OIL CROPS OUTLOOK                                           January 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-0197.  
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SWELLING MEAL EXPORTS TO FUEL NEAR RECORD DOMESTIC SOYBEAN CRUSH

The final U.S. soybean production estimate for 1996 was 2,382 million bushels,
down 20 million from the previous forecast.  USDA revised soybean planted area
to 64.2 million acres in its Crop Production--1996 Summary report, down
110,000 acres (mostly for Arkansas).  However, a higher proportion was
harvested in other States, which dropped harvested total area only 31,000
acres to 63.4 million.  Smaller final yields in Missouri, Indiana, and
Illinois accounted for most of the downward revision from the November
production report.  The final U.S. average yield settled to 37.6 bushels per
acre, tieing 1992 as the second highest yield.

Thriving meal exports are anticipated to boost domestic crushing in 1996/97. 
Firm meal prices and lower soybean prices have pushed the monthly gross crush
margin to the highest level since early 1995.  Projected U.S. soybean crush
was raised this month to 1,400 million bushels, up 10 million from last month. 
The forecast for this year would nearly equal the record quantity crushed in
1994/95.  Based on the Grain Stocks report, the rapid first quarter
disappearance has drawn down December 1 soybean stocks to 1,823 million
bushels, about 11 million bushels below a year earlier.  Greater crush and the
production revision would cut 1996/97 soybean ending stocks to 155 million
bushels, which represents the lowest stocks-to-use ratio since 1972/73.

U.S. export inspections this fall and winter have been very strong, running
about 76 million bushels ahead of the pace a year ago.  However, there should
be an unusually abrupt shift in seasonal exports as competing foreign supplies
surge from a very slim amount.  In spite of the recent dry spell in Brazil and
Argentina, the large planted area and still favorable soil moisture will
sharply curtail U.S. soybean export potential in the last half of 1996/97. 
Also, new Brazilian legislation exempts exports of raw materials and semi-
manufactured products from state sales taxes.  Previously, the taxes--which
included maximum taxes of 13 percent on soybeans, 11.1 percent on soybean
meal, and 8 percent on soybean oil--provided Brazilian farmers a great
incentive to sell soybeans to crushers rather than for export.  These reforms
now make Brazil more competitive against the United States in the world
soybean market, instead of favoring Brazilian exports of the soybean products.

The heavy domestic and foreign demand for soybeans and soybean products has
kept prices firm this fall, despite the large U.S. harvest.  USDA forecasts a
1996/97 season average farm price range of $6.60-$7.10 per bushel, up from the
December forecast of $6.30-$7.00.  Current prices should persist as long as
meal demand and anticipated oil demand from China holds up.

However, prices may soften somewhat by next spring.  A later than usual
harvest and withheld sales for tax deferment slowed farm marketings last fall. 
One sign of this retention is that more than half of the December 1 soybean
stocks were held on farms, the highest proportion in a decade.  Farm sales
should soon accelerate and weaken prices.  Also, within weeks, importers will
begin to cover their near-term requirements and start switching to South
American origins.  Some slippage in corn prices may yet occur, which would add
to pressure on soybean prices.  Rising expectations for large U.S. plantings
and improving yields again in 1997 could also put pressure on marketing the
remainder of the 1996 crop.

Although a higher domestic crush is expected, forecast 1996/97 soybean oil
production fell 135 million pounds this month because of a lower oil
extraction rate.  A below trend rate, averaging 10.93 pounds per bushel, is
now forecast.  This helps to reduce the year ending oil stocks to 2,015
million pounds, the same as the 1995/96 carryout.  U.S. soybean oil imports
were slightly raised to reflect increasing Canadian supplies.  Current prices
for soybean oil, at 21.6 cents per pound in December, are very competitive,
which should soon attract substantial export trade.  The projected average
price range of 22.5-24.0 cents per pound suggests that significantly higher
prices are anticipated in coming months.  Futures prices also indicate that a
stronger soybean oil market is imminent.

There are good reasons for this optimism.  This year's smaller supplies of
competing Northern Hemisphere vegetable oils are quickly disappearing. 
Chinese vegetable oil imports are forecast to climb from 2.8 million metric
tons last year to 3.8 million in 1996/97.  Robust world demand has drawn down
palm oil inventories faster than they can be replaced, creating an opportunity
for soybean oil.

This season's projected soybean meal extraction rate also dropped to 47.4
pounds per bushel, down from the December forecast of 47.6 pounds.  But, the
larger U.S. crush was enough to produce a net increase in expected 1996/97
meal production to 33.2 million short tons.  This would result in a record
domestic supply, slightly exceeding the 1994/95 volume.

The export market will absorb most of the additional U.S. meal supply,
although a slight increase in domestic use is also projected.  The U.S.
soybean meal export forecast was raised 200,000 short tons this month to 6.5
million.  China is the major source of new soybean meal demand in the world
this year.  Total Chinese production of oilseeds is down more than 4 million
metric tons from a year ago.  China's 1996/97 soybean meal imports were
increased 100,000 metric tons to 1.9 million this month, up from 0.9 million
in 1995/96.  A half-million-ton reduction in EU oilseed harvests and firmer
wheat prices compared to corn are also encouraging the EU to import more
soybean meal this winter.  To date, U.S. export commitments of soybean meal to
the EU are 123 percent above a year earlier.  This rapid U.S. pace is likely
to decline dramatically, however, once the South American harvest commences.

Despite larger supplies, the strong export trade is supporting year-to-date
prices for soybean meal.  Consequently, USDA forecast a higher average price
range this month, from $215-$235 per short ton to $220-$240.  This season's
price pattern should differ from the steadily rising 1995/96 pattern, by
gradually declining from this fall's $250 per ton level.

The recent Hogs and Pigs report indicated a 4-percent drop in hog numbers from
a year earlier and the smallest December 1 swine herd since 1990.  Despite a
dramatic reduction in sow slaughter in recent months, USDA reported the
smallest U.S. breeding herd ever.  In spite of a much improved price-to-feed
cost ratio and rising litter sizes, this limited capacity for an expansion in
production has cut December-May farrowing intentions 1 percent below
farrowings a year earlier.  These factors will restrain 1996/97 disappearance
of soybean meal to only 1 percent more than last season's level.

EXCELLENT SUNFLOWER YIELDS CUSHION PLUNGE IN ACREAGE

Although sunflower acreage dropped, larger seed yields (chiefly in North and
South Dakota) generated a net increase in 1996 production from the previous
forecast to 3.6 billion pounds.  Despite a late start, nearly ideal weather
conditions improved the national average yield to 1,435 pounds per acre, or 21
percent above the 1995 average.  U.S. production of confection sunflowers
actually increased to a record volume because of the superb yields.

Despite this year's smaller sunflowerseed output, very large carryin stocks
have maintained the total supply near its 1995/96 level.  This has moderated
the projected declines in 1996/97 crush and exports, each down 7 percent from
last season.  Non-oil uses (such as birdfood) appear to be less price
sensitive and are expected to rise to 1.4 billion pounds.  Consumption from
rapidly expanding non-oil sources may equal domestic crush demand within a
decade.

Although still above the 1995/96 volume, U.S. sunflowerseed oil exports were
cut this month to 683 million pounds.  Expected oil carryout stocks for
1996/97 fell to 74 million pounds, which is half the size of 1995/96 ending
stocks.  Stiff competition from soybean oil has narrowed the price premium for
sunflowerseed oil to just 0.7 cents per pound.

International highlights this month for the sunflowerseed sector include a
300,000-metric-ton increase in estimated 1996/97 Russian sunflowerseed
production, although it is still more than 1.4 million tons below the bumper
1995/96 harvest.  India's sunflower oil imports have recently increased. 
Reasons for this uncommon shift include a shortfall in domestic rapeseed,
soybean, and cottonseed oil production and rising prices for palm oil imports. 
But U.S. export demand from Algeria is likely to weaken, continuing the
declining trend in U.S. market share there.

Like sunflowers, U.S. canola acreage fell in 1996 as relative prices favored a
shift to wheat and feed grains.  Total canola plantings fell 18 percent to
366,000 acres, although a rebound in yield to 1,384 pounds per acre helped
blunt the loss of supplies.  Higher seed prices and lower U.S. vegetable oil
prices will restrict the volume of Canadian seed imports to nearly a half
billion pounds.

The next Oil Crops Outlook is scheduled for release at 4:00 pm ET Thursday,
Febuary 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    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     1,400    900    116    2,416    155
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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     33,191    33,500       26,800   6,500   33,300    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   15,295   17,415       13,650   1,750   15,400   2,015
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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    10.70    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
November       6.90  114.00    11.90    25.00   6.50
December1      6.92  133.00    11.50    26.60   6.68
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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
November      21.80    24.28   22.50  39.20  22.96
December1     21.60    24.29   22.30  40.75  22.27
-------------------------------------------------------
Preliminary 2 Decatur 3 PBSY Greenwood MS
4 Minneapoli 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
November    251.50  196.60  105.00  146.13  166.25
December1   250.60  224.50  113.35  172.67  171.65
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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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