OIL CROPS OUTLOOK                                           August 13, 1998
August 1998, OCS-0598
             Approved by the World Agricultural Outlook Board
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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 published copies are available.   
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Improved U.S. Yield Expectations Undermine Soybean Prices

USDA's first 1998 field survey indicated a national average
soybean yield of 39.5 bushels per acre.  Only Kansas, Missouri,
and Ohio set or tied record yields, but many Midwestern States
are near their best ever soybean yields.  Slightly fewer acres
(71.6 million) are expected to be harvested, resulting in a U.S.
harvest of 2,825 million bushels.  

Moisture conditions for soybeans stabilized in July, with
stressed crops in the South receiving some much needed relief. 
In the major producing States of the Corn Belt, crop conditions
continued to be quite favorable.  As of August 9, 66 percent of
U.S. soybean fields were rated in good to excellent condition. 
This was slightly better than a year earlier, but less than
1994's 79 percent, which ended up producing a record per-acre
yield.  More of this year's crop had advanced into the pod
filling stage (68 percent compared to a 5-year average of 50
percent).  With ample soil moisture reserves to draw on, it is
quite likely that the majority of soybeans will avoid problems
even if precipitation falls off in the remainder of August.

The improved outlook for yields is pressuring cash prices for
soybeans, meal, and oil.  The central Illinois soybean price has
dropped below $6 per bushel for the first time in 3 years.  A dry
weather rally pushed prices for soybean meal as high as $200 per
short ton in July, but prices have since collapsed to about $145
after widespread precipitation in the Corn Belt.

In recent weeks, domestic soybean crushing has been able to
remain strong because soybean exports have been so weak.  Despite
the lowest monthly U.S. gross crush margins in years, demand from
foreign crushers has nearly vanished, as evidenced by the
narrowed differential of the Gulf export price over the price
paid by Illinois processors.  Current season crush was forecast
higher this month to 1,590 million bushels.  The trend should
continue into 1998/99, when the crush is expected to reach 1,615
million bushels, up 15 million from the previous forecast.  Also,
a series revision raised 1997/98 and 1998/99 demand for seed to
86 million and 84 million bushels, respectively.

The export outlook for soybeans will continue to be eclipsed by
the dominant domestic crush market.  Despite ample soybean
supplies, heightened foreign competition may trim 1998/99 U.S.
exports to 850 million bushels.  Sinking prices for soybean meal
imports and the bumper oilseed crops now being harvested in
Europe have diminished soybean crush margins.  The slowing
Chinese economy will moderate import growth compared to recent
years.  And, unlike 1997/98, when U.S. soybean exports to Brazil
totaled 30 million bushels, shipments this fall will be
negligible.  Compared to the brisk 1997/98 U.S. export sales a
year ago, 1998/99 soybean sales so far are only 30 percent as
much.

For the current season through May, Census export data indicated
U.S. soybean exports of 791.6 million bushels.  Based on this and
the recent export pace, USDA reduced its 1997/98 export forecast
to 870 million bushels.

Yearending soybean stocks on August 31 are expected to be 210
million bushels.  Yet, the huge fall harvest will more than
double the 1998/99 carryout to 430 million bushels, which would
be the largest since 1986/87.  Such a large expected supply-to-
use balance is having a dramatic effect on soybean prices.  The
1998/99 season average price is anticipated to fall to $4.85-
$5.85 per bushel, from $6.45 this season.

World Soybean Stocks To Accumulate After Excellent Harvests,
Weakening Demand

World beginning stocks for 1998/99 are projected higher based on
old crop production revisions for Brazil (to 31.0 million metric
tons) and Argentina (18.5 million tons).  As with the United
States, 1998/99 soybean exports from Brazil and Argentina are
likely to wane.  Brazilian exports may drop from 9.0 million tons
this season to 8.5 million.  Likewise, Argentine exports may be
down from 2.6 million tons in 1997/98 to 2.1 million next year.

Even with moderately lower soybean production, 1998/99 global
ending stocks are projected to reach a record 24.8 million tons. 
World soybean imports are projected to drop from 39.0 million
tons this year to 37.6 million in 1998/99 as demand slows from
some of the largest import markets.  EU soybean crush is expected
to rise just 200,000 tons to 15.5 million in 1998/99 and EU
soybean imports will not rise at all due to a larger Italian
crop.  USDA now forecasts a smaller increase in Chinese soybean
imports from 3.1 million in 1997/98 to 3.3 million.  Projected
1998/99 Japanese soybean imports are 4.7 million tons, down from
5.0 million this season.  Taiwan's imports are also expected to
plateau at 2.2 million tons, compared to 2.6 million in 1996/97.

U.S. soybean meal exports should decline from this year's
spectacular 8.4 million metric tons to 8.2 million.  A more
temperate outlook for soybean meal imports by China and greater
U.S. competition will moderate meal export growth in Brazil and
Argentina.  Brazil is projected to export 10.3 million tons, up
from a revised 1997/98 forecast of 10.0 million.  A
proportionately greater increase in Argentine soybean production
and crush will raise 1998/99 expected Argentine meal exports from
9.7 million to 10.6 million tons.  Greater external trade will
boost EU 1998/99 meal imports to 16.8 million tons from 16.1
million this season.

Higher Supplies, Slower Exports Soften Soybean Oil Prices

In anticipation of a larger crop from the United States, foreign
soybean oil buyers have held off recent purchases and drawn down
stocks.  Also, China's campaign to improve domestic crush margins
by strictly enforcing import licenses for vegetable oil appears
to have had some impact.  In recent years, as much as half of
China's vegetable oil imports have been smuggled into the
country.  Current oil import quotas have been exhausted, creating
a great incentive to evade official channels.  The government
permits crushers to import crude oils without paying substantial
duties and value added taxes, provided they re-export the refined
oil.  But many of these imports have eventually wound up on the
domestic market.  The successful crackdown has helped subdue
current U.S. soybean oil prices, which have dropped from around
28 cents per pound in May to a July average of 24.8 cents.  USDA
forecasts a slight increase in Chinese soybean oil imports from
1.9 million tons in 1997/98 to 2.0 million tons next season. 
China will likely import a greater volume of rapeseed to bridge
the deficit in vegetable oil supplies, which would not add as
much to the country's current glut of protein meal.

Yet, soybean oil imports by other regions should soon pick up as
the new U.S. crop nears the market.  U.S. prices have been very
competitive against South American soybean oil.  And palm oil
prices are currently at a premium to soybean oil, boosting U.S.
sales to the Middle East.  The 1997/98 forecast for U.S. exports
was raised to 2,950 million pounds this month.  However,
increasing competition from South American crushers and improved
Indonesian palm oil production are expected to shave 1998/99
soybean oil exports to 2,800 million pounds.  Expanding oil
supplies will enable Argentina to increase its market share of
world soybean oil exports.

A record domestic supply of soybean oil will reverse the decline
in oil stocks from the previous 2 years.  USDA projects a 1998/99
soybean oil prices will average 25.5-27.5 cents per pound, down
from the previous forecast of 26-28 cents.

Southern Drought Withers Cottonseed and Peanut Output

In the Southern Plains, searing heat and extreme drought have
sharply cut prospective cottonseed production.  USDA estimated
1998 cottonseed output this month at 5.4 million short tons, down
nearly one-fourth from 1997.  Ample domestic supplies of other
oilseeds should limit cottonseed imports from Australia and
elsewhere, but the shortage will sharply cut cottonseed crush,
direct feeding, exports, and ending stocks.  Consequently, prices
for cottonseed oil and cottonseed meal will become more expensive
compared to their substitutes.

Despite a 1-percent increase in peanut acreage from last year,
1998 production is forecast down 2 percent to 3.48 billion
pounds.  The average yield is down to 2,442 pounds per acre
versus 2,507 pounds in 1997.  In the southeastern United States,
scattered rains during July were very timely for peanuts, which
have now nearly completed the pegging stage.  However, soil
conditions are still very dry in the Southeast and continue to
deteriorate in the Southern Plains.  As of August 9, just 49
percent of U.S. peanut fields were rated in good to excellent
condition, while 21 percent were rated poor to very poor. 
Smaller supplies available for export and a large Argentine
harvest are expected to curb U.S. peanut exports to about 640
million pounds.


The Summary of the Oil Crops Yearbook will be released October
30.  The next release of the Oil Crops Outlook is scheduled for
4:00 p.m. ET Thursday November 12, 1998.  This report is also
available electronically at the ERS website
http://www.econ.ag.gov

Information Contacts:

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


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  residual        stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1996/97    183    9    2,382    2,575     1,436    882    125    2,443    131
1997/98 2/ 131    5    2,727    2,863     1,590    870    193    2,653    210
1998/99 2/ 210    6    2,825    3,041     1,615    850    146    2,611    430
------------------------------------------------------------------------------
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    210
1997/98 2/  210    55    37,710    37,975     28,425   9,300   37,725    250
1998/99 2/  250    50    38,325    38,625     29,375   9,000   38,375    250
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 3--Soybean oil:  U.S. supply and disappearance
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                     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   55   17,930   19,505     15,150   2,950   18,100   1,405
1998/99 2/  1,405   55   18,170   19,630     15,300   2,800   18,100   1,530
------------------------------------------------------------------------------
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   20    7,144    7,681     3,860    116   3,182   7,158    523
1997/98 2/  523   40    6,935    7,497     3,870    145   2,992   7,007    490
1998/99 2/  490  100    5,353    5,943     3,250     25   2,518   5,793    150
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 5--Cottonseed meal:  U.S. supply and disappearance
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                     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     1,755     1,781     1,625     120    1,745     36
1998/99 2/   36     0     1,465     1,501     1,420      50    1,470     31
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1/ Estimated.  2/ Forecast.

Table 6--Cottonseed oil:  U.S. supply and disappearance
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                     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   1,225    1,292        990     205    1,195      97
1998/99 2/     97   0.3   1,040    1,137        935     150    1,085      52
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 7--Peanuts:  U.S. supply and disappearance
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                     Supply                         Disappearance 
           -------------------------  ----------------------------------------
Year 
begin.     Beg.   Im-  Produc- Total  Dom.   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   2,105   546   354  700    3,705     765
1998/99 2/    765  152  3,482  4,399   2,145   612   301  640    3,699     700
------------------------------------------------------------------------------
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     5.99
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
April          6.26   NA       12.60     NA     6.22
May            6.26   NA       13.80     NA     6.34
June           6.15   NA       14.40     NA     6.18
July1          6.13   NA       14.00     NA     6.02
--------------------------------------------------------
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   23.21  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
April         28.10    32.47   28.50  50.00  30.93
May           28.28    33.13   31.06  47.20  33.20
June          25.83    30.22   28.40  45.50  32.82
July1          24.88    29.40    NA    44.00  31.52
------------------------------------------------------
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
April       162.50  116.25   64.90  210.00  102.50
May         160.00  105.00   66.90  210.00   96.25
June        168.55  129.40   88.35  210.00  100.00
July1       183.45  146.65  100.00  210.00  111.00
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

END_OF_FILE