OIL CROPS OUTLOOK                                            October 15, 1996
            Approved by the World Agricultural Outlook Board
--------------------------------------------------------------------------------
OIL CROPS OUTLOOK is issued monthly by the Economic Research Service, U.S.
Department of Agriculture, Washington, DC 20005-4788.  OCS-1096.  
--------------------------------------------------------------------------------
 
SOYBEAN PRICES SAG ON LARGER CARRYIN STOCKS, EXPANDING HARVEST
 
The 1996 soybean harvest is picking up momentum.  As of October 6, 17 percent
of the Nation's soybean acreage had been harvested, behind the 5-year average
of 31 percent.  Northern frosts in early October accelerated the dropping of
soybean leaves and led to greater harvesting.  Many of the vulnerable late-
developing areas in the eastern Corn Belt escaped serious damage and continued
to increase their pod weights and maturity.  Three-fourths of U.S. soybeans
had dropped leaves by October 6.  Freezes will have little damage beyond this
stage.  Even with the late plantings and development, the national average
yield is projected at 37.0 bushels per acre, the third highest on record.
 
As of October 11, USDA projected total 1996 production at 2,346 million
bushels, the second-largest crop on record.  The forecast was 76 million
bushels higher than the September forecast.  Much of this month's production
increase is due to improved forecasts for Illinois, Indiana, and Ohio. 
Western Corn Belt yields are excellent.  Nebraska farmers will harvest a
record volume of soybeans.  Southern soybeans are also yielding well,
including a record average yield in Louisiana.  The additional supplies pushed
up expected 1996/97 ending stocks to 195 million bushels from 160 million a
month ago.
 
Soybean prices tumbled in the last month as the crop approached maturity
without a serious frost threat.  The accelerating harvest and an upward
revision in beginning stocks also moved the market lower.  A price range for
1996/97 of $6.50-$7.40 per bushel is forecast this month.  The plunge in
prices has stirred up more export sales, particularly to China.  As of October
3, China had already purchased 125,000 metric tons of soybean meal from the
United States, compared to 90,000 tons for all of 1995/96.  Total U.S. soybean
exports were projected higher to 850 million bushels based on larger supplies.
 
The surge of export sales of soybean meal for October-November delivery
suggests a robust crushing pace this fall.  USDA forecasts 1996/97 domestic
crush at 1,375 million bushels, 5 million bushels above last season.  But the
relatively small old-crop stocks and later-than-average new crop harvest have
complicated the operations of several soybean crushers, which should buoy
short term prices somewhat, especially if farmers are slow to market the new
crop.  Smaller world rapeseed, sunflowerseed, and cottonseed crops and the
currently slender South American soybean supply may also soon favor a firming
of prices.
 
LARGER SUPPLIES, LOWER PRICES MOVE MORE U.S. SOYBEAN MEAL EXPORTS
 
A larger crush lifts 1996/97 soybean meal production to 32.7 million short
tons.  The greater availability of supplies lowers the expected average price
range to $225-$245 per ton, from $245-$265 last month.  Exports of U.S.
soybean meal are forecast 250,000 short tons higher this month to 6.0 million. 
Foreign trade is likely to be strong this fall and winter, although attractive
oilseed prices should elicit substantial competition from South American
producers next year.
 
Despite a 4-percent decline in the September hog inventory from last year, the
outlook for U.S. hog feeding is improving.  The reduced swine herd, excess
packing capacity, enduring pork export demand, and smaller beef supplies are
keeping pork prices firm.  On the other hand, lower corn prices will help
increase feed intakes and raise animal weights, which should also mean greater
soybean meal consumption.  Producers anticipated reducing their farrowings
just 0.5 percent this fall and 1.4 percent for winter from a year ago, but may
yet expand them given expectations for good fall feed grain harvests.
 
Poultry production is also expected to resume its growth.  Since August,
hatching of broiler eggs and placements have risen from a year ago.  Rapid
export growth to China, Russia, and Mexico is maintaining high broiler prices. 
Lower corn prices will also increase feed intake (including soybean meal) and
produce larger poultry slaughter weights.  Forecast 1996/97 domestic
disappearance of soybean meal was raised 200,000 short tons from last month to
26.75 million.
 
SUPPLIES OF SOYBEAN OIL ACCUMULATE
 
U.S. soybean oil production for 1996/97 is expected at 15.4 billion pounds,
225 million pounds higher than last month's forecast.  Greater supply
availability will promote domestic and foreign demand in 1996/97.  Projected
U.S. export demand was raised to 1,700 million pounds.  But the higher use
will not be enough to prevent 1996/97 soybean oil ending stocks from building
to 2,235 million pounds.
 
Prices for soybean oil continue to weaken as oilseed supplies and oil stocks
mount.  The September average price dipped below 24 cents per pound.  The
average price for 1996/97 is expected to range from 22.5 to 24.5 cents per
pound, down from the September range of 22.5-25.5 cents.  Coupled with rising
soybean meal prices, soybean oil has sunk to 30 percent of total soybean
value.
 
ACTIVE CHINESE BUYING PROPELS A BULLISH WORLD PROTEIN MEAL MARKET
 
China has recently stepped up its imports of soybean meal, despite just
completing its own soybean harvest.  A smaller soybean area harvested is
expected to slightly reduce production from last year but consumption for
animal feeds will soar.  Smaller Chinese cottonseed and rapeseed crops will
also contribute to higher import needs.  USDA projects 1996/97 Chinese soybean
meal imports at 1.3 million metric tons, up from 1.1 million in 1995/96 and
near zero prior to that.  Once a significant exporter, China's meal exports
are anticipated to fall to just 300,000 tons this year as domestic needs
prevail.  Both U.S. and Argentine soybean crush were projected higher this
month on account of expanding Chinese meal demand.  The business will help
Argentina export a record 8.2 million tons of soybean meal this season.
 
Soybean production in Mexico is forecast down from last month to 162,000 tons. 
A severe drought and declining acreage are yielding the smallest Mexican
soybean harvest in almost 30 years.  Imports of soybeans by Mexico are
projected 100,000 tons higher this month to 2.55 million tons.  A larger
Mexican cottonseed supply will offset some of the drop in oilseed production,
though.
 
Thailand's 1996/97 soybean imports are projected to climb to 500,000 tons.
Recent flooding has damaged domestic production.  The rapidly growing Thai
livestock sector is responsible for rising imports, mostly from the United
States.
 
EU rapeseed production is up 200,000 tons from last month, based mostly on an
increase in expected French output.  Projected French sunflowerseed production
is up 120,000 tons this month.  Italian soybean and sunflowerseed production
are up, as well.  A large drop in rapeseed supplies, low vegetable oil prices,
and ample oil stocks will reduce EU oilseed crushings in 1996/97, helping to
shrink the oil surplus.  On the other hand, reduceduced crushings would also
exacerbate the EU protein meal situation, keeping prices very high relative to
feed wheat.  These factors act to reduce the October forecast for 1996/97 EU
soybean and soybean meal imports to 13.7 million tons (down 4 percent) and
16.1 million tons (down 1 percent), respectively.  More normal weather will
also produce a much larger Spanish sunflowerseed harvest, which will sharply
cut EU imports of sunflowerseed.
 
SMALLER HARVESTED AREA SCALES BACK U.S. SUNFLOWERSEED HARVEST
 
Although ahead of the very late 1995 pace, a wet spring again delayed Northern
Plains sunflower planting.  Good growing weather resulted in mostly good to
excellent crop conditions throughout the year.  The sunflower harvest is
lagging, as of October 6, with 5 percent complete in North Dakota and South
Dakota, compared to an average for the date of 12 percent.  The average yield
of 1,255 pounds per acre was up 5 percent from 1995.
 
Given this yield and a 20-percent reduction in acreage harvested (to 2.7
million acres), sunflowerseed production is expected to fall to 3,369 million
pounds in 1996.  Many producers opted to increase wheat planting at the
expense of sunflowers, with the severest cut occurring in Minnesota.
 
The Grain Stocks report found September 1 carryin stocks of sunflowerseed at
447 million pounds.  This was nearly twice as high as a year earlier.  Total
1996/97 supplies are forecast at 3.9 billion pounds, down from 4.3 billion
last season.  Slightly lower prices for the vegetable oil sector, including
sunflower oil, will trim domestic sunflowerseed crush about 2 percent to 1.9
billion pounds.  A much larger sunflowerseed harvest in the EU, the principal
export market for the United States, will cut U.S. seed exports to 415 million
pounds.  Although total seed demand is expected to fall, the larger supply
reduction will shrink year ending stocks to 245 million pounds.  
Sunflowerseed prices should remain relatively stable compared to 1995/96.
 
SOYBEAN PRODUCTION REVISED DOWN FOR 1995/96 BASED ON HIGHER CARRYOUT
 
The recent Grain Stocks report found September 1 U.S. soybean stocks of 183
million bushels, 13 million above last month's forecast.  Given the higher
than expected carryout, USDA revised 1995/96 soybean production up 25 million
bushels to 2,177 million.  The U.S. average yield improved from 34.9 bushels
per acre to 35.3 bushels.  Iowa's average yield, which went from 43 to 44
bushels per acre, represented the largest change in production.  With the
unexpected increase in supply, soybean prices fell sharply after the Grain
Stocks report was released.
 
Crush concluded 1995/96 at 1,370 million bushels and exports are expected to
tally 845 million.  Total soybean disposition for the season would be 2,334
million bushels, slightly down from the 1994/95 record.  A substantial upward
revision in soybean oil stocks ending July was a result of changes in the
reporting system.  The current level of 2.1 billion pounds is the highest
since early 1993.  
 
The next Oil Crops Outlook is scheduled for 4:00 pm ET Wednesday, November 13.
 
******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
******************************************************************************
 
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 & resid.         stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------
 
1994/95     209    6    2,517    2,731     1,405    838    153    2,396    335
1995/96 1/  335    5    2,177    2,517     1,370    845    119    2,333    183
1996/97 1/  183    5    2,346    2,535     1,375    850    115    2,340    195
------------------------------------------------------------------------------
1/ Forecast.
 
Table 2--Soybean meal:  U.S. supply and disappearance
------------------------------------------------------------------------------
                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.      Beg.    Produc-   Total      Domestic   Ex-     Total    End.
Oct. 1    stocks     tion                           ports           stocks
------------------------------------------------------------------------------
 
         ---------------------------1,000 short tons--------------------------
 
1994/95     150     33,265    33,479       26,538   6,717   33,256    223
1995/96 1/  223     32,557    32,860       26,800   5,860   32,660    200
1996/97 1/  200     32,685    32,975       26,750   6,000   32,750    225
------------------------------------------------------------------------------
1/ Forecast.
 
Table 3--Soybean oil:  U.S. supply and disappearance
------------------------------------------------------------------------------
                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.       Beg.   Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks    tion                         ports            stocks
------------------------------------------------------------------------------
 
         -------------------------- Million pounds---------------------------
 
1994/95     1,103   15,613   16,733       12,916   2,680   15,596   1,137
1995/96 1/  1,137   15,263   16,500       13,450   1,040   14,490   2,010
1996/97 1/  2,010   15,400   17,485       13,550   1,700   15,250   2,235
------------------------------------------------------------------------------
1/ 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.
                                     
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       6.80  106.00    11.35    29.30   5.25
 
1994/95
September      5.47  101.00    10.70    30.60   4.55
October        5.30   96.00    10.50    28.60   4.52
November       5.36  107.00    10.60    25.90   4.52
December       5.41  103.00    10.60    25.80   4.72
January        5.47   95.00    10.50    25.50   4.76
February       5.40   70.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.13
April          5.55    NA      10.70     NA     5.10
May            5.56    NA      10.60     NA     4.91
June           5.68    NA      10.70     NA     5.03
July           5.90    NA      11.50     NA     5.11
August         5.83  100.00    11.40    30.60   5.21
 
1995/96
September      5.98  100.00    11.00    29.70   5.11
October        6.15   99.00    11.00    28.60   5.11
November       6.40  114.00    10.80    29.50   5.17
December       6.76  116.00    10.60    28.60   5.03
January        6.77   98.00    11.00    29.80   5.27
February       7.01  120.00    11.50     NA     5.18
March          7.00    NA      11.90     NA     5.28
April          7.43    NA      12.50     NA     5.31
May            7.69    NA      13.60     NA     6.03
June           7.41    NA      14.30     NA     5.88
July           7.62    NA      13.60     NA     6.19
August         7.82  118.00    12.70     NA     6.15
 
1996/97
September1     7.85  134.00    12.10    28.10   6.28
--------------------------------------------------------
1 Preliminary.
 
Table 5--Vegetable oil prices
---------------------------------------------------
                      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 
                                                   
1994/95                                            
October       27.06    27.81   28.90  46.00  24.73 
November      29.84    30.72   29.40  50.88  24.75 
December      30.61    31.83   30.63  53.80  24.75 
January       29.04    28.70   29.25  50.25  28.01 
February      28.15    29.95   27.66  41.83  27.26 
March         28.33    27.14   27.97  41.00  28.17 
April         26.30    27.61   26.89  41.25  27.30 
May           26.00    27.51   26.34  40.25  26.42 
June          26.78    30.04   27.30  39.00  26.61 
July          27.60    30.63   28.69  39.13  27.38 
August        26.56    30.26   27.47  41.50  26.35 
September     26.26    28.61   27.41  41.30  25.93 
 
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        24.00    27.81   24.90  42.60  24.33
September1    23.90    26.13   24.95  40.80  
-------------------------------------------------------------------------
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
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
 
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
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 1 276.35  193.13  125.60  192.80  167.50
----------------------------------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
END-OF-FILE