OIL CROPS OUTLOOK                                            May 13, 1999
May 1999, ERS-OCS-0599
             Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is issued monthly a year by the Economic Research 
Service, U.S. Department of Agriculture, Washington, DC 20036-5831.  Electronic
release only; no printed copies are available.   
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More Oilseed Price Declines Anticipated from Record 1999/2000
Supplies

This month, USDA forecast a record 1999/2000 global oilseed
production of 298.0 million metric tons, up 2 percent from
1998/99.  Weaker prices will slow growth in 1999/2000 foreign
oilseed production, which is projected up 0.6 percent to 208.4
million tons.  Rapeseed accounts for much of the increase in
foreign supplies.  Most of the expected increase in world oilseed
production is attributed to a rise in U.S. output, from 84.9
million tons to 89.7 million.  Although two-thirds of the U.S.
gain is associated with soybeans, larger acreages for cottonseed,
sunflowerseed, and canola are also contributing.

Midwestern farmers normally strive to plant corn before the
middle of May.  Corn yields tend to decline for later plantings,
as pollination gets delayed into a warmer and drier midsummer
period, and the shorter maturity period reduces kernel filling. 
Above normal rainfall since early April had stalled planting
progress throughout much of the Corn Belt.  Yet, by May 9, 55
percent of U.S. corn had been planted, up from 21 percent just 1
week earlier, and compared to the average 52 percent for this
date.  Most of the major producing States still have surplus to
adequate topsoil moisture, with corn planting progress still
behind in Missouri, Kansas, and Nebraska.  

If the wet pattern returns this month, 1999 soybean plantings
could exceed the March intentions of 73.1 million acres.  Further
shifting into soybeans would be conditional on sufficient soil
drying before mid-June, which would allow farmers to plant them
until their practical cutoff date.  As of May 9, just 12 percent
of soybeans had been planted, a figure very close to the 5-year
average of 11 percent.  Assuming a trend yield of 40.0 bushels
per acre on a harvested area of 72.0 million acres, 1999 soybean
production would total 2,880 million bushels.

While the steep soybean price drop expected this year will limit
U.S. farm returns, 1999/2000 domestic demand and exports should
benefit.  Cutbacks in foreign oilseed production next year will
also aid U.S. soybean and product trade.  Weak crush margins that
have depressed crushings to an estimated 1,560 million bushels in
1998/99 should somewhat improve next season, prompting a record
crush of 1,635 million bushels.  USDA also projects record
1999/2000 U.S. soybean exports of 930 million bushels, up from
the 1998/99 forecast of 770 million.  Policy changes will shift
the composition of China's imports next year toward more soybeans
versus soybean meal and soybean oil.

Despite the robust increases in domestic crush and exports, total
soybean supplies in 1999/2000 are expected to increase by 352
million bushels.  Stocks carried over from 1998/99 would be a
very large 430 million bushels, which in itself is enough to
blunt potential price rallies this summer from the weather. 
Ending stocks for 1999/2000 would accumulate to 595 million
bushels, surpassing the 1985/86 record.  This volume of U.S.
stocks would comprise about 57 percent of the world total,
compared with the current season forecast of 45 percent.

The soybean surplus will considerably depress 1999/2000 prices. 
Under similar circumstances in the past, the soybean loan rate
would provide an effective floor for U.S. farm prices.  The loan
rate in 1985/86 was $5.02 per bushel and the season average price
was $5.05, with the highest stocks-to-use ratio ever.  But this
situation no longer applies now that the soybean marketing loan
allows the market to clear at a price below the loan rate, thus
preventing the accumulation of Commodity Credit Corporation (CCC)
stocks.  Next year's U.S. soybean farm price is expected to
average $3.95-$4.75 per bushel, down from $5.05 this season. 
Nominal prices this fall could be the lowest since 1972.  At this
price range, farmers would be able to redeem loans at their
posted county price.  They would then receive the county loan
rate (based on the $5.26 national average), with loan deficiency
payment rates likely nearing $1.00 per bushel.  Farm income
support in the form of loan deficiency payments could reach $2-$3
billion in 1999/2000 on soybeans alone.

This season's plunge in soybean meal prices will likely bottom
out in 1999/2000.  However, bargain prices will hover near the
1998/99 average of $135 per short ton, with the 1999/2000 average
predicted at $120-$140.  Firming meal prices and lower soybean
prices will help normalize returns for U.S. crushers.  World
soybean meal imports should improve and U.S. exporters will be
better positioned to take advantage.  In particular, Brazil's
crushing industry will suffer the most from the fallout of the
Brazilian devaluation and ample Argentine processing capacity. 
U.S. soybean meal exports are forecast to rise from 6.8 million
short tons in 1998/99 to 8.2 million.  Although U.S. poultry
producers will continue to benefit from cheap feed, hog producers
are scaling back production.  Growth in domestic soybean meal
disappearance will moderate, increasing from the revised 1998/99
forecast of 30.0 million tons to 30.7 million next year.

A slightly lower oil extraction rate will moderate the increase
in 1999/2000 soybean oil production, but output should still
reach a record 18.4 billion pounds based on the high crush rate. 
New signs of accelerating Asian palm oil output and world
rapeseed increases will temper global soybean oil trade.  U.S.
1999/2000 exports are anticipated to reach 2,300 million pounds,
down slightly from the revised 1998/99 forecast of 2,450 million. 
The relative strengthening of returns from soybean meal versus
soybean oil means that carryout oil stocks will likely
accumulate.  Soybean crush driven more by the meal market will
push 1999/2000 yearend oil stocks to 1,795 million pounds, up
from 1,295 million this season.

USDA projects the 1999/2000 U.S. average soybean oil price at
18.0-21.0 cents per pound, compared to 21.0 cents in 1998/99.  In
the last 2 months, central Illinois soybean oil prices have
greatly fluctuated between 18 cents and 19.75 cents per pound. 
Wet weather has been responsible for price movements in both
directions.  Price rallies have been linked to the Argentine
harvest delays, while spring planting delays have boosted
estimates of U.S. soybean acreage and potential oil supplies. 

Argentine Harvest Problems Lift World Vegetable Oil Prices

Like last year, Argentina's soybean harvest has been hampered by
very wet weather that began in March and has continued.  By May
7, just 45 percent of Argentine soybeans had been harvested.  The
delays compound the difficulties of second crop soybeans, which
were hurt by a hot and dry period in mid-February.  Additional
damage from a hard frost in mid-April affected northern
production areas.  USDA reduced its forecast of 1999 Argentine
soybean output to 18.5 million metric tons from 18.7 million last
month.  The problems recently boosted soybean oil prices, but a
very brisk Argentine crush is still expected to lift 1998/99
soybean oil exports to 2.65 million tons.  Argentine soybean meal
exports, now forecast at 12.4 million tons, would gain at the
expense of U.S. trade.

The heavy rains and frost that threatened Argentine soybean
producers also afflicted other oilseed crops.  Heavy damage to
cotton fields cut Argentine cottonseed output by 22 percent this
month to 430,000 tons.  Flooded sunflower fields were abandoned
and yields and seed quality were damaged by excess rain before
harvest.  Further damage is limited as the Argentine
sunflowerseed harvest is nearly finished now.  Although the
Argentine sunflowerseed production estimate was reduced this
month from 6.7 million tons to 6.5 million, it still represents a
record crop.  Demand for Argentine sunflowerseed will be very
robust, particularly in Europe.  Argentine 1998/99 exports,
expected to total 835,000 tons, should almost double last year's
volume.

As it did in Argentina, adverse late season weather also trimmed
estimates of Paraguay's soybean production to 3.1 million tons. 
Better-than-average yields would still lead to a record crop,
however.  Bolivia's 1999 soybean crop was cut from 1.25 million
tons to 1.1 million based on lower harvested area, although there
are also reports excessive rain contributed to the reduction. 
Brazil's soybean harvest is virtually complete, with most of the
remaining fields in the extreme south.  Brazilian farm marketings
are well above average, and current soybean export registrations
are about double their record setting pace from a year ago. 
Soybean exports for 1998/99 were raised 150,000 tons to 9.65
million, offseting downward revisions for Paraguayan and Bolivian
exports.

World prices for coconut oil have also risen, with the Rotterdam
price exceeding $900 per ton, compared to the April 1998 average
of $618.  Philippine copra production has fallen substantially
because drought in early 1998 reduced the size of the coconuts. 
Precipitation has been above average since last October, but
copra output is still depressed because of the lag in the harvest
cycle.  The country's two largest coconut oil producers
(accounting for over half of the national output) have
temporarily closed because of the supply shortage.  Consequently,
Philippine coconut oil exports have plunged and are expected down
46 percent for 1998/99.  Similar supply tightness in Indonesia,
the second-largest producing nation, cannot help the situation. 
The major importers (European Union and United States) are likely
to shift to increasing supplies of palm kernel oil, coconut oil's
chief substitute for lauric acid.  U.S. 1998/99 imports of
coconut oil were forecast down this month to 895 million pounds,
compared to 1,440 million in 1997/98.

Rapeseed is India's second-largest oilseed, after peanuts. 
Harvested in February, rapeseed is the major domestic oil source
prior to the peanut and soybean harvests in September.  Most
Indian rapeseed is produced in the northern and northeastern
states.  While yields this year have been normal in the leading
rapeseed state of Rajasthan, less favorable weather in Uttar
Pradesh, the second ranked state, has held down yields.  India's
1999 rapeseed crop was forecast 0.3 million tons lower to 5.8
million, although it would still be better than the 4.9-million-
ton 1998 crop.  Rapeseed crush would be reduced an equivalent
amount, thus cutting rapeseed oil production.  However, Indian
imports of rapeseed oil appear less robust than earlier forecast,
so soybean oil imports were predicted higher to 400,000 tons. 
Indian palm oil demand should also pick up soon as prices begin
to ease.

The recent rally in vegetable oil prices may not be long-lived,
however.  Malaysian palm oil production surged 17 percent in
March from a year earlier, and preliminary reports of April
output are just as high.  This heralds an upswing in the
production cycle after drought in the last 2 years.  Malaysian
palm oil prices have dropped, although they are still at a
premium to soybean oil.  USDA raised its forecast of 1998/99
Malaysian output from 8.75 million tons to 8.9 million and
exports from 7.4 million to 7.5 million.

Similarly, increasing tree maturity and more favorable weather in
Indonesia prompted raising the 1998/99 palm oil production
forecast from 5.5 million tons to 5.8 million.  A more stable
currency and political environment will also aid palm oil
exports.  Indonesian 1998/99 exports were forecast up to 2.7
million tons, 15 percent higher than the previous season. 
Traders anticipate a reduction in the 40-percent export tax on
crude palm oil following the June 7 general election. 
Indonesia's Government has a commitment with the International
Monetary Fund to reduce the tax to 10 percent by yearend.

The next release of the Oil Crops Outlook is scheduled at 4:00
p.m. ET Monday, June 14, 1999.  The report may be accessed at
http://usda.mannlib.cornell.edu/ or via the ERS website at
http://www.econ.ag.gov.

Information Contacts:
Mark Ash--Soybeans, minor oilseeds, oils   (202) 694-5289    
mash@econ.ag.gov
Robert Skinner--Cottonseed, peanuts        (202) 694-5313 
skinner@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  residual        stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1997/98    132    5    2,689    2,826     1,597    870    158    2,626    200
1998/99 1/ 200    6    2,757    2,963     1,560    770    203    2,533    430
1999/00 2/ 430    5    2,880    3,315     1,635    930    155    2,720    595
------------------------------------------------------------------------------
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--------------------------

1997/98     210    56    38,171    38,437     28,889   9,330   38,219    218
1998/99 1/  218    50    36,807    37,075     30,000   6,800   36,800    275
1999/00 2/  275    50    38,825    39,150     30,700   8,200   38,900    250
------------------------------------------------------------------------------
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
------------------------------------------------------------------------------

         -------------------------- Million pounds---------------------------

1997/98     1,520   60   18,143   19,724     15,264   3,077   18,341   1,382
1998/99 1/  1,382   58   17,605   19,045     15,300   2,450   17,750   1,295
1999/00 2/  1,295   55   18,395   19,745     15,650   2,300   17,950   1,795
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 4--Cottonseed:  U.S. supply and disappearance
------------------------------------------------------------------------------
                   Supply                          Disappearance 
        -------------------------------- ------------------------------------
Year                                                             
begin.     Beg.   Im-   Produc-  Total     Crush   Ex-   Other   Total   End.
Aug. 1   stocks  ports   tion                     ports                 stocks
------------------------------------------------------------------------------
         -------------------------- 1,000 Short tons--------------------------

1997/98     523   96    6,935    7,553     3,885    149   2,957   6,990    563
1998/99 1/  563  155    5,497    6,215     2,800     65   3,100   5,965    250
1999/00 2/  250   15    6,955    7,220     3,350    130   3,165   6,645    575
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.


Table 5--Cottonseed 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---------------------------

1997/98      26     0     1,767    1,793     1,596     109     1,705     88
1998/99 1/   88     0     1,260    1,348     1,280      45     1,325     23
1999/00 2/   23     0     1,510    1,533     1,425      70     1,495     38
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 6--Cottonseed 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---------------------------

1997/98        66   0.1   1,223    1,289      1,003     208    1,211      79
1998/99 1/     79  66.4     895    1,040        925      50      975      65
1999/00 2/     65  10.3   1,070    1,145        965     110    1,075      70
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 7--Peanuts:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     Supply                         Disappearance 
           -------------------------  ----------------------------------------
Year 
begin.     Beg.   Im-  Produc- Total  Dom.   Crush  Seed&  Ex-  Total     End.
Oct. 1     stocks ports tion          Food         resid. ports         stocks
------------------------------------------------------------------------------

            ----------------------- Million pounds---------------------------

1997/98       795  141  3,539  4,475   2,099   544   303  681    3,627     848
1998/99 1/    848  152  3,931  4,932   2,140   717   325  650    3,832   1,100
1999/00 2/
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 8--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
1996/97        7.35  126.00    11.70    28.10   6.37
1997/98        6.47  121.00    11.60    28.30   5.81

1997/98
September      6.72  115.00    11.20    29.70   5.73
October        6.49  119.00    10.60    27.90   5.78
November       6.86  124.00    11.10    25.00   5.71
December       6.72  122.00    11.10    26.90   5.72
January        6.69  121.00    11.10    30.70   5.82
February       6.57  107.00    11.80     NA     6.27
March          6.40   NA       12.10     NA     6.26
April          6.26   NA       12.70     NA     6.23
May            6.26   NA       13.80     NA     6.33
June           6.16   NA       14.40     NA     6.17
July           6.14   NA       15.80     NA     6.17
August         5.43  113.00    14.40     NA     5.45

1998/99
September      5.25  113.00    11.40    26.80   5.09
October        5.18  120.00    10.70    26.30   4.86
November       5.40  133.00    10.50    21.50   4.97
December       5.37  138.00    10.80    24.00   5.01
January        5.32  139.00    11.40    25.50   5.06
February       4.80  141.00    12.20      NA    5.05
March          4.61    NA      10.70      NA    4.95
April 1/       4.59    NA      10.90      NA    4.95
--------------------------------------------------------
1/ Preliminary.  NA = Not available.

Table 9--Vegetable oil prices
---------------------------------------------------
                      Cotton-  Sun-       
Marketing    Soybean   seed   flower Peanut  Corn  
 year         oil 2/  oil 3/  oil 4/ oil 5/  oil 6/ 
---------------------------------------------------
                     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  25.24 
1996/97       22.50    25.58   22.64  43.70  24.05 
1997/98       25.80    28.85   27.00  49.00  28.94
                                                   
1997/98
October       24.31    28.47   24.51  49.63  25.20
November      25.73    29.11   26.41  51.00  26.25
December      25.08    26.78   26.36  51.25  26.28
January       25.09    27.69   25.75  51.60  26.04
February      26.51    29.37   25.91  51.00  27.31
March         27.09    30.46   26.51  51.00  28.50
April         28.10    32.47   28.50  50.00  30.93
May           28.28    33.13   31.06  47.20  33.20
June          25.83    30.22   28.40  45.50  32.82
July          24.88    29.40    NA    44.00  31.52
August        23.99    30.11    NA    43.75  29.93
September     25.13    33.26    NA    43.88  29.25

1998/99
October       25.21    33.99   NA     45.40  29.46
November      25.20    34.16   NA     45.00  29.65
December      23.99    33.40  26.70   44.25  29.88
January       22.88    31.72  23.41   44.00  29.15
February      19.96    28.21  19.86   39.75  26.58
March         18.54    26.27  19.12   34.75  23.01
April 1/      18.78    24.39  19.58   35.20  23.08
------------------------------------------------------
1/ Preliminary 2/ Decatur 3/ PBSY Greenwood MS
4/ Minneapolis 5/ Southeast mills 6/ Chicago

Table 10--Oilseed meal prices
---------------------------------------------------
            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  159.00
1996/97     262.00  192.00  110.60  232.00  158.75
1997/98     185.30  144.05   84.20  209.60  110.00

1997/98
October     229.30  189.10   96.90  210.00  140.60
November    245.30  189.10   88.10  210.00  161.25
December    222.50  190.50  100.00  210.00  150.50
January     202.85  153.10   90.00  210.00  130.00
February    192.75  139.10   75.87  210.00  121.25
March       174.20  128.70   72.60  210.00  116.25
April       162.50  116.25   64.90  210.00  102.50
May         160.00  105.00   66.90  210.00   96.25
June        168.55  126.00   88.35  210.00  100.00
July        183.40  145.65   97.50  210.00  117.50
August      146.25  130.30   85.00  207.50  101.00
September   135.80  115.60    NA    205.00   90.00

1998/99
October     135.70  106.50   50.00  161.00   83.75
November    144.45  107.90   50.00  100.00   92.50
December    146.40  119.75   80.90  103.75  102.50
January     138.80  110.60   77.50  105.00   95.00
February    132.30  101.25   73.75  102.50   87.25
March       133.00  106.90   70.00   91.25   83.00
April 1/    134.50  110.95   70.00   94.50   82.50
-----------------------------------------------------------------------
1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills

END_OF_FILE