OIL CROPS OUTLOOK                                            April 12, 1999
April 1999, ERS-OCS-0499
             Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is issued eleven times a year by the Economic Research 
Service, U.S. Department of Agriculture, Washington, DC 20036-5831. 
Electronic release only; no printed copies are available.   
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Despite Low Prices, U.S. Farmers Intend To Expand Soybean Acreage

On March 31, USDA's Prospective Plantings report indicated U.S.
farmers intend to plant 73.1 million acres of soybeans in 1999. 
Soybean acreage at this level would be a U.S. record, and would
be up 730,000 acres from the previous high established last year. 
The largest prospective gains are in the western Corn Belt,
including Nebraska (up 500,000 acres), South Dakota (up 450,000),
and Iowa (up 400,000).  Soybean expansion in these areas would be
largely at the expense of corn and winter wheat.  However, the
number of States expecting a decline or no change in soybean
acreage exceeds those anticipating an increase.  Soybean intended
acreage for 1999 will be smaller in the South as cotton and rice
area expands.  

U.S. minor oilseed acreage is also expected to rise.  Sunflower
producers intend to plant 3.96 million acres, up from 3.55
million last year.  Although far from the record 5.6 million
acres planted in 1979, this year's acreage would be the largest
since 1982.  Most of the sunflowerseed increase would occur in
South Dakota, Kansas, and Minnesota, while North Dakota (the
largest producing State) is expected to drop 40,000 acres.  In
addition, flaxseed planted acreage would increase from 336,000
acres in 1998 to 521,000 this year, with North Dakota producers
accounting for all of the expansion.

The U.S. soybean farm price in March averaged $4.55 per bushel,
the lowest since 1976.  Therefore, it seems unusual that farmers
would consider planting so many soybeans.  One reason this makes
sense, however, is that there is more cropland available for
soybean production this spring.  U.S. winter wheat acreage
declined 3.05 million acres from a year ago.  Farmers in South
Dakota, Illinois, Ohio, and Kansas are all likely to plant more
soybeans onto land not taken for winter wheat production.

The other major factor for greater soybean planting is the
marketing loan.  In March, USDA announced that the 1999 marketing
loan rates for soybeans, corn, and wheat would be set at $5.26,
$1.89, and $2.58 per bushel, respectively, the same as last year. 
The minor oilseeds marketing loan was set at 9.3 cents per pound. 
Under the 1996 farm legislation, these are the maximum rates
allowed.  Marketing loan rates for wheat, corn, soybeans, and
minor oilseeds are required to be no less than 85 percent of the
simple average of prices received by producers during the
preceding 5 years, excluding the high and low years.  

Soybean cash prices are unlikely to exceed the loan rates this
year, so the difference will be made up by loan deficiency
payments and marketing loan gains.  Even if soybean cash prices
continue weakening this spring, farmers are still assured of a
better return by planting soybeans.  Given relative production
costs and expected yields, a ratio of 2.7-2.8 between the soybean
marketing loan and December corn futures favors soybeans.  The
U.S. average variable costs of corn production are approximately
double the cost of soybeans (about $81 per acre).  Soybean yields
also tend to suffer less under weather stress, so risk-averse
farmers can better stretch their operating loans by planting more
soybeans.

Lower U.S. Carryout Stocks of Soybeans Seen 

The March Grain Stocks report reconfirms this year's ample
soybean supply.  March 1 soybean stocks were 1,458 million
bushels, which is 255 million above a year earlier.  Another
indicator of low price environment is the proportion of stocks
held on farm, which is 56 percent.  This is the highest
percentage since 1983.  The share of total soybean stocks that
farmers have under CCC loan is also comparatively high, at 20
percent.  These stock levels and year-to-date crush and exports
implied a larger residual demand for 1998/99, which was raised
from 65 million bushels to 115 million.  Consequently, forecast
crop year ending stocks were reduced from 470 million bushels to
430 million.  The range for the 1998/99 average soybean farm
price was narrowed to $5.00-$5.10 per bushel.

Offsetting some of the ending stocks reduction were projected
U.S. 1998/99 soybean exports, which were trimmed 10 million
bushels this month to 770 million.

Domestic disappearance of soybean meal was left unchanged this
month at 29.8 million short tons.  USDA's Hogs and Pigs report
indicated that intended farrowings for December 1998 through May
1999 were down 4 percent.  Market hogs in the two smallest weight
classes (which will account for most of the protein meal fed to
swine between March 1 and September 30) were down 1 percent from
a year ago.  While the slowdown has not been as dramatic as
expected for the current season, the report still portends a
weaker outlook for 1999/00.  There was a relatively large 6-
percent decline in the breeding herd, and farrowing intentions
for spring and summer are down 7 percent.  The 1998/99 average
soybean meal price was increased to $130-$140 per short ton. 
Slowing domestic soybean crush and smaller projected Argentine
production is expected to support prices this summer.

USDA edged its 1998/99 forecast of soybean oil exports up to
2,350 million pounds from 2,205 million a month ago.  Based on
this outlook and a slowing of domestic offtake in January and
February, domestic disappearance was reduced an equivalent amount
to 15,500 million pounds.  Prices for soybean oil sagged in March
to 18.5 cents per pound as monthly oil stocks accumulated. The
April price forecast narrowed the range for the season average to
20.5-22.5 cents per pound.

Chinese Policy Alters World Oilseed And Products Trade 

In China, soybeans, soybean meal, and soybean oil are subject to
import duties set at 3, 5, and 13 percent, respectively.  In
addition, a value added tax (VAT) of 13 percent is levied.  In
1995, the Chinese government relaxed import quotas and waived the
VAT on soybean meal as a means of providing support for the
domestic livestock sector.  The VAT exemption for soybean meal
succeeded in boosting imported supplies for an expanding
livestock sector, pushing imports from a negligible amount in
1994/95 to 4.2 million metric tons last year.  

However, the Asian financial crisis exposed massive losses in
China's state-owned enterprises, including oilseed crushing
plants.  Chronically large price differentials for vegetable oil
enticed refiners to circumvent taxes and quotas on imports of
crude soybean oil by not re-exporting the refined oil.  The wave
of meal imports undermined prices and left domestic processors
with excessive stocks that they could not sell at a profit. 
These factors suppressed crushing margins and led to a great deal
of idle crushing capacity.  Yet, surplus domestic oilseed stocks
increased, as access to supplies was discouraged by restrictions
on interprovincial movement.

These events sparked a reform program to make these facilities
profitable.  In 1998, Chinese authorities were able to strengthen
enforcement of import quotas for vegetable oils.  China also
recently redefined the list of VAT-exempt feed products, which
excluded soybean meal and other oilseed meals.  The change is
retroactive to January 1 and effective through December 31, 2000. 
For months, Chinese customs officials collected mandatory
deposits from importers against the rumored tax.  Sales of
soybean meal to China slumped as cautious traders feared
potential defaults.  Reducing tax evasion and ending soybean
meal's VAT-exempt status should provide a greater incentive to
import oilseeds for domestic processors to turn into protein meal
and vegetable oil.  With much lower world oilseed prices, the
changes are hoped to reduce financial losses by the state-run
crushing plants.

As of April 1, U.S. shipments of soybean meal to China were 0.15
million tons, down more than three-fourths from a year earlier. 
China's 1998/99 imports of soybean meal were forecast down to 3.0
million tons, from 3.5 million last month.  Part of the reduction
will be offset by larger fishmeal imports, which retain the VAT
exemption.  China's fishmeal imports, already the world's
largest, were forecast up to 0.8 million tons from 0.48 million
in 1997/98.  This is aided by a substantial recovery this year in
world fishmeal exports, which plunged by nearly half in 1998
after poor harvests by Peru and Chile.

In Argentina, hot and dry weather during the February pod filling
period for double cropped soybeans has clipped yields, especially
in Cordoba (Argentina's second largest soybean province).  Recent
heavy rains were too late to help the crop, but have caused
isolated flooding and harvest delays.  As a result, this year's
estimate of Argentine soybean production was scaled back from
19.2 million to 18.7 million metric tons.  The reduction in
soybean crush to 15.9 million was moderated by larger expected
imports.  Argentina's expected exports of soybean meal were
shaved back to 12.1 million tons.  A boom is still expected in
Argentina's soybean oil exports, which may rise from 2.2 million
tons in 1997/98 to 2.6 million this season.

Larger Argentine soybean imports became possible following
reports from Paraguay of larger soybean area, generally favorable
weather, and excellent yields, which raised the 1999 production
forecast to a record 3.4 million tons.  A lack of crushing
capacity and the growing ease of shipping down the Parana River
has escalated Paraguayan exports to Argentina in recent years. 
River barges now transport about 70 percent of Paraguay's soybean
exports, where in the past they were nearly all trucked to
Brazil's port at Paranagua.  Paraguay's 1998/99 exports were
projected 0.3 million tons higher from the previous forecast to
2.7 million tons.

Weak soybean crush margins are still dampening EU soybean imports
for 1998/99.  Total EU soybean imports are forecast down again
this month to 15.6 million tons, nearly 1.3 million less than the
1997/98 volume.  Balancing this was higher expected EU soybean
meal imports of 17.9 million tons.

USDA forecast South Korean 1998/99 soybean imports 100,000 tons
lower this month to 1.3 million tons.  The country's largest
crusher (accounting for nearly half of national processing) has
defaulted on its short term loans.  Its operations will be
interrupted until a debt restructuring plan is implemented later
this month.  Profitability of the two other South Korean crushers
has also been under stress from inexpensive imports of soybean
meal and oil.  Projected Korean imports of soybean meal were
raised 100,000 tons to 0.95 million.


The next release of the Oil Crops Outlook is scheduled at 4:00
p.m. ET Thursday, May 13, 1999.  The report may be accessed at
http://usda.mannlib.cornell.edu/ or via the ERS website at
http://www.econ.ag.gov.

Information Contacts:
Mark Ash--Soybeans, minor oilseeds, oils   (202) 694-5289    
mash@econ.ag.gov
Robert Skinner--Cottonseed, peanuts        (202) 694-5313 
skinner@econ.ag.gov                          

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
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         -------------------------- Million bushels---------------------------

1996/97    183    9    2,380    2,573     1,436    882    123    2,441    132
1997/98    132    5    2,689    2,826     1,597    870    158    2,626    200
1998/99 2/ 200    6    2,757    2,963     1,560    770    203    2,533    430
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 2--Soybean 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     212   102    34,211    34,525     27,321   6,994   34,316    210
1997/98     210    56    38,171    38,437     28,889   9,330   38,219    218
1998/99 2/  218    50    36,807    37,075     29,800   7,000   36,800    275
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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.   Im-  Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks  ports  tion                        ports            stocks
------------------------------------------------------------------------------

         -------------------------- Million pounds---------------------------

1996/97     2,015   53   15,752   17,821     14,264   2,037   16,300   1,520
1997/98     1,520   60   18,143   19,724     15,264   3,077   18,341   1,382
1998/99 2/  1,382   58   17,605   19,045     15,500   2,350   17,850   1,195
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1/ Estimated.  2/ Forecast.

Table 4--Cottonseed:  U.S. supply and disappearance
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                   Supply                          Disappearance 
        -------------------------------- ------------------------------------
Year                                                             
begin.     Beg.   Im-   Produc-  Total     Crush   Ex-   Other   Total   End.
Aug. 1   stocks  ports   tion                     ports                 stocks
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         -------------------------- 1,000 Short tons--------------------------

1996/97     517   20    7,144    7,681     3,860    116   3,182   7,158    523
1997/98     523   96    6,935    7,553     3,885    149   2,957   6,990    563
1998/99 2/  563  180    5,182    5,925     2,650     75   3,000   5,725    200
------------------------------------------------------------------------------
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      26     0     1,767     1,793     1,596     109    1,705     88
1998/99 2/   88     0     1,195     1,283     1,230      30    1,260     23
------------------------------------------------------------------------------
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        66   0.1   1,223    1,289      1,003     208    1,211      79
1998/99 2/     79  66.4     850      995        850     100      950      45
------------------------------------------------------------------------------
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       795  141  3,539  4,475   2,099   544   303  681    3,627     848
1998/99 2/    848  152  3,931  4,932   2,140   717   325  650    3,832   1,100
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1/ Estimated.  2/ Forecast.
Table 8--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.

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
1997/98        6.47  121.00    11.60    28.30   5.81

1997/98
September      6.72  115.00    11.20    29.70   5.73
October        6.49  119.00    10.60    27.90   5.78
November       6.86  124.00    11.10    25.00   5.71
December       6.72  122.00    11.10    26.90   5.72
January        6.69  121.00    11.10    30.70   5.82
February       6.57  107.00    11.80     NA     6.27
March          6.40   NA       12.10     NA     6.26
April          6.26   NA       12.70     NA     6.23
May            6.26   NA       13.80     NA     6.33
June           6.16   NA       14.40     NA     6.17
July           6.14   NA       15.80     NA     6.17
August         5.43  113.00    14.40     NA     5.45

1998/99
September      5.25  113.00    11.40    26.80   5.09
October        5.18  120.00    10.70    26.30   4.86
November       5.40  133.00    10.50    21.50   4.97
December       5.37  138.00    10.80    24.00   5.01
January        5.32  139.00    11.40    25.50   5.06
February       4.80  141.00    12.20      NA    5.05
March1          4.55    NA      11.10      NA    4.84
--------------------------------------------------------
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 
1997/98       25.80    28.85   27.00  49.00  28.94
                                                   
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
July          24.88    29.40    NA    44.00  31.52
August        23.99    30.11    NA    43.75  29.93
September     25.13    33.26    NA    43.88  29.25

1998/99
October       25.21    33.99   NA     45.40  29.46
November      25.20    34.16   NA     45.00  29.65
December      23.99    33.40  26.70   44.25  29.88
January       22.88    31.72  23.41   44.00  29.15
February      19.96    28.21  19.86   39.75  26.58
March1         18.54    26.27  19.12   34.75  23.01
------------------------------------------------------
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
1997/98     185.30  144.40   84.20  209.60  110.00

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
July        183.40  146.65   97.50  210.00  117.50
August      146.25  130.30   85.00  207.50  101.00
September   135.80  115.60    NA    205.00   90.00

1998/99
October     135.70  106.50   50.00  161.00   83.75
November    144.45  107.90   50.00  100.00   92.50
December    146.40  119.75   80.90  103.75  102.50
January     138.80  110.60   77.50  105.00   95.00
February    132.30  101.25   73.75  102.50   87.25
March1       133.00  106.50   70.00   91.25   83.00
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

END_OF_FILE