HDR1011800201401113951600
OIL CROPS OUTLOOK                                            November 13, 1995
            Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is published monthly (except January) by the Economic Research
Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  OCS--1195.
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U.S. SOYBEAN YIELD STABILIZES
 
In November, USDA lowered its 1995/96 forecast of U.S. soybean production to
2,183 million bushels, down from 2,191 million in October.  With a small
reduction in harvested acres, the national average yield declined only 0.1
bushel to 35.4 bushels per acre.  Increases in area harvested and yield in
Nebraska, South Dakota, and Kentucky were offset by declines in Indiana, Ohio,
and Mississippi.
 
Mostly dry conditions in September and October permitted the soybean harvest
to advance on schedule throughout the Nation, a welcome event in a year beset
with weather problems.  By November 5, 91 percent had been harvested, with
most of the unharvested acres in the South.
 
In recent years, an impressive body of evidence has developed demonstrating
the superiority of soybean yields from rows spaced 15 inches or less versus
those from rows of 30 inches or more.  The yield difference is estimated at 2-
6 bushels per acre.  Drilled stands with higher plant populations tend to grow
taller, crowding out weeds before they can get established.  The stands also
grow more quickly than wide-rowed soybeans, raising the height of pods and
translating into more recoverable pods.  Drilling soybeans also takes less
time than planting in wide rows, which was a major factor this year when a wet
spring delayed seeding.  Farmers in the western Corn Belt have been generally
slower to adopt this practice than their eastern counterparts.
 
STEADY OILSEED DEMAND EXPECTED IN 1995/96 DESPITE PRICE INCREASES
 
U.S. soybean exports began the 1995/96 crop year robustly, as shipments in
September 1995 were nearly 65 million bushels, surpassing the previous high
for the month of 59 million, set in September 1987.  However, October export
shipments slowed considerably.  Forecast exports for 1995/96 (800 million
bushels) were unchanged from the October projection.  This month's reduction
in 1995/96 soybean supplies was mostly balanced by reducing yearend stocks 5
million bushels to 215 million.
 
The season average farm price for soybeans is forecast at $6.30-$7.30 per
bushel, up 5 cents from last month.  Soybean futures prices are currently near
contract highs, helped by bullish soybean demand and price strength in other
commodities, particularly corn and wheat.  High barge rates and strong foreign
demand lifted the soybean price at the Gulf to $6.77 per bushel in September,
which is higher than at the start of 1993/94, when a short crop sent prices
soaring.  As corn prices spiral upward, acreage and production of soybeans for
1996/97 look less encouraging, which may strengthen soybean prices by next
spring.
 
Already below year-ago levels, gross crush margins in 1995/96 may weaken in
response to higher soybean prices and lower soybean oil prices, helping to
curtail crush.  Soybean oil prices should remain under pressure as stocks
build through the year.
 
The 1995/96 expected soybean oil carryout of 1,840 million pounds would be 62
percent above last season's.  Larger carryin stocks are mainly responsible, as
production was unchanged and total use was slightly down from October.  Based
on a lower 1994/95 domestic disappearance for soybean oil, this year's U.S.
offtake was forecast at 13,050 million pounds, down 50 million pounds from
last month.  The expected price range was lowered to 23.5-27.5 cents per
pound, down from 24.0-28.5 cents last month.
 
The most recent Hogs and Pigs report indicated that hog inventories on
September 1 were 2 percent below a year earlier.  The market hogs inventory
was 2 percent below a year ago.  With soybean meal prices $5-$10 per ton
higher than last year, this suggests that domestic meal disappearance in the
first quarter of 1995/96 will be curbed.  If the relatively low hog-corn ratio
(15.8 in October) continues to slip, fewer hogs would be held back for
breeding in 1996.  The breeding inventory is 5 percent below September 1994
and December-February farrowing intentions are even with last year, meaning
that the following quarters will likely show little growth, at best, in
protein meal demand.  While ample invisible soybean meal stocks (1994/95
production held by feeders and feed compounders) may help livestock producers
exceed their breakeven prices longer, they could also restrain this year's
domestic disappearance.
 
On the other hand, poultry producers are better able to weather rising feed
costs.  Record-setting exports are expected to push poultry production about 6
percent higher than in 1995.  And higher corn prices have dropped the soybean
meal to corn price ratio to the lowest level in years, encouraging a greater
meal portion of the feed ration.  Wheat feeding is expected down by 120
million bushels in 1995/96, also favoring soybean meal use.
 
FOREIGN OILSEED OUTPUT EXPECTED TO DECLINE IN 1995/96
 
Foreign oilseed production for 1995/96 is expected to slightly increase from
last month, but fall 2 percent from the 1994/95 estimate.  China's soybean
production was reduced 500,000 metric tons this month to 14.5 million tons. 
Recent official estimates suggest that 1995 soybean area harvested was below
previous expectations.  The smaller soybean output and increasing demand for
soybeans and soybean products will likely boost soybean and soybean meal
imports.  Although soybean imports are projected at 350,000 tons (up 75
percent from last month's estimate), China's potential for imports is greater,
and will heavily depend on supplies and domestic policy.  China's 1995/96
soybean oil imports are also expected up from last month, but still below last
year's record.  Strong growth in China's of rapeseed and cottonseed production
and significant carryin stocks of vegetable oils should limit China's
vegetable oil imports this year.
 
Russia's projected 1995 sunflower crop is revised upward to 4.2 million tons,
the largest since 1972.  The revision is based on new information regarding
yield estimates.  Sunflowerseed exports, at a record 1.5 million tons, have
risen nearly 300 percent since 1992.  The striking climb in Russian
sunflowerseed trade has been primarily driven by Western European and Turkish
demand.  Three consecutive years of drought in Spain have contributed to the
lowest output in nearly 15 years, which has left domestic supplies
significantly short of demand.  In Turkey, excess crushing capacity and barter
agreements with Ukraine and Russia have allowed massive amounts of
sunflowerseed imports.  However, if crushing facilities in Russia are
renovated and processing resumes in larger quantities, domestic consumption
should increase at the expense of exports.
 
The Government of Brazil announced a new farm debt relief package worked out
between congress and the central government.  The legislation allows the
rescheduling of agricultural debts for about $7.4 billion.  The new agreement
provides farmers a grace period of 1 to 2 years, and a repayment term of 7-10
years at 3 percent interest.  Undoubtedly, this package is highly beneficial
for farmers, but it does little to solve the current shortage of credit.  In
addition, inputs (previously obtained from swap deals with soybean buyers)
have drastically dropped.  These economic and financial factors, combined with
less than optimal weather conditions for planting, support smaller soybean
production in Brazil in 1995/96.
 
1994/95 WRAP-UP
 
U.S. soybean exports finished 1994/95 at 838 million bushels.  The Netherlands
narrowly edged out Japan as the top U.S. soybean importing country (138.5
million bushels versus 133.6 million).
 
September soybean oil production finished the year with another monthly
record, pushing 1994/95 output to a record 15,613 million pounds.  But an
upward revision of U.S. season ending stocks to 1,135 million pounds meant
total soybean oil disappearance unexpectedly dropped in September to its
lowest monthly mark of the year.  Domestic disappearance fell from October's
estimate to 12,908 million pounds.  Expected soybean oil exports declined 60
million pounds to 2.69 billion.
 
Consumption of soybean oil in edible products for 1994/95 was only 1.6 percent
larger than in 1993/94 (see ERS Autofax document #2375).  Consumption in salad
and cooking oils was relatively good (up 11 percent).  However, the year-to-
year increase in soybean oil use was held back by more sluggish markets for
baking and frying fats and margarine (down 4 percent and 8 percent,
respectively).
 
The strong September crush also helped final 1994/95 soybean meal production
reach 33,271,000 short tons.  Soybean meal exports were raised 75,000 tons
from the October estimate to 6,675,000 tons.  This was at the expense of
domestic disappearance, which dropped 115,000 tons from the October estimate
of 26.7 million tons.  Ending stocks of soybean meal were 224,000 tons.
 
Table 1--Soybeans:  U.S. supply and disappearance
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                     Supply                          Disappearance 
        --------------------------------  ------------------------------------
Year                                                     Seed,                
begin.     Beg.   Im-   Produc-  Total    Crush   Ex-    feed,    Total   End.
Sept. 1  stocks  ports   tion                    ports & resid.         stocks
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         -------------------------- Million bushels---------------------------
 
1993/94     292    6    1,871    2,170     1,276    589     96    1,961    209
1994/95 1/  209    6    2,517    2,731     1,405    838    153    2,396    335
1995/96 2/  335    5    2,183    2,523     1,395    800    113    2,308    215
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1/ Estimated.  2/ Forecast.
 
Table 2--Soybean meal:  U.S. supply and disappearance
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                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.      Beg.    Produc-   Total      Domestic   Ex-     Total    End.
Oct. 1    stocks     tion                           ports           stocks
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         ------------------------------1,000 tons-----------------------------
 
1993/94     204     30,514    30,788       25,283   5,356   30,638    150
1994/95 1/  150     33,271    33,484       26,585   6,675   33,260    224
1995/96 2/  224     33,041    33,325       27,000   6,100   33,100    225
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1/ Estimated.  2/ Forecast.
 
Table 3--Soybean oil:  U.S. supply and disappearance
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                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.       Beg.   Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks    tion                         ports            stocks
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         -------------------------- Million pounds---------------------------
 
1993/94     1,555   13,951   15,574       12,941   1,529   14,471   1,103
1994/95 1/  1,103   15,613   16,733       12,908   2,690   15,598   1,135
1995/96 2/  1,135   15,695   16,840       13,050   1,950   15,000   1,840
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1/ Estimated.  2/ Forecast.
 
Table 4--Oilseeds prices received by farmers, U.S.
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Marketing      Soy-  Cotton-  Sun- 
 year         beans   seed   flowers  Peanuts  Flaxseed
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              $/bu.   $/ton   $/cwt   Cents/lb  $/bu.
                                     
1990/91        5.74  121.00    10.80    34.70   5.27
1991/92        5.58   71.00     8.69    28.30   3.52
1992/93        5.56   97.50     9.74    30.00   4.12
1993/94        6.40  113.00    12.90    30.40   4.25
1994/95        5.45  101.00    10.75    29.00   
 
1993/94:
September      6.21  104.00    14.20    32.00   4.24
October        6.01  112.00    11.20    30.00   4.09
November       6.32  122.00    11.60    29.50   4.05
December       6.64  123.00    13.00    29.70   4.18
January        6.72  126.00    13.60    36.10   4.38
February       6.71   97.00    15.10     NA     4.61
March          6.73     NA     15.00     NA     4.64
April          6.57     NA     15.00     NA     4.60
May            6.77     NA     15.60     NA     4.43
June           6.72     NA     14.20     NA     4.25
July           5.92     NA     12.40     NA     4.28
August         5.58   89.00    12.60     NA     4.52
 
1994/95
September      5.47  101.00    10.70    30.60   4.54
October        5.30   96.00    10.80    28.60   4.49
November       5.36  107.00    10.60    25.90   4.51
December       5.41  104.00    10.30    25.80   4.71
January        5.47  101.00    10.60    25.70   4.75
February       5.40   97.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.15
April          5.55    NA      10.70     NA     5.10
May            5.56    NA      10.50     NA     4.93
June           5.68    NA      10.50     NA     5.13
July           5.90    NA      11.50     NA     5.10
August         5.83  100.00    11.40    30.70   5.16
 
1995/96
September      5.99   99.00    11.00    29.70   5.11
October1       6.17   97.00    11.00    29.50   5.20
--------------------------------------------------------
1 Preliminary.
 
Table 5--Vegetable oil prices
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                      Cotton-  Sun-       
Marketing    Soybean   seed   flower Peanut  Corn  
 year          oil2     oil3    oil4  oil5    oil6 
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                     Cents/lb.
                                                   
1990/91       21.00    22.30   23.67  45.50  27.50 
1991/92       19.10    20.10   21.63  27.30  25.82 
1992/93       21.40    25.00   25.37  27.40  20.90 
1993/94       27.09    27.78   31.08  43.20  26.38 
1994/95       27.55    25.80   28.10  44.30  26.47 
                                                   
1993/94:                                           
October       22.96    24.79   26.33  40.20  22.25 
November      25.43    26.69   28.20  43.33  23.06 
December      28.27    30.39   32.11  43.17  26.93 
January       29.91    33.16   35.08  46.10  28.00 
February      28.85    29.96   33.68  46.12  29.89 
March         29.03    29.60   33.48  44.50  30.30 
April         27.90    29.06   33.00  43.40  29.63 
May           29.10    29.66   33.50  44.25  29.48 
June          27.60    27.55   31.34  43.75  29.43 
July          24.53    24.20   28.89  44.00  27.20 
August        25.38    23.71   28.13  45.00  25.02 
September     26.12    24.51   29.28  43.10  24.87 
                                                   
1994/95                                            
October       27.06    23.64   28.90  46.00  24.73 
November      29.84    24.85   29.40  50.88  24.75 
December      30.61    25.50   30.63  53.80  24.75 
January       29.04    26.41   29.25  50.25  28.01 
February      28.15    25.63   27.66  41.83  27.26 
March         28.33    26.41   27.97  41.00  28.17 
April         27.16    24.00   26.89  41.25  27.30 
May           26.00    24.24   26.34  40.25  26.42 
June          26.78    26.72   27.30  39.00  26.61 
July          27.60    28.25   28.69  39.13  27.38 
August        26.56    27.09   27.47  41.50  26.35 
September     26.26    26.50   27.41  41.30  25.93 
 
1995/96
October1      26.56    28.12   27.58  42.50  26.05 
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1 Preliminary 2 Decatur 3 Beginning Oct 1995, PBSY Greenwood MS
4 Minneapolis 5 Southeast mills 6 Chicago
 
Table 6--Oilseed meal prices
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             Soy-   Cotton   Sun-           
Marketing    bean    seed   flower  Peanut  Linseed
 year        meal2   meal3   meal4   meal5   meal4
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                        $/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
 
1993/94:
October     194.50  173.10   90.00  196.00  147.50
November    209.40  181.00   90.00  197.00  161.80
December    206.00  180.00   89.40  200.00  155.25
January     198.30  170.30   97.00  209.00  140.25
February    198.40  173.10   98.75  207.50  136.25
March       195.40  174.00    N/Q   198.75  127.20
April       188.90  166.25    N/Q   191.00  125.50
May         193.75  157.75  105.00  187.50  125.00
June        195.50  154.10  102.50  163.75  111.90
July        181.10  152.50   97.50  164.00  114.90
August      178.60  144.50   90.75  153.75  111.60
September   174.50  145.00   85.00  114.80   NA
 
1994/95
October     168.50  134.40   75.00  151.25  122.50
November    161.00  120.50   69.50  147.50  110.00
December    156.90  114.20   52.50  127.00   95.60
January     156.40  106.75   50.00  105.00   82.40
February    151.30   97.50   46.88  107.50   85.25
March       156.90  100.30   52.50  119.00   90.00
April       161.90   98.10   62.50  125.00   94.40
May         159.10   92.75   60.90  123.75   85.00
June        160.40  108.75   62.38  134.00   85.00
July        170.45  116.90   73.75  138.75   92.50
August      166.70  116.50   83.75  136.25   95.00
September   180.99  137.60    NA    142.00  112.50
 
October1    193.92  151.88   81.00  132.50  129.38
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
 *****************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0838
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
Jaime Castaneda  World Oilseeds                             (202) 219-0826
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The next release of the OIL CROPS OUTLOOK is scheduled for 4:00 p.m. ET
Wednesday, December 13.
 
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