OIL CROPS OUTLOOK                                               December 13, 1996
            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-1296.  
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ROARING DEMAND RALLIES SOYBEAN PRICES

Despite the second-largest U.S. soybean harvest in history, soybean prices
have rallied in recent weeks owing to a robust increase in demand and a
passive delivery pace from farmers.  In October, soybean processors crushed
126.1 million bushels, one of the highest monthly volumes ever and the highest
for any October.  Weekly crush data indicate that the torrid pace continued
through November.

A very rapid export pace has been evident the last several weeks, as sales to
China are racking up.  USDA raised its 1996/97 export forecast to 900 million
bushels, 30 million above last month's forecast, and potentially the third-
highest volume on record.  Expected higher foreign demand is projected to
reduce U.S. carryout stocks to 180 million bushels, very similar to the
1995/96 situation.  Consequently, the 1996/97 average farm price is forecast
to range from $6.30 to $7.00 per bushel, nearly identical to the range
forecast in December a year ago.

Huge export sales of soybean meal are driving the surge in crushing.  As of
December 5, total export commitments for soybean meal had increased a
remarkable 83 percent from a year ago.  China, Thailand, and the Philippines
are sparking current U.S. meal trade.  Domestic consumption has not been
dormant, either.  Sow slaugher this fall is way down, suggesting that U.S. hog
feeders intend to aggressively expand their herds into 1997.  Poultry
producers are also expanding production to take advantage of much lower feed
costs.  Heavy demand will likely firm soybean meal prices in 1996/97, which
are expected to average $215-$235 per short ton, compared with last month's
$210-$225 estimate.

Cool summer temperatures, which were the case in 1996, generally lessen the
oil content of soybeans.  USDA is projecting an oil extraction rate of 11.1
pounds per bushel, which is down from 11.19 pounds in 1995/96.  This reduces
yearending soybean oil stocks to 2,140 million pounds, down 115 million from
last month's forecast.  Despite the strong crush in October, soybean oil
stocks dipped slightly as total disappearance soared.  The slightly tighter
outlook raises the expected soybean oil price from November to a 22.25-23.75
cents per pound, suggesting future strengthening from current levels.

U.S. exports of soybean oil also exceeded year-earlier volumes, based on a
resurgent Chinese market.  As of December 5, shipments were 359 million
pounds, more than triple the amount of a year ago.  U.S. exports to China
already equal total 1995/96 shipments to that destination.

Projected exports of U.S. sunflowerseed oil are raised this month to 705
million pounds, based on an unusually large Indian purchase of 110 million
pounds.  The supplies necessary to meet the greater foreign demand are
expected to result from higher crush and smaller domestic consumption.

CHINA LOOMS LARGE ON WORLD OILSEED MARKET

Based on a lower estimate of harvested area, USDA forecast 1996/97 Chinese
soybean production at 12.5 million metric tons this month, down from the
previous forecast of 13.3 million.  The large net reduction in Chinese oilseed
supplies exacerbates China's deficiency of protein meal.  Consequently,
projected Chinese imports of soybeans and soybean meal were raised to 1.5
million and 1.8 million tons, respectively, which are nearly double last
year's volumes.  China's soybean exports, nearly all of which are food-grade
exports to Japan, were also trimmed to just 200,000 tons.

Despite intense Chinese purchases this fall, there is concern that the brisk
import trade could be interrupted this winter.  Chinese traders may have
frontloaded their imports of soybeans and soybean meal in anticipation of
government import quotas or higher duties next January.  The major producing
province in northern China is relaxing a ban on exports to other southern
provinces, which should ease demand for imports from abroad.  However, some
soybean oil traders have imported on speculation of greatly liberalized
Chinese quotas or an absence of quotas for 1997.  Depleted Chinese palm oil
stocks and a pickup in deliveries this fall were the basis for this month's
higher palm oil import forecast, to 1.7 million tons from 1.0 million in
1995/96.

India's 1996/97 soybean production is expected down despite a larger area. 
Unseasonably heavy rains during harvest in late October and early November
damaged soybean yield and quality.  India's soybean output this year is now
forecast at 4.0 million tons, down from 4.2 million forecast last month and
4.5 million in 1995/96.  This will likely further constrain India's ability to
crush and export soybean meal.  The December forecast for 1996/97 Indian
soybean meal exports was reduced 100,000 tons to 2.2 million, and down from
2.5 million last year.  Other than the United States, India is one of the few
competitive sources of soybean meal between November and February.

A rapidly growing population in Indonesia is encouraging a large domestic
poultry industry and accelerating feed demand.  Indonesia may boost soybean
meal imports to 1.0 million tons in 1996/97, which would be double the amount
imported just 3 years ago.  India, Brazil, and China are the principal
exporters of soybean meal to Indonesia.  Indonesia's stagnant production of
soybeans necessitates maintaining the same level of imports for 1996/97.  All
Indonesian soybean imports are used for food (tempeh and tofu), as the
country's only crushing plant ceased operation in 1996, unable to compete with
cheaper meal imports.

This month's forecast for higher Chinese cottonseed production was offset by a
reduction for the former Soviet Union (FSU).  Abysmal yields are expected to
sink FSU cottonseed production to 2.6 million tons, the smallest in three
decades.  Poor weather has also caused much lower FSU sunflowerseed yields
this year.  Russian sunflowerseed output for 1996/97 is forecast at 4.8
million tons, a substantial drop from last season's bumper 7.4 million tons. 
This month's 500,000-ton reduction further curbs crush in Russia and Ukraine. 
With a shortage of oilseeds in western Europe, there are ready buyers for FSU
sunflowerseed, which should prevent FSU export demand from falling as much as
domestic crush.

The next Oil Crops Outlook is scheduled for 4:00 pm ET Monday, January 13.

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---------------------------

1994/95     209    6    2,517    2,731     1,405    838    153    2,396    335
1995/96     335    5    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183    5    2,403    2,590     1,390    900    120    2,380    180
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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     33,066    33,375       26,850   6,300   33,150    225
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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   15,430   17,540       13,650   1,750   15,400   2,140
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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
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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        5.48  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  100.00    11.00    29.70   5.11
October        6.15   99.00    11.00    28.60   5.11
November       6.40  114.00    10.80    29.50   5.17
December       6.76  116.00    10.60    28.60   5.03
January        6.77  107.00    11.00    29.80   5.27
February       7.01  117.00    11.50     NA     5.18
March          7.00    NA      11.90     NA     5.28
April          7.43    NA      12.50     NA     5.31
May            7.69    NA      13.60     NA     6.03
June           7.41    NA      14.30     NA     5.88
July           7.62    NA      13.60     NA     6.19
August         7.82  118.00    12.70     NA     6.15

1996/97
September      7.79  134.00    12.00    27.70   5.89
October        6.95  127.00    11.70    25.80   6.49
November1      6.80  114.00    11.10    25.30   6.41
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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    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
November1     21.80    24.28   22.50  40.00  21.96
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1 Preliminary 2 Decatur 3 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   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
November1   251.50  196.56  105.00  170.00  166.25
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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) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
****************************************************************************

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