OIL CROPS OUTLOOK                                            March 12, 1999
March 1999, ERS-OCS-0399
             Approved by the World Agricultural Outlook Board
---------------------------------------------------------------------------
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 published copies are available.   
---------------------------------------------------------------------------
Abundant World Soybean Supplies Drive Down Prices

At 158.1 million metric tons, global 1998/99 soybean production
is just 0.7 percent higher than 1997/98 production, but is 20
percent larger than 1996/97 output.  Consecutive bumper harvests
by all the major growing nations are pushing world ending soybean
stocks to a record 27.5 million tons.  The previous high was 23.7
million tons in 1994/95.

Nearly ideal weather conditions are expected to push Brazil's
1999 soybean output to 31.0 million tons, compared to last
month's forecast of 30.5 million.  The new estimate would be just
under the record 1998 crop of 31.5 million tons.  Since yields
are seen equal to last year's, the reduction from last year is
entirely due to 200,000 fewer hectares harvested.  Farmers have
recently begun soybean harvesting, with the majority headed
directly for export.  About 8 percent of Brazilian soybeans had
been reported harvested by March 5, compared to a 5-year average
of 9 percent.

With smaller than expected offtake in 1997/98, the estimate of
1998/99 Brazilian carryin stocks was increased this month. 
Larger total supplies raise the forecast for 1998/99 Brazilian
exports to 9.5 million tons, although some of the larger supplies
merely add to carryout stocks.  Fears of further price erosion
(if the real recovers) and a reimposition of an export tax on
soybeans are favoring shipments as early as possible.  As of
February 28, Brazilian export registrations were 5.1 million
metric tons, compared to 1.5 million a year earlier.  And
Brazilian soybean exports this year should be accelerated by the
50-percent increase in shiploading capacity at the Port of
Paranagua, the nation's leading shipper of soybeans abroad.  The
outlook for Brazilian soybean meal exports is expected to improve
as well.  Although 1998/99 soybean meal exports would still be
well below the 1995/96 record of 11.9 million tons, the 11.0-million
-ton forecast would surpass all other years.  Brazil's currency 
devaluation is promoting expansion of poultry exports,
so 1998/99 domestic meal consumption may stabilize around last
year's 5.9 million tons.

The 1999 Argentine soybean crop was forecast higher again this
month to 19.2 million tons.  The new Argentine crop would equal
the record 1998 harvest, which was estimated 0.5 million tons
higher than the previous estimate based on usage data.  As in
Brazil, ample rains have supported record Argentine yields. 
Improvements in genetics and production practices have also
enhanced productivity.  Reportedly 60-70 percent of Argentina's
soybeans were planted using glyphosate-tolerant varieties, which
offer farmers better weed control at a lower cost.  The increase
in stocks carried over from 1997/98 and the huge new crop swells
this month's Argentine crush forecast 1 million tons to an all-time 
high of 16 million.  Soybean meal exports are expected to
rise to 12.2 million tons, 19 percent greater than the 1997/98
record.

As Argentine and Brazilian processing expands, the EU is expected
to substitute more imports of soybean meal for soybeans.  EU
1998/99 soybean imports were forecast down to 15.75 million tons,
while soybean meal imports were raised an equivalent amount to
17.8 million tons.

Higher Chinese domestic production of peanut meal and soybean
meal means that fewer soybean meal imports are needed there. 
Projected 1998/99 imports of soybean meal by China dropped to 3.5
million tons from 3.9 million in February and 4.2 million in
1997/98.  Chinese soybean imports for crushing were also trimmed
150,000 tons from last month's forecast of 3.6 million.

Very Large U.S. Soybean Carryout Predicted for 1998/99

Weaker foreign and domestic demand raised expected U.S. 1998/99
ending soybean stocks 60 million bushels from the February
forecast to 470 million.  This carryout would be the highest
since the 1985/86 record of 536 million and represents a dramatic
reversal from the 1997/98 carryout of 200 million bushels.

Rising competition in soybean meal and oil markets has taken the
steam out of U.S. soybean crushing.  Although oil and meal
extraction rates have been excellent, low product prices have
made the profitability of crushing difficult to sustain.  For
this time of year, the spot spread between soybean prices paid by
processors and the value of products has not been this small
since 1989.  Projected U.S. soybean meal exports were sharply
scaled back to 7.0 million short tons, compared to last month's
7.9-million-ton forecast.  A relatively mild winter has tempered
domestic soybean meal disappearance, which is expected to total
29.8 million tons in 1998/99.  Thus, domestic 1998/99 crush is
expected to drop to 1,560 million bushels, down 30 million from
last month's forecast.

U.S. soybean exports for 1998/99 were also forecast lower this
month to 780 million bushels from the February forecast of 810
million bushels and the 1997/98 volume of 870 million.  One
reason that U.S. shipments have failed to keep pace with last
season is that no exports have been made to Brazil and Argentina,
which together imported 48 million bushels in late 1997.  With a
few exceptions, U.S. export shipments to most other destinations
are down slightly from a year ago.  Most significantly, soybean
shipments to the EU have lagged the 1997/98 pace and there are
few outstanding export sales to catch up before South American
supplies flood the world market.

It is fairly typical to see soybean prices weaken in February as
deliveries by U.S. farmers increase and South American supplies
near harvest.  This year, the central Illinois cash soybean price
has dropped about $1.25 per bushel since early December.  A
substantial price recovery is unlikely to occur  before this
summer, and is conditional on poor U.S. growing conditions.  USDA
forecasts the 1998/99 average farm price at $4.95-$5.15, down
from $5.00-$5.40 a month ago.  With less support from foreign
buyers, domestic soybean meal prices also continued to slide, to
an average $132 per short ton in February.  USDA forecasts a
lower 1998/99 average soybean meal price at $125-$135 per ton,
compared to $130-$145 last month.

Vegetable Oil and Animal Fats Prices Plunge on Growing Supplies,
Weak Demand

While huge oilseed supplies are rapidly approaching the market,
global import demand has waned.  A wave of contract defaults by
some major Asian importers (as they renegotiate to take advantage
of diving prices) has been the most recent event to shake the
fats and oils markets.  The monthly average central Illinois
soybean oil price declined sharply from 22.9 cents per pound to
under 20 cents in February.  With the price around 18 cents in
early March, this is a one-fifth reduction since last November. 
Expected record 1998/99 U.S. sunflower oil production reduced
Minneapolis prices from 23.4 to 19.9 cents per pound in February. 
Corn oil prices dropped from 29.2 cents per pound in January to
26.6 cents in February.  Cottonseed and peanut oil prices fell
more than 3 cents per pound, although both maintained a large
premium relative to soybean oil.  Heavy slaughter rates and
pressure from vegetable oils cut February average prices for
edible tallow and lard (basis Chicago) to 14.4 and 13.8 cents per
pound, respectively, from January's 16.8 and 16.7 cents.  For
1998/99, the soybean oil price is now expected to average 21.0-23.0
cents per pound, down from last month's forecast of 23.5-25.0 cents.

There are several reasons for the abundance of oil supplies. 
From the beginning of the Argentine marketing year in April 1998
to January 1999, Argentine crushers increased soybean oil output
54 percent from the same period a year earlier.  Virtually all
Argentine oil production is exported.  Likewise, Brazil's soybean
oil production increased 14 percent.  These supplies added to a
relatively brisk U.S. crushing pace last fall.  The now apparent
bumper oilseed harvests in Argentina and Brazil and expectations
for an increase in U.S. oilseed plantings this year are weighing
heavily on prices.  Greater winter rapeseed plantings in the EU,
China, and India are also contributing to oil price weakness, as
has the emergence of Australia as a major world producer. 
Forecasts for a rebound in Malaysian and Indonesian palm oil
production by year's end loom large on the horizon.  World
vegetable oil production is projected 4.4 percent higher in
1998/99 to 80.3 million tons.

The relative inactivity of China in the vegetable oil market has
also taken a toll on prices.  China's imports of vegetable oil
have been sluggish partly because domestic oilseed production was
much better than previously thought.  Based on official crop
estimates, USDA raised the 1998 Chinese peanut crop to 11.7
million metric tons from the previous estimate of 10.2 million. 
Additional peanut crushing would raise domestic oil supplies by
160,000 tons.  Revisions in 1998 soybean and cottonseed
production from 13.5 million tons to 13.8 million and from 7.8
million to 7.9 million, respectively, also added to oil supplies. 
And, USDA forecast higher Chinese rapeseed imports in 1998/99. 
Prospects for China's 1999 crops also look good.  Harvesting of
China's rapeseed will begin in May, and planted area is thought
to be much larger and in better condition than last year, when
the crop totaled 8.3 million tons.  Domestic rapeseed oil
supplies would be larger, further limiting import requirements. 
Consequently, China's soybean oil imports for 1998/99 were
projected down 100,000 tons this month to 1.65 million, about
equal to 1997/98 imports.

In spite of the current bleak situation, conditions are
developing for a near term resurgence in oil import demand and
prices.  Malaysian palm oil production has retreated to its
normal seasonal low early in the calendar year, leading to a
cutback in recent exports.  And, despite a reduction in the
Indonesian export duty on palm oil, producers still profit more
by selling to the domestic market.  Internal stocks remain high,
so 1998/99 Indonesian exports are no longer expected to exceed
the 1997/98 volume.  World prices for soybean and sunflower oils
are now at a substantial discount to palm oil, which should
encourage more soybean and sunflower oil imports by several
countries.

China is anticipated to soon fix vegetable oil import quotas for
the second quarter of 1999.  The lack of quotas and absence of
import licenses issued have limited Chinese oil imports so far
this year.  The sizes of the new quotas are not publicly
announced, but are expected to exceed the first-quarter quota. 
With world prices falling against internal Chinese prices, import
demand should revive once the quotas are available.  This month,
Chinese 1998/99 palm oil imports were projected down to 1.2
million tons, from 1.3 million in 1997/98.

Indian imports of soybean, sunflowerseed, and rapeseed oil in
1998/99 are expected to be record large at, 0.3 million, 0.4
million, and 0.25 million tons, respectively.  Indian vegetable
oil producers have urged the government to impose higher duties
to protect their margins from the recent influx of imports.  In
response, only a minor increase in the import duty (from 15
percent to 16.5 percent) was adopted.

U.S. exports of soybean oil slowed considerably in January.  As
of March 4, cumulative shipments to China and Hong Kong (the
largest U.S. importers) trailed last year's pace by 784 million
pounds.  This slowdown caused January U.S. ending stocks to jump
to 1,505 million pounds from 1,312 million in December.  Slowing
domestic crush and a pickup from the recent lapse in exports
should eventually trim September 30 stocks to around 1,210
million pounds.  U.S. oil prices will be little affected by this
historically modest level of oil stocks because of the oil
supplies inherent in the vast carryover stocks of soybeans. 
Given the ample foreign supplies noted above, U.S. exporters will
not be the sole beneficiaries of the anticipated revival in oil
import demand.  Even reaching the projected 1998/99 U.S. soybean
oil exports of 2.2 billion pounds (which is 245 million pounds
less than the previous forecast) implies an acceleration from the
current pace.  A favorable price has kept domestic disappearance
of soybean oil relatively firm.  U.S. disappearance is projected
slightly higher this month to 15,650 million pounds.

The next release of the Oil Crops Outlook is scheduled at 4:00
p.m.. ET Monday, April 12, 1999.  The report is also available on
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
------------------------------------------------------------------------------
                   Supply                          Disappearance 
        ------------------------------    ------------------------------------
Year                                                     Seed,  
begin.    Beg.  Im-   Produc-   Total     Crush   Ex-    feed,   Total   End.
Sept. 1  stocks ports  tion                      ports  residual        stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1992/93    278    2    2,190    2,471     1,279    770    130    2,179    292
1993/94    292    6    1,870    2,168     1,276    589     95    1,959    209
1994/95    209    5    2,515    2,729     1,405    838    151    2,395    335
1995/96    335    4    2,174    2,514     1,370    851    109    2,330    183
1996/97    183    9    2,380    2,573     1,436    882    123    2,441    132
1997/98 1/ 132    5    2,689    2,826     1,597    870    158    2,626    200
1998/99 2/ 200    6    2,757    2,963     1,560    780    153    2,493    470
------------------------------------------------------------------------------
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--------------------------

1996/97     212   102    34,211    34,525     27,321   6,994   34,316    210
1997/98 1/  210    56    38,171    38,437     28,889   9,330   38,219    218
1998/99 2/  218    50    36,807    37,075     29,800   7,000   36,800    275
------------------------------------------------------------------------------
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---------------------------

1996/97     2,015   53   15,752   17,821     14,264   2,037   16,300   1,520
1997/98 1/  1,520   60   18,143   19,724     15,264   3,077   18,341   1,382
1998/99 2/  1,382   63   17,620   19,065     15,650   2,205   17,855   1,210
------------------------------------------------------------------------------
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--------------------------

1996/97     517   20    7,144    7,681     3,860    116   3,182   7,158    523
1997/98 1/  523   96    6,935    7,553     3,885    149   2,957   6,990    563
1998/99 2/  563  180    5,182    5,925     2,650     75   3,000   5,725    200
------------------------------------------------------------------------------
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---------------------------

1996/97      51     4     1,752     1,807     1,649     132    1,781     26
1997/98 1/   26     0     1,767     1,793     1,596     109    1,705     88
1998/99 2/   88     0     1,195     1,283     1,250      10    1,260     23
------------------------------------------------------------------------------
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---------------------------

1996/97        94   0.3   1,216    1,310      1,012     232    1,244      66
1997/98 1/     66   0.1   1,223    1,289      1,003     208    1,211      79
1998/99 2/     79  66.4     850      995        850     100      950      45
------------------------------------------------------------------------------
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---------------------------

1996/97       758  127  3,661  4,545   2,029   692   363  666    3,751     795
1997/98 1/    795  141  3,539  4,475   2,099   544   303  681    3,627     848
1998/99 2/    848  152  3,931  4,932   2,140   720   321  650    3,832   1,100
------------------------------------------------------------------------------
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 1/    4.83  141.00    10.10    28.70   5.09
--------------------------------------------------------
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 1/   19.96    28.21  19.86   39.75  26.58
------------------------------------------------------
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  144.40   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  129.40   88.35  210.00  100.00
July        183.40  146.65   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 1/ 132.30  101.25   73.75  102.50   87.25
---------------------------------------------------
1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis
4/ Minneapolis 5/ 50% SE mills.

END_OF_FILE