OIL CROPS OUTLOOK                                             December 12, 1997
December 1997, Issue number OCS-1397
            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  20036-5831.  
This report and the others in this series (COTTON & WOOL OUTLOOK, 
FEED OUTLOOK, RICE OUTLOOK, and WHEAT OUTLOOK) are only 
available electronically; there is no published version of these reports.  
For further information on our products and services, please call the 
ERS Information Center at (202) 694-5050.
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World Snatches Up U.S. Soybeans and Soybean Products

Like the many holiday shoppers, world soybean buyers have been
very busy in the present U.S. soybean market.  Inspections of
U.S. soybeans for export in October soared to a record 173.6
million bushels, well surpassing the previous high of 152.4
million in November 1996.  The price spreads between nearby and
deferred Chicago soybean futures have narrowed, signaling a
greater risk for storage and encouraging near term physical
marketing.  Shifting an even greater proportion of the farm
marketings to the first half of the marketing year has boosted
the season average price forecast to $6.20-$7.00 per bushel. 
Soybean prices were able to rally last spring because of tighter
supplies and emerging drought in Argentina.

On the other hand, year to date U.S. export sales of soybeans to
Mexico have moderated.  Mexico's 1997/98 soybean imports were
trimmed from 3.1 million to 3.0 million tons this month, although
still up from 2.7 million in 1996/97.  The difficulty in
acquiring railcars from the United States this fall, including
for soybean deliveries, has also dimmed trade prospects.

To supply the very brisk export trade in soybean meal, U.S.
crushers processed 140.4 million bushels in October, a record
volume for any single month.  U.S. soybean meal exports have
benefited from the sharp decline in South American crushing.  Low
Brazilian soybean supplies and unfavorable crush margins have cut
exportable meal and oil supplies.  Brazil's 1997/98 imports and
crush were trimmed to 1.6 million and 20.45 million metric tons,
respectively.  

Trade reports indicate U.S. soybean meal exports soared again in
November, on the heels of a very robust October volume.  The
world's dependence on U.S. supplies has kept meal prices
relatively firm, currently around $245 per short ton.  This price
situation will last another 3 months until the 1998 soybean
harvest begins in South America.  If the expected record planting
and decent weather materialize to produce bumper Brazilian and
Argentine crops, U.S. soybean and meal prices will likely slide
next spring.  The market reflects this viewpoint with a price
inverse for deferred versus nearby soybean meal futures.  

Despite early wetness that stalled seeding in southern Brazil, a
recent window of clear weather has advanced soybean planting to
nearly three-fourths complete by late November.  Recent rains in
the drier northern regions have also improved planting
conditions.  Soybean planting progress in Argentina has been near
average, with 64 percent planted by December 5. 

Other than the United States, India is the only major soybean
meal exporter in the current picture.  The forecast for India's
soybean crop was raised this month from 5.0 million tons to a
record 5.35 million.  This was based on a higher area harvested
estimate and the best soybean yields ever seen in India.  Most of
the increased supply will be crushed.  Indian soybean meal prices
are about $20 per metric ton less than U.S. gulf quotes,
resulting in a significant competitive advantage in several major
Asian markets.  Forecast 1997/98 Indian soybean meal exports were
raised to 3.2 million tons this month.  The additional soybean
oil produced may lift India's domestic consumption to almost 1
million tons.

Despite this month's better yield estimate for 1997/98 Chinese
cottonseed production, a shortfall in oilseeds production and
unabated consumption have accelerated Chinese imports of soybeans
this fall.  However, this has also moderated China's import
demand for soybean meal so far.  Import demand from the rest of
Asia for soybean meal will show no growth in 1997/98 because of
the region's serious economic downturn.

Persistently wet and cold weather has hampered the sunflowerseed
harvest in Russia and the Ukraine.  Lower yields dropped
projected output by all the New Independent States below last
year's disappointing level to 5.2 million.  Similar shortfalls
have occurred in Romania and Hungary.  This tightening of
supplies may curtail sunflowerseed imports and crushing in the EU
and would favor greater processing of soybeans and rapeseed. 
This has contributed to the surge of soybean exports from the
United States to the EU, which are 16 percent ahead of last
year's pace.

Soybean oil prices have risen steadily since last summer to near
26 cents per pound.  The 1997/98 average price was forecast up to
24.0-27.0 cents per pound this month.  Even with a tremendous
production increase in October, month-ending oil stocks barely
budged as already robust domestic consumption and exports
expanded.  

Concerns about tropical oils production in Southeast Asia have
also supported the world soybean oil market.  Indonesia and
Malaysia have been struck by a serious drought.  Recent rains
have eased the dryness in Java and Sumatra although the seasonal
moisture deficit is still substantial.  The weather will limit
1997/98 production growth compared to recent years.  Indonesian
palm oil production is expected to rise modestly, from 5.1
million tons in 1996/97 to 5.36 million this season.  Last
summer, the Indonesian government dramatically reduced export
taxes on crude palm oil.  But that regime has been replaced by a
newly instituted quota system, where exporters are to limit their
exports to one-fourth of their total palm oil production to
stabilize domestic prices.  Steadily rising domestic consumption
of palm oil and lower production and imports from Malaysia are
expected to shave Indonesian 1997/98 palm oil exports to 2.15
million tons.  This would be virtually unchanged from the 1996/97
export volume.

Despite higher fish catches in Peru and Chile, the fish have been
smaller than usual.  This has reduced the quantity and quality of
the fish oil produced in Chile, which would reduce exports and
raise domestic inedible consumption.  Sharply rising prices will
curtail fish oil imports and consumption by the major buyers in
Western Europe.  The reduction further tightens projected ending
stocks for world edible oils to 6.5 million tons.  The last time
world oil stocks have been this low was in 1995.


The next Oil Crops Outlook is scheduled for 4:00 p.m. ET
Wednesday, January 14.  Because of resource constraints, ERS will
publish only 6 issues of this report in 1998.  We will continue
to publish the Oil Crops Yearbook, which will released in October
1998.  This will include both sector data and analysis of
critical issues and topics.  Check the ERS web site
(http://www.econ.ag.gov) for the full schedule and for other
publications relating to oil crops.  If you have questions or
comments about this change in our schedule, please contact Joy
Harwood, Chief, Field Crops Branch (202-694-5310;
jharwood@econ.ag.gov) or Fred Surls, Outlook Program Coordinator
(202)694-5320; fsurls@econ.ag.gov).


Table 1--Soybeans:  U.S. supply and disappearance
------------------------------------------------------------------------------
                   Supply                          Disappearance 
        -------------------------------- ------------------------------------
Year                                                      Seed,  
begin.     Beg.   Im-   Produc-  Total     Crush   Ex-    feed,  Total   End.
Sept. 1  stocks  ports   tion                    ports  residual        stocks
------------------------------------------------------------------------------
         -------------------------- 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
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

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

         ---------------------------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
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

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

         -------------------------- 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
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 4--Oilseeds prices received by farmers, U.S.
--------------------------------------------------------
Marketing      Soy-  Cotton-  Sun- 
 year         beans   seed   flowers  Peanuts  Flaxseed
--------------------------------------------------------
              $/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        6.72  106.00    11.50    29.30   5.19
1996/971        7.35  125.00    11.70    28.50   6.37


1996/97
September      7.79  129.00    12.00    27.70   5.89
October        6.94  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           7.52   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        6.50  119.00    10.60    25.40   5.81
November1       6.95  124.00    10.70    23.50   5.97
--------------------------------------------------------
1/ Preliminary.  NA = Not available.


Table 5--Vegetable oil prices
---------------------------------------------------
                      Cotton-  Sun-       
Marketing    Soybean   seed   flower Peanut  Corn  
 year          oil2     oil3    oil4  oil5    oil6 
---------------------------------------------------
                     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 
1996/971       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   22.90  47.25  25.15

1997/98
October         24.31    28.47   24.51  49.63  25.20
November1      25.73    29.11   26.41  51.00  26.25
---------------------------------------------------------------------------
1/ Preliminary 2/ Decatur 3/ PBSY Greenwood, MS 4/ Minneapolis 5/ Southeast
mills 6/ Chicago

Table 6--Oilseed meal prices
---------------------------------------------------
             Soy-   Cotton   Sun-           
Marketing    bean    seed   flower  Peanut  Linseed
 year        meal2   meal3   meal4   meal5   meal4
---------------------------------------------------
                        $/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
1996/971    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  192.00   89.20  210.00  136.70

1997/98
October      229.30  189.10   96.90  210.00  140.60
November1    245.35  189.06   88.13  210.00  161.25
------------------------------------------------------------------------------
1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills

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