pounds this month to 13.8 billion.  The additional
offtake offset the net increase in supplies, trimming year ending stocks to
1.9 billion pounds.  This month's 1996/97 price forecast for soybean oil was
raised a quarter-cent, to 23.0-24.5 cents per pound.

U.S. imports and exports of canola oil were projected up this month to 1,213
million and 309 million pounds, respectively.  A partial explanation for the
unusually large trade to date may be an increase in Canadian transshipments. 
Shipments through western Canada were slowed because of bad winter weather and
shortages of locomotives, which caused backlogs at Vancouver ports.  To avoid
substantial demurrage charges, Canadian exports may have been routed through
Washington ports to Japan or back to Canada.

The next Oil Crops Outlook is scheduled for 4:00 pm ET Monday, April 14.

******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils     (202) 219-0712
                                                           mash@econ.ag.gov
Scott Sanford    Peanuts, Cottonseed                         (202) 219-0835
                                                       ssanford@econ.ag.gov
******************************************************************************

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 & resid.         stocks
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         -------------------------- Million bushels---------------------------

1994/95     209    5    2,517    2,731     1,405    838    153    2,396    335
1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183    4    2,382    2,570     1,420    900    111    2,431    140
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1/ Forecast.

Table 2--Soybean meal:  U.S. supply and disappearance
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                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.      Beg.    Produc-   Total      Domestic   Ex-     Total    End.
Oct. 1    stocks     tion      1/                   ports           stocks
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         ---------------------------1,000 short tons--------------------------

1994/95     150     33,265    33,479       26,538   6,717   33,256    223
1995/96     223     32,514    32,813       26,581   6,002   32,584    229
1996/97 3/  229     33,521    33,850       27,000   6,650   33,650    200
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1/ Includes imports.  2/ Estimated.  3/ Forecast.

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

1994/95     1,103   15,613   16,733       12,916   2,680   15,596   1,137
1995/96     1,137   15,234   16,466       13,459     992   14,451   2,015
1996/97 3/  2,015   15,460   17,550       13,800   1,850   15,650   1,900
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1/ Includes imports.  2/ Estimated.  3/ 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.
                                     
1990/91        5.74  121.00    10.80    34.70   5.27
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
1995/961       6.77  106.00    11.35    29.30   5.25

1995/96
September      5.98  101.00    11.00    29.70   5.11
October        6.16   99.00    11.00    28.60   5.11
November       6.40  114.00    10.80    29.50   5.17
December       6.76  116.00    10.70    28.60   5.03
January        6.78  106.00    11.10    29.80   5.27
February       7.00  117.00    11.50     NA     5.18
March          7.00    NA      12.10     NA     5.28
April          7.43    NA      12.70     NA     5.31
May            7.69    NA      13.50     NA     6.03
June           7.41    NA      14.30     NA     5.88
July           7.62    NA      13.70     NA     6.19
August         7.82  118.00    12.70     NA     6.15

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
February1      7.37  128.00    11.30     NA     6.34
--------------------------------------------------------
1 Preliminary.

Table 5--Vegetable oil prices
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                      Cotton-  Sun-       
Marketing    Soybean   seed   flower Peanut  Corn  
 year          oil2     oil3    oil4  oil5    oil6 
---------------------------------------------------
                     Cents/lb.
                                                   
1990/91       21.00    24.10   23.67  45.50  27.50 
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 
1995/961      24.70    26.53   25.40  40.00  25.55 
                                                   
1995/96
October       26.57    27.61   27.49  42.50  26.05
November      25.42    26.27   26.25  41.63  25.54
December      24.76    26.10   25.98  39.20  24.99
January       23.52    24.45   24.65  37.25  24.52
February      23.49    24.35   24.23  36.00  24.30
March         23.60    24.25   24.28  36.60  24.34
April         25.70    26.77   25.63  39.25  26.60
May           26.50    28.46   26.38  42.80  27.98
June          24.95    27.94   25.72  43.00  25.66
July          24.10    28.25   24.58  43.00  25.46
August        23.99    27.81   24.90  42.60  24.33
September     23.92    26.13   24.90  40.80  24.14

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
February1     22.40    25.44   23.07  43.88  23.97
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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        meal2   meal3   meal4   meal5   meal4
---------------------------------------------------
                        $/Short ton
1990/91     181.40  130.75   88.00  193.00  130.10
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
1995/961    235.90  190.74  123.75  202.70  159.05

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
February1   262.40  184.75  137.50  228.13  156.25
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills


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