OIL CROPS OUTLOOK                                            February 13, 1997
            Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is published monthly by the Economic Research Service, U.S.
Department of Agriculture, Washington, DC 20005-4788.  OCS-0297.
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SOUTH AMERICAN COMPETITION FOR WORLD SOYBEAN TRADE SHAPING UP

A very dry December in the southern Brazilian state of Rio Grande do Sul
(Brazil's second-largest producing region) added a weather premium to soybean
prices in January.  The market has been particularly sensitive to threats to
South American production considering the projected reduction of U.S. ending
stocks.  But rains finally arrived in the last half of January, alleviating
dryness before the critical reproductive stage for most soybean fields.  Now
based on a near record expected yield, USDA raised its projection of 1996/97
Brazilian soybean production to 26.5 million metric tons, up from 26.0 million
previously.  Chicago futures prices have fallen from recent highs to reflect
the change in weather.

Farther north, the states of central Brazil have experienced generous
moisture.  In fact, some farmers in the center-west region are already
harvesting short season soybeans, but have been delayed by excessive rain. 
Ships at the port of Paranagua are waiting for new crop supplies to arrive. 
The longer these delays continue, the greater the benefit to U.S. exports in
February and March.

With larger supplies and robust world demand, Brazil's 1996/97 projected crush
and exports were raised to 21.3 million tons and 5.3 million tons,
respectively.  The tight September stocks situation should ease slightly from
5.0 million tons in 1995/96 to 5.3 million this year.

Soybean planting in Argentina was completed by the end of January, with most
principal growing regions receiving ample rains.  Warm weather is now needed
to accelerate crop development.  Argentine production is antipated to be 13.5
million tons, up 0.5 million from the previous forecast.  This is a record
harvest on record area of 6.2 million hectares.  Average yields will be down
slightly because of a greater proportion of double cropped soybeans this year. 
The increased supply is expected to raise Argentine crush and exports to 10.5
million and 2.5 million tons, respectively.  End of September stocks were
forecast higher to 4.7 million tons.

Also, Argentine sunflowerseed area harvested is expected higher, although even
with last year's level.  Some early season dryness motivated farmers to shift
some intended planting for corn and sorghum into sunflowers, which are more
tolerant of dry conditions.  With subsequent rains relieving the dryness,
excellent sunflowerseed yields are likely, which may boost sunflowerseed
production to 5.4 million tons, the third-largest Argentine harvest on record. 
Argentina, which is the world's largest processor and exporter of
sunflowerseed, is anticipated to crush and export 4.6 million tons and 700,000
tons, respectively, in 1996/97.  Argentina will have an even more dominant
presence in world trade this year given smaller crops in Russia, Ukraine, and
the United States.

India's 1996/97 soybean production was forecast down this month to 3.8 million
tons from 4.5 million in 1995/96.  Despite a record harvested area, Indian
soybean yields are expected to be at a 10-year low.  A late monsoon that
delayed planting and damaging harvesttime rains in Madhya Pradesh (India's
major soybean producing state) were chief reasons for the yield losses.  Short
supplies have driven up soybean prices and may idle many Indian crushing
plants until April, when the rapeseed harvest begins.  Unless the government
allows imports of soybeans, the supply shortfall will raise prices, curtailing
Indian soybean meal consumption and accelerating imports of vegetable oils. 
The Indian government has historically resisted importing soybeans to prevent
introduction of foreign soybean diseases and pests and to support prices for
the nation's farmers.

This year's tightness in the world oilseeds market has generally not developed
because of soybeans, but from production shortfalls of other oilseeds.  World
production of soybeans in 1996/97 is expected to be the second largest in
history.  The proportion of soybeans to world oilseed production has increased
from 49 percent to 52 percent.  Production of other oilseeds (particularly
rapeseed, cottonseed, sunflowerseed) has fallen 6 percent, keeping global
oilseed production relatively static.

United Kingdom farmers produced a record rapeseed crop for 1996/97 of 1.45
million tons.  Ideal growing conditions compensated for a lower area
harvested.  Germany and Poland, which had poor rapeseed harvests in 1996, are
likely to take more U.K. exports.

A larger area and tree population is the reason for raising 1996/97 production
of Indonesian palm and palm kernel oil to 4.95 million tons and 670,000 tons,
respectively.  New palm plantations on the islands in eastern Indonesia are
rapidly emerging.  Favorable weather in 1996 was beneficial to copra in
Indonesia, which permitted a higher forecast for coconut oil production.  But
effects of typhoons in the Philippines in late 1995 are still reverberating,
resulting in an offsetting cut in Philippine coconut oil output and limiting
export growth.

World olive oil production will rise about one-fourth to 2.0 million metric
tons in 1996/97, largely because of a rebound in Spanish output to 655,000
tons.  Heavy rains during harvest blemished what had been ideal growing
conditions, but Spanish production will still rank among the best ever.  This
has offset a mediocre Italian output, which was forecast up from a month ago
to 490,000 tons, but still below the 1995/96 output of 620,000 tons.

RECORD U.S. SOYBEAN CRUSHING, BOOMING EXPORTS RAPIDLY DRAW DOWN SUPPLIES

Thanks to surging meal exports, domestic soybean demand continued its hot
pace, with a record monthly crush of 138.2 million bushels in December.  The
1996/97 domestic crush was forecast 10 million bushels higher this month to
1,410 million.  However, monthly crush margins are beginning to show some
weakness and recent weekly crush volumes have drifted lower.  Diminishing
soybean supplies, peaking meal prices, static oil prices, and below average
extraction rates are starting to pressure crush profitability.  The oil
extraction rate in December was a very low 10.66 pounds per bushel.  While
soybean oil content may be below average this year, maximum extraction rates
are probably being sacrificed because of the large throughput and may recover
later in the season.  The soybean price spread between Illinois processors and
the Gulf widened in January, which portends a greater emphasis on foreign
versus domestic demand.  However, freezing of the Illinois River, which
stopped southbound barges, could have contributed to this effect.

U.S. soybean exports in November were 152 million bushels, the largest volume
ever for a single month.  Current crop year exports were forecast up 5 million
bushels to 905 million.  However, climbing U.S. soybean prices, a large
impending South American crop, and a strengthening dollar should soon moderate
U.S. exports.  In one key market, China, U.S. export commitments of soybeans
and soybean meal have stagnated since late December.  Chinese ports have had
trouble moving out the glut of December imports and shipments have accumulated
there.  Buying may resume soon after the Chinese New Year but the imports will
likely be sourced from South America, whose prices for March-April delivery
are significantly lower than comparable U.S. quotes.  Total imports by China
were forecast up this month to 1.7 million tons for soybeans, 2.1 million tons
for soybean meal, and 1.55 million for soybean oil.

The increase in forecast soybean use reduces 1996/97 expected carryout to a
very tight 140 million bushels, down from 183 million the previous year. 
USDA's forecast of U.S. season average farm price for soybeans was raised this
month to $6.75-$7.25 per bushel.  The unique combination of a large harvest
and strong prices will generate a record value of soybean production (over $16
billion) in 1996/97 for U.S. farmers.

The downgraded Indian soybean harvest provides additional support for U.S.
soybean meal exports in 1996/97, which were again forecast higher to 6.65
million short tons.  November U.S. exports of soybean oil were 304 million
pounds, also one of the largest monthly shipments on record.  Projected
1996/97 exports were lifted to 1,850 million pounds this month.  Cumulative
sales to China to date are more than double those of a year earlier.  Yet,
given the heavy output from crushing plants, oil demand hasn't been strong
enough yet to lift prices much.  Soybean oil stocks were above 2 billion
pounds again by the end of the year.

U.S. 1996/97 sunflowerseed exports are forecast much lower this month, to 360
million pounds, down from 494 million last season.  Even assuming a similar
export pace for December-August as in 1995/96, the very small shipments last
fall point toward a larger year-to-year reduction.  Despite lower area,
excellent yields are expected to soon deliver another large crop out of
Argentina, constraining U.S. export potential.  Domestic sunflowerseed crush
also has been hard to maintain.  This year's sunflowerseed prices are slightly
higher, oil prices are considerably lower, and recent additions to Canadian
crushing capacity have heightened the competition.  The absence of the
Sunflower Oil Assistance Program (SOAP) has also allowed domestic
sunflowerseed crush margins to remain tight compared to recent years.  Ending
stocks of sunflowerseed are forecast to rise to 485 million pounds, the
highest since 1991/92.  U.S. sunflowerseed oil exports in 1996/97 are also
rated no higher than last year's volume of 628 million pounds.


The next Oil Crops Outlook is scheduled for 4:00 pm ET Wednesday, March 12.


******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
******************************************************************************


Table 1--Soybeans:  U.S. supply and disappearance
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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
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1994/95     209    5    2,517    2,731     1,405    838    153    2,396    335
1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183    4    2,382    2,570     1,410    905    116    2,431    140
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1/ 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      1/                   ports           stocks
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         ---------------------------1,000 short tons--------------------------

1994/95     150     33,265    33,479       26,538   6,717   33,256    223
1995/96     223     32,514    32,813       26,581   6,002   32,584    229
1996/97 3/  229     33,341    33,650       26,800   6,650   33,450    200
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1/ Includes imports.  2/ Estimated.  3/ 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      1/                 ports            stocks
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         -------------------------- Million pounds---------------------------

1994/95     1,103   15,613   16,733       12,916   2,680   15,596   1,137
1995/96     1,137   15,234   16,466       13,459     992   14,451   2,015
1996/97 3/  2,015   15,350   17,465       13,650   1,850   15,500   1,965
------------------------------------------------------------------------------
1/ Includes imports.  2/ Estimated.  3/ Forecast.


Table 4--Oilseeds prices received by farmers, U.S.
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Marketing      Soy-  Cotton-  Sun- 
 year         beans   seed   flowers  Peanuts  Flaxseed
--------------------------------------------------------
              $/bu.   $/ton   $/cwt   Cents/lb  $/bu.
                                     
1990/91        5.74  121.00    10.80    34.70   5.27
1991/92        5.58   71.00     8.69    28.30   3.52
1992/93        5.56   97.50     9.74    30.00   4.12
1993/94        6.40  113.00    12.90    30.40   4.25
1994/95        5.48  101.00    10.70    28.90   4.63
1995/961       6.77  106.00    11.35    29.30   5.25

1995/96
September      5.98  101.00    11.00    29.70   5.11
October        6.16   99.00    11.00    28.60   5.11
November       6.40  114.00    10.80    29.50   5.17
December       6.76  116.00    10.70    28.60   5.03
January        6.78  106.00    11.10    29.80   5.27
February       7.00  117.00    11.50     NA     5.18
March          7.00    NA      12.10     NA     5.28
April          7.43    NA      12.70     NA     5.31
May            7.69    NA      13.50     NA     6.03
June           7.41    NA      14.30     NA     5.88
July           7.62    NA      13.70     NA     6.19
August         7.82  118.00    12.70     NA     6.15

1996/97
September      7.79  129.00    12.00    27.70   5.89
October        6.95  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
January1       7.16  132.00    11.60    28.60   6.50
--------------------------------------------------------
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 
---------------------------------------------------
                     Cents/lb.
                                                   
1990/91       21.00    24.10   23.67  45.50  27.50 
1991/92       19.10    22.83   21.63  27.30  25.82 
1992/93       21.40    30.07   25.37  27.40  20.90 
1993/94       27.00    30.30   31.08  43.20  26.38 
1994/95       27.51    29.23   28.10  44.30  26.47 
1995/961      24.70    26.53   25.40  40.00  25.55 
                                                   
1995/96
October       26.57    27.61   27.49  42.50  26.05
November      25.42    26.27   26.25  41.63  25.54
December      24.76    26.10   25.98  39.20  24.99
January       23.52    24.45   24.65  37.25  24.52
February      23.49    24.35   24.23  36.00  24.30
March         23.60    24.25   24.28  36.60  24.34
April         25.70    26.77   25.63  39.25  26.60
May           26.50    28.46   26.38  42.80  27.98
June          24.95    27.94   25.72  43.00  25.66
July          24.10    28.25   24.58  43.00  25.46
August        23.99    27.81   24.90  42.60  24.33
September     23.92    26.13   24.90  40.80  24.14

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
January1      22.45    25.21   22.65  43.50  23.39
-------------------------------------------------------------------------
1 Preliminary 2 Decatur 3 PBSY Greenwood MS
4 Minneapolis 5 Southeast mills 6 Chicago


Table 6--Oilseed meal prices
---------------------------------------------------
             Soy-   Cotton   Sun-           
Marketing    bean    seed   flower  Peanut  Linseed
 year        meal2   meal3   meal4   meal5   meal4
---------------------------------------------------
                        $/short ton
1990/91     181.40  130.75   88.00  193.00  130.10
1991/92     189.20  140.50   76.80  154.50  125.25
1992/93     193.75  161.78   89.00  172.90  133.60
1993/94     192.86  164.30   94.00  194.91  139.55
1994/95     162.55  112.02   62.70  128.94   95.85
1995/961    235.90  190.74  123.75  202.70  159.05

1995/96
October     193.90  153.25   82.88  132.50  131.00
November    204.10  165.00   99.00  175.00  151.67
December    223.60  185.80  122.50  204.00  143.75
January     232.00  208.80  135.00  220.00  142.00
February    228.30  202.80  130.00  215.00  143.75
March       226.57  195.60  123.50  210.00  155.00
April       249.30  220.00  133.00  210.00  174.00
May         244.30  191.25  137.00  212.00  177.00
June        238.80  192.20  135.00  210.00  178.75
July        252.50  201.56  135.00  224.25  174.00
August      261.20  193.10  126.25  227.00  170.00
September   276.40  193.10  125.60  192.80  167.50

1996/97
October     248.50  183.25  116.00  170.00  175.00
November    251.50  196.60  105.00  146.13  166.25
December    250.60  224.50  113.35  172.67  171.65
January1    249.20  207.19  125.00  221.00  165.00
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills


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