OIL CROPS OUTLOOK                                               May 12, 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--0595.  
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DESPITE DROP IN 1995 PRODUCTION, AMPLE OILSEED SUPPLIES ARE EXPECTED
 
Planting of full-season soybeans has commenced in the southern States.  But a
wet, cool spring has put grain planting behind schedule in the upper Midwest. 
As of May 7, corn had been 20 percent planted compared to the 43-percent
average, while spring wheat was 23 percent seeded, compared to the average 67
percent by this date.  The delays are weighing on soybean prices, as chances
increase that farmers will substitute more soybean acreage.  In early March,
farmers intended to plant 61.5 million acres of soybeans, down 1 percent from
1994.
 
USDA's first 1995/96 supply and demand forecast assumes the U.S. soybean yield
will be at the trend level of 36.5 bushels per acre.  The U.S. trend yield is
based on a weighted (by acres) average of regional trend yields.  With
projected harvested area of 60.3 million acres, 1995 soybean production is
figured to total 2.2 billion bushels.  While this is more than 300 million
bushels less than last year, it would still rank as the third-largest U.S.
harvest.
 
Soybean crush is projected to drop slightly, to 1,375 million bushels. 
Exports are also expected to slip to 760 million bushels based on lower
available U.S. supplies, reduced demand in Mexico, and a moderate decline in
crush margins in the EU.  Total demand will exceed production so that ending
stocks will decline from this year.  But the relatively large 380-million-
bushel carryover does not leave much room for a price gain next year.  The
1995/96 average price range is $5.10-$6.10 per bushel, compared to $5.40
forecast for 1994/95.
 
Production of soybean oil, at 15.4 billion pounds, should top 1994/95's record
output.  The heavy soybean crush will allow for a healthy oil export picture
and a rebuilding of carryover soybean oil stocks.  However, oil exports will
sink to 1.9 billion pounds, off 550 million from this year's boom.  Abundant
sunflower and soybean oil in South America, and a sharp increase (6.7 percent)
in palm oil output means more competition for U.S. soybean oil exports.  And
after 3 years of falling oil stocks, next year's carryover will rise to about
1.4 billion pounds.  This suggests soybean oil prices will ease from this
year's average of 27 cents per pound to 24.0-27.0 cents per pound in 1995/96.
 
Projected soybean meal production next year is slightly larger (by 35,000
tons) based on a trend extraction rate that is greater than the estimated
1994/95 rate.  Like oil, U.S. meal exports are expected to drop, to 5.5
million tons.  A much larger carryover of Brazilian soybeans dampens the
prospects for U.S. meal exports next year.  Soybean meal imports by the EU
also are expected to slip.  EU grain prices will be further reduced under CAP
reform, thus increasing grains' competitiveness against protein meal.  U.S.
domestic meal disappearance rises 1.6 percent to 27.2 million tons,
significantly down from this year's estimated 5.8-percent growth rate.  Meal
prices should slightly firm in 1995/96, ranging from $155-$175 per ton,
compared to $155 per ton this season.
 
OUTLOOK FOR SUNFLOWERSEED PRICES APPEARS WEAKER IN 1995/96 
 
U.S. sunflower production for 1995/96 is forecast down to 4.3 billion pounds. 
The forecast is based on 3.4 million acres harvested, which represents a
normal acreage abandonment from 3.5 million acres of intended plantings.  The
projected 1995 yield for sunflowers is 1,274 pounds per acre and is well below
the 1994 yield of 1,410 pounds per acre.  The trend yield is a weighted
average of oil-type and confectionery sunflowers.  The yield of each type of
sunflower is the regional trend yield for 1978-1994, weighted by the
prospective regional acreage.
 
Crush in 1995/96 will exceed this year's expected record of 2.55 billion
pounds by 15 million.  Seed exports will show larger growth, from 551 million
pounds to 625 million.  So, while total demand rises and production falls,
yearend sunflowerseed stocks dip to 675 million pounds, which is still
historically large.  The expected higher crush and slightly lower prices will
sustain solid export demand (750 million pounds) for U.S. sunflowerseed oil,
although less than 1994/95 exports.  Price reductions in the entire vegetable
oil complex next year will depress prices for sunflowerseed oil, and
ultimately sunflowerseed.
 
SLIGHT GAIN IN WORLD OILSEED SUPPLIES FOR 1995/96
 
Larger carryin stocks of oilseeds but smaller world production is seen for
1995/96, resulting in projected world oilseed supplies of nearly 280 million
metric tons, up 0.4 percent.  Total foreign oilseed production is projected up
1 percent from 1994/95.  Except for soybeans,  world oilseeds production is
rising in response to higher prices.  The relative prices of oil and meal
favor the production of high oil-content seeds (rapeseed, sunflowerseed).  In
addition, rising world prices for cotton support higher cottonseed production.
 
Supply and demand for vegetable oils will be the largest uncertainty in
1995/96.  Tight palm oil supplies and continued strong vegetable oil demand
(from China and other developing countries) have prevented any significant
decline in vegetable oil prices.  Although palm oil production is expected to
sharply increase in 1995/96, the total vegetable oil stocks-to-use ratio will
likely remain below average.
 
Slowed growth in protein meal supplies are likely to support slight gains in
protein meal prices in 1995/96.  Global consumption growth may slow because of
weaker demand in developed country markets.  Relatively low prices for protein
meal, especially soybean meal, will likely continue to support import demand
in developing countries and higher consumption in producing countries.  EU
demand for soybean meal in 1995/96 is likely to slightly drop as grain prices
drop relative to soybean meal.
 
SOYBEAN CRUSH FOR 1994/95 UP ON OIL AND MEAL EXPORT GAINS
 
Total U.S. crush for this marketing year was raised to 1,380 million bushels
in response to persistent vigor in soybean product exports.  Cumulative crush
through March was 848 million bushels, or over 10 percent higher than the same
period last season.  The increase in domestic use lowers ending stocks 10
million bushels, to 425 million.
 
The May forecast for 1994/95 soybean oil production rose because of the higher
expected crush.  Total output is now forecast at 15.3 billion pounds. 
Domestic soybean oil disappearance was slightly reduced for 1994/95 based on a
year-to-date total that is below last year.
 
The increase in 1994/95 soybean meal production is divided between increases
in both domestic use and exports.  Domestic disappearance, up nearly 9 percent
through February, is forecast up 160,000 tons from last month's forecast, to
26.8 million tons.
 
U.S. SOYBEAN AND PRODUCT EXPORTS REMAIN BRISK IN 1994/95
 
U.S. soybean meal exports for 1994/95 are expected up from last month to 5.9
million short tons, while U.S. soybean exports remain unchanged at 800 million
bushels.  Cumulative U.S. meal exports (Oct.-Feb.) of just over 3 million tons
are 14 percent larger than last year. 
 
U.S. exports continue strong in 1994/95, primarily due to an expected slowing
of Brazilian and Argentine soybean exports.  In Brazil, expected soybean
exports are down 300,000 metric tons, as credit uncertainty and extremely low
prices during harvest ($4 a bushel in Matto Grosso), combined with port delays
and higher freight costs have significantly diminished the export window for
the October-September year.  In Argentina, farmer and export sales are
sluggish.  The harvest pace is significantly below the average level, mainly
because of the unusually large second soybean crop (planted in late December).
 
U.S. soybean meal exports have also benefited from a drop in India's expected
exports.  India's soybean meal export prospects were cut by 444,000 metric
tons from last month.  Higher domestic use, and a 200,000-metric-ton cut in
soybean imports account for lower Indian soybean meal exports.  The Government
of India (GOI) declared a temporary restriction on soybean imports until after
planting (importers were told to import soybeans only between July 15 and
September 30).  The GOI indicated its concerns that some farmers could use
imported soybeans for seeding, with the potential of spreading plant diseases. 
Indian soybean crushers are unlikely to purchase additional soybeans, as the
first of September usually marks the end of their crushing season.
 
U.S. SOYBEAN OIL EXPORTS IN 1994/95 PROJECTED AS THE SECOND LARGEST
 
Continued high palm oil prices and strong vegetable oil demand by China, are
expected to push U.S. soybean oil exports in 1994/95 to 2.45 billion pounds,
second only to the 2.69 billion pounds of 1979.  Cumulative U.S. soybean oil
exports from October 1994 through February 1995 were 1.3 billion pounds, with
China importing directly 584 million pounds.  The 1994/95 total also signifies
the first year since 1991/92 that U.S. soybean oil exports have exceeded
Brazil's, although both countries still trail Argentina by a wide margin.
 
MEXICO'S PESO DEVALUATION REDUCES OILSEED DEMAND FOR 1994/95
 
Three months after the peso devaluation, Mexico's oilseed demand is showing
the first signs of significant contraction.  Cumulative shipments of U.S.
soybeans from September 1994 through April 1995 were 1 million metric tons,
unchanged from last year.  After the peso devaluation, U.S. shipments to
Mexico from January through April totaled 686,000 metric tons, compared with
952,000 tons during the same period in 1994.  U.S. soybean exports accounted
for 90 percent of all Mexican soybean imports in 1993/94.
 
Mexican edible oil and oilseed imports are projected down 22 and 13 percent,
while protein meal imports are up 15 percent.  Crushing in Mexico remains more
profitable than refining oil.  But smaller demand for oils and significantly
lower prices for protein meals support a reduction in oil and seed imports,
but greater meal imports.
 
The outlook for Mexico's 1994/95 oilseed demand remains unclear, as the effect
of higher inflation, lower real wages, and rising interest rates continues
depressing the domestic market.
 
SMALLER U.S. SUNFLOWERSEED OIL EXPORTS CURB DOMESTIC SEED CRUSH
 
U.S. sunflowerseed and oil exports to Mexico are expected up from 1993/94. 
Mexico has a preference for sunflower oil, and currently sunflowerseed and oil
prices are highly competitive.  Slower-than-expected oil exports to Mexico
through February lowered projected 1994/95 U.S. sunflowerseed oil exports this
month to 772 million pounds, which is still 72 percent above 1993/94.  The
diminished export prospects have reduced 1994/95 U.S. sunflowerseed crush this
month to 2.5 billion pounds, which raised ending seed stocks to over 800
million pounds.
 
CORN OIL EXPORTS ALSO SURGE
 
As with other vegetable oils, U.S. corn oil exports are forecast to climb this
year.  Record exports of 815 million pounds are expected in 1994/95, up from
705 million in 1993/94.  Through February, corn oil exports (see ERS Autofax
document #2370) were up nearly 12 percent versus a year ago.  Much of the
trade expansion has been to the European Union countries.  A global shortage
in cooking oils has run up prices, generating record production of corn oil in
the United States.  Outturn for 1994/95 is forecast at 2,150 million pounds,
which is nearly 13 percent above the 1993/94 level.  A high quality corn crop
in 1994 also helped increase oil yields well above those from the poor quality
crop of 1993.
 
Growth in domestic disappearance has been sluggish, however, as total use of
oils for margarine (a major corn oil market) has dipped.  Estimated 1994/95
U.S. disappearance was reduced this month to 1,265 million pounds, which is up
from 1,239 million last year.  With higher supplies, the lackluster U.S.
market is expected to hike ending stocks of corn oil to a relatively high 190
million pounds.
 
The next release of the Oil Crops Outlook is scheduled for 4:00 p.m. ET
Tuesday, June 13.
 
******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0838
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
Jaime Casteneda  World Oilseeds                             (202) 219-0826
******************************************************************************
 
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    8    2,558    2,775     1,380    800    171    2,351    425
1995/96 2/  425    5    2,200    2,630     1,375    760    116    2,250    380
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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     30,417    30,691       25,185   5,356   30,541    150
1994/95 1/  150     32,650    32,860       26,600   5,900   32,660    200
1995/96 2/  200     32,685    32,950       27,200   5,500   32,700    250
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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   15,317   16,430       12,950   2,450   15,350   1,030
1995/96 2/  1,030   15,400   16,440       13,100   1,900   15,000   1,490
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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
 
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   86.00    12.60     NA     4.52
 
1994/95
September      5.47  101.00    10.70    30.30   4.54
October        5.30   96.00    10.80    28.80   4.49
November       5.36  106.00    10.60    25.60   4.51
December       5.41  119.00    10.30    25.40   4.71
January        5.47  120.00    10.60    25.70   4.75
February       5.40  103.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.15
April1         5.57    NA      10.40     NA     5.20
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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 
---------------------------------------------------
                     Cents/lb.
                                                   
1990/91       21.00    22.30   23.60  45.50  27.50 
1991/92       19.10    20.10   21.60  27.30  25.82 
1992/93       21.40    25.00   25.30  27.40  20.90 
1993/94       27.09    27.78   31.00  43.20  26.38 
                                                   
                                                   
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 
April1        27.16    24.00   26.90  41.25  27.30 
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1 Preliminary 2 Decatur 3 Valley points 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
---------------------------------------------------
                        $/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
 
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
April1      160.16   98.13   62.50  125.00   94.38
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
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