OIL CROPS OUTLOOK                                                May 13, 1998
May 1998, OCS-0398
             Approved by the World Agricultural Outlook Board
------------------------------------------------------------------------------
OIL CROPS OUTLOOK is issued six times a year by the Economic Research Service,
U.S. Department of Agriculture, Washington, DC 20036-5831.  Electronic release
only; no printed copies are available.   
------------------------------------------------------------------------------

Rebound in 1998 Oilseed Production Expected To Pressure Prices

World oilseed production for 1998/99 is projected up 2 percent to
a record 288.5 million metric tons.  Foreign oilseed production
is expected to total 202.3 million tons, 3.2 million tons greater
than this year's output.  Larger rapeseed and sunflowerseed crops
account for much of the increase.  Spurred by attractive oil
prices, farmers in Canada and Europe are seen expanding plantings
of both high-oil content oilseeds.  Gains in U.S. soybean
production are expected to make up 38 percent of the global gain
in 1998/99 oilseed production.  However, foreign soybean
production should decline next year as yields are likely to slip
from the high yields produced by very favorable weather in
1997/98.  In addition, foreign harvested soybean area should
flatten as producers shift to grains and other oilseeds.

Total U.S. oilseed output in 1998/99 is projected at 86.2 million
metric tons, topping this year's record 84.2 million.  Higher
production of all oilseeds except cottonseed is expected.  U.S.
farmers intend to plant a record 72.0 million acres of soybeans
this spring, so 1998 soybean production is anticipated to eclipse
the record 1997 output.  An estimated trend yield of 39.5 bushels
per acre would genreate 1998 production of 2.8 billion bushels
(76.2 million metric tons), nearly 3 percent larger than last
year's bumper harvest.

Grain planting in the western and northern parts of the Corn Belt
is advancing well, but wet conditions in the eastern part have
held back seeding.  Cotton planting is lagging throughout the
South.  New-crop soybean futures have slid recently on ideas that
delays in grain planting would continue and consequently add even
more soybean acreage.  As of May 10, 15 percent of U.S. soybeans
had been planted, ahead of the 5-year average of 10 percent. 
Soil moisture conditions appear favorable for good germination
once planted.  For other oilseeds, firm topsoils in the Northern
Plains have expedited grain seeding and promoted an early start
for sunflowers, flax, and canola.  Rain and cool temperatures,
particularly in Georgia, were delaying peanut planting.  As of
May 10, 31 percent of peanuts had been planted, compared to the
5-year average of 41 percent.

While ample soybean supplies will reduce prices enough to sustain
a comparatively brisk export pace, a large South American
carryover will curtail U.S. trade through the early months of
1998/99.  Current harvest delays in Brazil and Argentina have
only accentuated this outcome.  USDA projects a small increase in
soybean exports for 1998/99 to 925 million bushels.  The dynamic
domestic crush market will endure next year, as mills process an
expected record 1,575 million bushels into meal and oil.

Despite increases in domestic and foreign demand, a larger
carryin and record output will boost carryout soybean stocks. 
Year ending stocks would increase to 410 million bushels, the
largest since 1986/87.  Such abundance should moderate soybean
plantings in 1999, so 1998/99 seed demand should decline
somewhat.  In the absence of weather-related problems in the
coming summer, a sharp reduction in the 1998/99 average farm
price to $4.75-$5.75 per bushel is projected from $6.45 per
bushel this season.

Soybean oil production is projected to reach an alltime high of
17.7 billion pounds in 1998/99.  However, given low carryin
stocks (1,255 million pounds) and modest anticipated growth in
domestic and export demand, this volume would be insufficient to
rebuild the stocks.  It is common for domestic disappearance of
soybean oil to plateau following a year of considerable growth. 
End users may have exaggerated domestic disappearance this year
by accumulating oil stocks that would be actually consumed in
1998/99.  Carryout supplies are projected to slightly decline, to
1,180 million pounds.  Even with renewed growth in global
vegetable oils output, steady increases in consumption will keep
the supply-demand balance tight.  Domestic soybean oil prices
will be supported between 27.0 and 30.0 cents per pound.

Even at an intense crush rate, soybeans alone do not have a high
enough oil content to quickly rebuild world oil supplies.  World
soybean production rebounded in 1997/98, but oil supplies only
grew smaller because of shortfalls by major palm oil producers. 
An enduring crush for oil market heralds another record supply of
soybean meal in 1998/99 and a price that will stay depressed.  An
outlook for the second-largest outturn of competing protein meals
will also maintain price pressure.  The average price for soybean
meal should remain soft in 1998/99, between $145 and $160 per
short ton.  Such a price level would support U.S. exports but
greater competition from foreign protein meal suppliers should
limit export growth to a projected 8.5 million short tons.  Lower
feed prices would also accelerate 1998/99 U.S. soybean meal
consumption by poultry, although consumption by hogs will likely
slow from this year's robust pace.  Domestic disappearance of
soybean meal is forecast to rise from 28.2 million short tons
this season to 29.0 million in 1998/99.

U.S. 1998/99 Cottonseed Crop Forecast at 6.4 Million Short Tons

In its initial forecast of 1998/99 U.S. cottonseed production,
USDA sees cottonseed output at 6.4 million short tons, the lowest
since the 1993 season.  The smaller crop and total supply is
forecast to sharply reduce 1998/99 cottonseed crush to 3.65
million tons, other use to 2.875 million, and exports to 100,000
short tons.  Estimated to total 250,000 short tons on July 31,
1999, ending stocks of cottonseed next season could fall to their
lowest level since the 1986 season.

U.S. 1997/98 Cottonseed Crop Revised Downward

USDA this month reduced the estimate of 1997/98 U.S. cottonseed
production by 343,000 short tons to 6.935 million.  Total supply
was forecast lower by a similar amount.  This smaller supply
estimate is consistent with recent industry reports of reduced
crushing rates as mills eye tightening stocks and new crop
supplies still several months away.  All offtake components were
forecast lower this month, with 1997/98 mill use seen 25,000 tons
below last month's estimate at 3.875 million, other use 219,000
lower to 2.982 million, and exports 50,000 lower to 125,000 tons. 
Ending stocks on July 31, 1998 were forecast lower to 475,000
short tons.

Current Season Soybean Crushing Stays Brisk, Exports Fade

Soybean crushing showed surprising strength in April, despite
declining margins.  Harvest delays in South America have extended
the demand for U.S. meal and oil.  Brazilian soybean and soybean
meal exports during February-March 1998 were down 15 percent from
last year and current export registrations are down about one-third.
Forecast U.S. crushings for 1997/98 were raised 25
million bushels this month to 1,550 million.

On the other hand, U.S. soybean exports have become quite
sluggish.  New sales plunged in April, with little chance for
improvement over the next several months.  It is unlikely that
U.S. exports this summer will repeat last summer's pace, when a
short Argentine harvest allowed U.S. shipments to bounce back. 
As of April 30, export shipments had reached 792 million bushels,
although outstanding sales through August were only 50 million. 
USDA cut its 1997/98 soybean export forecast to 915 million
bushels.  The reduction offsets larger domestic use and nudges
the 1997/98 ending stocks forecast up to 240 million bushels. 

Some glitches in the transportation system are also hindering
U.S. export prospects.  The United States has long dominated
Mexican soybean trade, but continuing railcar backups at the
border have motivated Mexican importers to substitute some
Brazilian soybeans.  And, a low water level in the Panama Canal
has restricted the maximum draft for ocean vessels.  The
associated limits on cargo weights is raising per unit freight
costs to Asia via the canal, or compelling some shippers to take
longer alternate routes.  High water levels on the Mississippi
River and a strike by barge pilots have complicated grain
movements to the Gulf ports.

While soybean exports are static, exports of soybean meal and oil
are establishing new highs.  Higher exports of soybean meal were
forecast this month, raising the 1997/98 total to 8.45 million
short tons.   

Soybean oil prices continued their upward march last month,
rising to 28.1 cents per pound.  The yearly average was forecast
higher to 27.25 cents per pound.  Conversely, the still active
crush pace caused soybean meal prices to drift lower in April, to
$162.50 per short ton.  The average price of soybean meal for
1997/98 was forecast at $185 per ton.


U.S. 1997/98 Peanut Food Use Seen Higher

USDA this month raised the 1997/98 U.S. peanut food use estimate
by 20 million pounds, from last month, to 2.115 billion pounds,
in-shell.  If realized, the 1997/98 food use estimate would
represent a 4.2-percent rise from last season's use.  Peanut use
in primary products continues to exhibit strong gains in monthly
use versus a year ago.  Among major product categories, peanut
use in peanut candy for the August-March period is 1.9 percent
ahead of a year ago, snack peanut use is up 9.0 percent and
peanut butter use is up 6.3 percent.  Total use in primary
products is 5.9 percent ahead of last season.  Also aiding total
food use higher is roasting stock use, which is about 10 million
pounds ahead of last season's record pace.

U.S. peanut crush for 1997/98 is reduced this month by 24 million
pounds, in-shell, from last month, to 575 million.  If realized,
this crush estimate would represent the lowest annual peanut
crush since the 1987 season.  Even at this lower level, peanut
oil production, when combined with large beginning stocks, should
be adequate to provide for domestic use near its usual 200
million pound level.

Foreign Oilseeds and Vegetable Oil Trade Encounter Adverse
Weather 

Farmers in Argentina are still struggling to complete the
sunflowerseed harvest, which was 91 percent percent done by the
first week of May.  What was once considered a potentially bumper
sunflowerseed crop has vanished as yield potential and crop
quality have been marred by flooding and excessive moisture. 
Argentina's 1997/98 output is forecast down 200,000 tons this
month, to 5.0 million.  All year, the rains have likewise
promoted high soybean yields, but now the problem lies in getting
this bumper crop out of the ground.  Farmers hope to avoid these
problems with soybeans, which follow the sunflower harvest, but
they have been set back by the same wetness.  Current harvest
progress has reached 50 percent, compared to 75 percent a year
ago.  Floods have also damaged Argentina's cotton crop, reducing
projected cottonseed output to 580,000 tons.  Nearly all
cottonseed in Argentina is crushed, so the change accordingly
scales back oil and meal production there.

In Paraguay, record soybean plantings had been expected to
produce a record harvest of 2.9 million tons in 1998.  Despite
flooding along the Parana River, soybean fields in Paraguay have
been relatively unharmed.  The excess rain has delayed harvest,
however, and reduced USDA's forecast to 2.7 million tons,
slightly below the 1997 crop.  Paraguay has a negligible domestic
market for meal and oil and its larger neighbors have advantages
in crushing.  So, unprocessed soybean exports (including to
Brazilian and Argentine crushers) bring the best returns from the
country's output.  Paraguayan exports are forecast to total 2.1
million tons, compared to crushings of 0.5 million tons.

After many interruptions from rain, Brazilian producers have
nearly wrapped up this year's soybean harvest.  In May, USDA
raised its forecast of Brazilian production to 30.7 million
metric tons.  The increase was based on an upward revision in
area (to 13.0 million hectares) and average yield.  In 6 out of
the last 7 years (including 1998), Brazil has established a
record soybean yield.  Generally good weather, adoption of
superior management practices, and increasing use of inputs are
responsible.  With greater supplies, the soybean export forecast
for Brazil was raised to 8.25 million tons, just below the
prolific 1996/97 volume.

Based on official Chinese data, last year's drought did not
damage China's peanut production as much as previously thought. 
The 1997/98 output was raised to 9.6 million tons, up from 8.8
million previously and down from 10.1 million in 1996/97.  The
quality of this harvest is suspect, however, requiring a greater
proportion to be crushed for peanut oil instead of direct human
consumption.

Malaysian palm oil production was scaled back this month to 8.7
million tons (down from 9.0 million in 1996/97), based on a year-old 
drought. Monthly oil production has been falling since December.  
Because of events in Indonesia, Malaysian palm oil exports have been 
able to increase, but at the cost of very low stocks and rising 
domestic prices.  Malaysia's domestic consumption is expected to 
show little growth in 1997/98.  And while Indonesia lifted its export 
ban on palm oil in April, it is still a challenge getting the trade 
flowing again.  In early May, riots on Sumatra disrupted shipments 
between palm plantations and local refineries and ports.  Deliveries 
have resumed in recent days but the volatile situation will create 
another substantial obstacle for palm oil exporters.


The next release of the Oil Crops Outlook is scheduled for 3:00
p.m. ET Monday July 13, 1998.

Information Contact:

Mark Ash        Soybeans, minor oilseeds, oils                 
(202) 694-5289
Scott Sanford   Cottonseed, peanuts                            
(202) 694-5309

This report is also available electronically at the ERS website
http://www.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---------------------------

1996/97    183    9    2,382    2,575     1,436    882    125    2,443    132
1997/98 2/ 132    6    2,727    2,865     1,550    915    160    2,625    240
1998/99 2/ 240    6    2,800    3,046     1,575    925    136    2,636    410
------------------------------------------------------------------------------
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    34,209    34,523     27,322   6,994   34,316    207
1997/98 2/  207    60    36,630    36,900     28,200   8,450   36,650    250
1998/99 2/  250    65    37,435    37,750     29,000   8,500   37,500    250
------------------------------------------------------------------------------
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   15,743   17,811     14,247   2,045   16,291   1,520
1997/98 2/  1,520   70   17,365   18,955     14,800   2,900   17,700   1,255
1998/99 2/  1,255   70   17,705   19,030     14,950   2,900   17,850   1,180
------------------------------------------------------------------------------
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.
Sept. 1  stocks  ports   tion                     ports                 stocks
------------------------------------------------------------------------------
         -------------------------- 1,000 Short tons--------------------------

1996/97     517    0    7,144    7,661     3,860    116   3,162   7,138    523
1997/98 2/  523    0    7,250    7,773     3,875    150   3,248   7,273    500
1998/99 2/  500    0    6,400    6,900     3,650    100   2,900   6,650    250
------------------------------------------------------------------------------
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 2/   26     0     1,765     1,791     1,610     145    1,755     36
1998/99 2/   36     0     1,645     1,681     1,530     120    1,650     31
------------------------------------------------------------------------------
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 2/     66   0.3   1,230    1,297      1,005     225    1,230      67
1998/99 2/     67   0.3   1,170    1,237        965     210    1,175      62
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.


Table 7--Peanuts:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     Supply                         Disappearance 
           -------------------------  ----------------------------------------
Year 
begin.     Beg.   Im-  Produc- Total  Domest. 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 2/    795  139  3,537  4,470   2,115   575   315  700    3,705     765
1998/99 2/    765  152  3,755  4,672   2,155   725   316  700    3,897     775
------------------------------------------------------------------------------
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
1997/981       6.45  120.00    11.35    26.40   5.80

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
November       6.85  124.00    11.00    23.60   5.71
December       6.71  122.00    11.00    26.90   5.72
January        6.69  122.00    11.10    28.40   5.86
February       6.57  108.00    11.90     NA     6.27
March          6.40   NA       12.00     NA     6.24
April1         6.22    NA      12.60     NA     6.25
--------------------------------------------------------
1 Preliminary.  NA = Not available.


Table 9--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  25.24 
1996/97       22.50    25.58   22.64  43.70  24.05 
1997/981        27.25    30.00   27.50  52.25  28.80
                                                   
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
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
April1        28.10    32.47   28.38  50.00  30.93
------------------------------------------------------
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        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  159.00
1996/97     262.00  192.00  110.60  232.00  158.75
1997/981    185.00  142.00   68.00  145.00   110.00

1996/97
October     248.50  183.25  116.00  170.00  167.50
November    251.50  196.60  105.00  146.13  168.30
December    250.60  224.50  113.35  172.67  170.00
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
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
April1      162.50  118.75   66.75  210.00  105.00
-----------------------------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

END_OF_FILE