OIL CROPS OUTLOOK                                           January 17, 1996
            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--0196.  
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FINAL 1995/96 SOYBEAN YIELD DECLINES, TIGHTENING MARKET FURTHER
 
The 1995 U.S. soybean crop yielded 34.9 bushels per acre, down from the
previous forecast of 35.4 bushels.  Although many States had slightly higher
yields than in USDA's last production report, Illinois and Iowa yields
declined 1.5 and 1.0 bushels per acre, respectively.  This lowered U.S.
soybean output from 2,183 million bushels to 2,152 million.  Several northern
States (especially Minnesota and Michigan), in which soybeans were planted on
time and benefited from abundant summer precipitation, set or neared their
production records.  Other States had relatively good pod counts, but the
condensed growing season reduced yields through shorter plant heights, fewer
beans per pod, and smaller bean size.
 
Based on strengthening soybean prices and slightly weaker export markets for
soybean meal and oil, expected 1995/96 crush is reduced 5 million bushels to
1,390 million.  The smaller soybean supplies trimmed projected ending stocks
to 190 million bushels, which would be the smallest since 1988/89.  In terms
of stocks relative to total use, this year's carryout would be the slimmest in
20 years.
 
Producer prices for soybeans soared to $6.71 per bushel in December, up from
$6.39 in November and $5.41 for December 1994.  Farmers have reportedly slowed
their soybean marketings, waiting for signs of further price increases. 
Robust domestic soybean meal demand has sustained crushing, which also
supports soybean price strength.  The projected price range for 1995/96 is
$6.55-$7.55 per bushel.
 
U.S. SOYBEAN MEAL DEMAND SEEN STRENGTHENING ON SURPRISING HOG DATA
 
The December 1, 1995, hog inventory was the largest December inventory since
1980.  The September-November 1995 pig crop was 2 percent above the same
quarter for 1994.  Intended farrowings for December 1995-February 1996 and
March-May 1996 are, respectively, 1 and 2 percent above a year earlier. 
Breeding inventory was up 1 percent from a year earlier.  Sow slaughter rates
are not increasing.  On the contrary, sow slaughter has declined from a year
earlier.  These data suggest that hog farmers are not planning to cut back
their herds for 1996, despite rising feed costs.  On the other hand, average
live weights for slaughter hogs are below last year's, so that the large
increase in soybean meal prices should be curtailing the length of time the
animals are fed before reaching an acceptable market weight.  USDA increased
its forecast for domestic soybean meal disappearance to 27.15 million short
tons, up 150,000 tons from the previous report.
 
Despite a lower projected soybean crush this month, higher 1995/96 soybean
meal production is expected because of a greater meal extraction rate.  While
official crush and trade data from the Census Bureau have been delayed by the
government shutdown, reports from the crushing industry warrant an increase in
the rate.  The 1995/96 meal extraction rate is 47.6 pounds per bushel, versus
the previous forecast of 47.4 pounds.
 
Rising cash and futures prices for soybean meal also indicate that meal demand
will remain firm.  The average monthly price rose again in December to $223.60
per ton and is nearly $67 higher than a year earlier.  USDA now anticipates an
average soybean meal price for 1995/96 of $210-$235 per ton, up $15 from last
month.
 
However, with stronger domestic use heating up protein meal prices, U.S.
exports of soybean meal are projected 100,000 tons lower this month to 6.0
million short tons.
 
U.S. SOYBEAN OIL EXPORTS EXPECTED TO DECLINE
 
Weak sales from Middle East and North African countries have dimmed the
outlook for U.S. soybean oil exports in 1995/96.  Outstanding export sales on
December 28 were 56,000 metric tons, compared to 428,900 tons a year earlier
and 80,600 tons 2 years ago.  Total commitments (outstanding sales plus
shipments) currently represent 20 percent of the 1995/96 forecast.  As this is
a smaller than normal ratio for this date, a considerable acceleration is
implied later in the marketing year to meet the export projection.  U.S.
soybean oil exports are now projected at 1,825 million pounds, down 125
million pounds from the December forecast and 855 million below a year
earlier.
 
With softer world import demand and higher U.S. stocks, the U.S. soybean oil
price is projected down 0.5 cent per pound from December to the 23.0-27.0
cents per pound range.  Cash prices continued to slip in December, to 24.8
cents per pound.
 
SOUTH AMERICAN SOYBEAN PRODUCTION AND STOCKS LOWER ON WEATHER-RELATED PROBLEMS
 
South American production is expected down 600,000 metric tons this month, as
unfavorable weather in Brazil, Argentina, and Paraguay dims the outlook for
soybeans.  Widespread drought in Brazil's leading soybean producing state, Rio
Grande do Sul, has reduced yield potential.  Recent heavy rainfall has been
beneficial for crop prospects.  Brazil's projected soybean output of 23
million tons is only 300,000 tons lower this month.  Nevertheless, Brazil's
soybean outlook remains extremely uncertain and will depend on more timely
rains.  Area planted is expected to be unchanged from last month as the recent
rally in soybean prices has encouraged farmers in the center-west to increase
planting, thus offsetting a potential abandonment of soybeans in the south.
 
In Argentina, soybean production is projected down 200,000 tons in response to
long periods of dryness and above normal temperatures that have depleted
topsoil moisture.  Current Argentine soybean yield estimates are based on
normal growing conditions.  Thus, if the sporadic rains persist in the main
growing areas of Southern Santa Fe, Northern Buenos Aires, and Cordoba, it is
likely to be insufficient to yield the expected output.
 
Global ending stocks are projected 900,000 tons lower this month as soybean
demand outpaces soybean production in South America and the United States. 
Projected world ending stocks for 1995/96 (the lowest in more than 10 years)
are pushing internationally traded soybean prices to their highest level since
1988/89.  Soybean meal prices continue to drive the increase in soybean
prices, while soybean oil prices continue their downward trend.  A shortage of
feed grains has pushed soybean meal demand up, while strong competition from
other oils has driven soybean oil stocks up and prices down.  However, at this
time, soybean futures are highly speculative on South American weather and
global demand for soybean meal.  Any significant departure from prevailing
weather or demand assumptions may produce vast changes in international
prices.
 
World soybean trade is expected to fall in response to the smaller U.S. and
South American soybean crops.  South America is likely to maintain a strong
crush at the expense of soybean exports and stocks.  The EU-15 is expected to
account for most of the decline in import demand this month.  Although soybean
meal demand in Asia is soaking up the limited exportable supplies from India,
global soybean meal exports this month are expected down in response to lower
supplies.
 
GLOBAL SOYBEAN OIL IMPORTS PROJECTED DOWN
 
Despite lower soybean oil prices, soybean oil imports in the Middle East and
North African countries are reduced by 7 percent from last month.  Iran and
Morocco account for most of the decline, but most countries in the region are
also expected to reduced imports from last month and last year.  The smaller
imports reverse the strong demand growth experienced by these countries during
the last 6 years.  Soybean oil import demand is projected to slow down in
response to keen competition from other oils, such as sunflower, rapeseed, and
palm, and overbuilt stocks in several countries.  In December, sunflower oil
from Argentina was sold at a discount to Argentine soybean oil.  Likewise,
Dutch rapeseed oil in December was sold on average about $10 per metric ton
less than soybean oil.  Additional discouragement to buyers comes from current
market conditions that have led to unsubsidized soybean oil trade.
 
Although there have been numerous reports of large unofficial soybean oil
imports from South America, China's soybean oil imports are unchanged this
month.  Last year, China bought its largest share of imports from the United
States between February and June.  Because the supply of South American
soybean oil will be at its lowest during the next few months, the United
States has the potential to recover and provide China with an increasing
amount of soybean oil exports.
 
SMALLER SUNFLOWER YIELD AND ACREAGE CUTS PRODUCTION AND USE
 
The January Crop Production report substantially lowered the 1995
sunflowerseed crop from previous estimates.  The 1995/96 U.S. sunflower yield
dropped to 1,189 pounds per acre because of poorer growing conditions in all
major producing States.  An abnormally wet spring delayed planting, a wet
summer contributed to more severe disease problems, and a late September frost
shortened the growing season.  With harvested area 116,000 acres less than
previously estimated (North Dakota accounted for nearly all the reduction),
these components reduced production to 4,005 million pounds, down 17 percent
from the large 1994 harvest.
 
Given much smaller supplies, projected sunflowerseed use also is expected to
decline.  Export demand took a large portion of the cut, falling from the
previous 1995/96 forecast by one-third to 355 million pounds.  The year-to-
year reduction in seed exports is 44 percent.  Non-oil uses, such as birdfood,
dropped 14 percent from a year earlier to 1,125 million pounds.  A less active
oil market this year also limits crushing potential to 2,635 million pounds,
down 55 million from December and 259 million from 1994/95.  Projected exports
of sunflowerseed oil were reduced from 850 million pounds to 827 million this
month.
 
While a reduced crush will curtail sunflower meal supplies, the soybean meal
situation has the largest influence on sunflower meal prices.  The brisk
market for protein meals should boost sunflower meal prices to the highest
level since 1988/89, and well above 1994/95's $65 per short ton.
 
Prices for sunflowerseed are expected somewhat higher in 1995/96 but pale in
comparison to competing crops.  The likelihood of minimal set-asides and
rising wheat and feed grain prices in 1996 should reduce plantings of
sunflowers next spring.
 
******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
Jaime Castaneda  World Oilseeds                             (202) 219-0826
******************************************************************************
 
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---------------------------
 
1993/94     292    6    1,871    2,170     1,276    589     96    1,961    209
1994/95 1/  209    6    2,517    2,731     1,405    838    153    2,396    335
1995/96 2/  335    5    2,152    2,492     1,390    800    111    2,301    190
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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.    Produc-   Total      Domestic   Ex-     Total    End.
Oct. 1    stocks     tion                           ports           stocks
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         ------------------------------1,000 tons-----------------------------
 
1993/94     204     30,514    30,788       25,283   5,356   30,638    150
1994/95 1/  150     33,265    33,479       26,538   6,717   33,256    223
1995/96 2/  223     33,067    33,350       27,150   6,000   33,150    200
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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.   Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks    tion                         ports            stocks
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         -------------------------- Million pounds---------------------------
 
1993/94     1,555   13,951   15,574       12,941   1,529   14,471   1,103
1994/95 1/  1,103   15,613   16,733       12,916   2,680   15,596   1,137
1995/96 2/  1,137   15,640   16,790       13,050   1,825   14,875   1,915
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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.
                                     
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        5.45  101.00    10.60    29.00   4.65
 
1993/94:
September      6.21  104.00    14.20    32.00   4.24
October        6.01  112.00    11.20    30.00   4.09
November       6.32  122.00    11.60    29.50   4.05
December       6.64  123.00    13.00    29.70   4.18
January        6.72  126.00    13.60    36.10   4.38
February       6.71   97.00    15.10     NA     4.61
March          6.73     NA     15.00     NA     4.64
April          6.57     NA     15.00     NA     4.60
May            6.77     NA     15.60     NA     4.43
June           6.72     NA     14.20     NA     4.25
July           5.92     NA     12.40     NA     4.28
August         5.58   89.00    12.60     NA     4.52
 
1994/95
September      5.47  101.00    10.70    30.60   4.54
October        5.30   96.00    10.50    28.60   4.49
November       5.36  107.00    10.60    25.90   4.51
December       5.41  104.00    10.30    25.80   4.71
January        5.47  101.00    10.60    25.70   4.75
February       5.40   97.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.15
April          5.55    NA      10.70     NA     5.10
May            5.56    NA      10.50     NA     4.93
June           5.68    NA      10.50     NA     5.13
July           5.90    NA      11.50     NA     5.10
August         5.83  100.00    11.40    30.70   5.16
 
1995/96
September      5.99   99.00    11.00    29.70   5.11
October        6.15   97.00    11.00    28.80   5.11
November       6.39  114.00    10.80    29.50   5.13
December1      6.71  111.00    10.80    30.80   5.12
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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    22.30   23.67  45.50  27.50 
1991/92       19.10    20.10   21.63  27.30  25.82 
1992/93       21.40    25.00   25.37  27.40  20.90 
1993/94       27.09    27.78   31.08  43.20  26.38 
1994/95       27.55    25.80   28.10  44.30  26.47 
                                                   
1993/94:                                           
October       22.96    24.79   26.33  40.20  22.25 
November      25.43    26.69   28.20  43.33  23.06 
December      28.27    30.39   32.11  43.17  26.93 
January       29.91    33.16   35.08  46.10  28.00 
February      28.85    29.96   33.68  46.12  29.89 
March         29.03    29.60   33.48  44.50  30.30 
April         27.90    29.06   33.00  43.40  29.63 
May           29.10    29.66   33.50  44.25  29.48 
June          27.60    27.55   31.34  43.75  29.43 
July          24.53    24.20   28.89  44.00  27.20 
August        25.38    23.71   28.13  45.00  25.02 
September     26.12    24.51   29.28  43.10  24.87 
                                                   
1994/95                                            
October       27.06    23.64   28.90  46.00  24.73 
November      29.84    24.85   29.40  50.88  24.75 
December      30.61    25.50   30.63  53.80  24.75 
January       29.04    26.41   29.25  50.25  28.01 
February      28.15    25.63   27.66  41.83  27.26 
March         28.33    26.41   27.97  41.00  28.17 
April         27.16    24.00   26.89  41.25  27.30 
May           26.00    24.24   26.34  40.25  26.42 
June          26.78    26.72   27.30  39.00  26.61 
July          27.60    28.25   28.69  39.13  27.38 
August        26.56    27.09   27.47  41.50  26.35 
September     26.21    26.50   27.41  41.30  25.93 
 
1995/96
October       26.57    28.12   27.49  42.50  26.05
November      25.41    26.88   26.25  41.63  25.54
December1     24.76    26.10   25.87  39.20  24.99
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1 Preliminary 2 Decatur 3 Beginning Oct 1995, 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
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
 
1993/94:
October     194.50  173.10   90.00  196.00  147.50
November    209.40  181.00   90.00  197.00  161.80
December    206.00  180.00   89.40  200.00  155.25
January     198.30  170.30   97.00  209.00  140.25
February    198.40  173.10   98.75  207.50  136.25
March       195.40  174.00    N/Q   198.75  127.20
April       188.90  166.25    N/Q   191.00  125.50
May         193.75  157.75  105.00  187.50  125.00
June        195.50  154.10  102.50  163.75  111.90
July        181.10  152.50   97.50  164.00  114.90
August      178.60  144.50   90.75  153.75  111.60
September   174.50  145.00   85.00  114.80   NA
 
1994/95
October     168.50  134.40   75.00  151.25  122.50
November    161.00  120.50   69.50  147.50  110.00
December    156.90  114.20   52.50  127.00   95.60
January     156.40  106.75   50.00  105.00   82.40
February    151.30   97.50   46.88  107.50   85.25
March       156.90  100.30   52.50  119.00   90.00
April       161.90   98.10   62.50  125.00   94.40
May         159.10   92.75   60.90  123.75   85.00
June        160.40  108.75   62.38  134.00   85.00
July        170.45  116.90   73.75  138.75   92.50
August      166.70  116.50   83.75  136.25   95.00
September   180.99  137.60    NA    142.00  112.50
October     193.90  153.25   82.88  132.50  131.00
November    204.10  165.00   99.00  175.00  151.67
December1   223.60  185.83  123.00  204.00  143.75
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
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