OIL CROPS OUTLOOK                                            January 13, 1999
January 1999, OCS-0199
             Approved by the World Agricultural Outlook Board
---------------------------------------------------------------------------
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.   
---------------------------------------------------------------------------
Slower Global Soybean Meal Use, Higher Foreign Exports Stall U.S.
Demand

USDA's Crop Production--1998 Summary indicated 1998 U.S. soybean
production of 2,757 million bushels, down 6 million from the last
estimate.  An upward yield revision for Iowa mostly offset
reductions in harvested acreage and yields elsewhere.  The final
U.S. average soybean yield settled to 38.9 bushels per acre.

Final USDA historical revisions, which are based largely on data
from the forthcoming 1997 Census of Agriculture, dropped 1997
soybean acreage harvested 0.5 million acres to 69.1 million. 
This cut 1997 soybean production 14 million bushels to 2,689
million bushels.  Other soybean production and stocks revisions
going back to 1992 were relatively minor (see ERS Autofax
document numbers 12309, 12312, and 12316).

Other than China and Mexico, there are few foreign markets that
will import more soybeans this season.  For 1998/99, global
soybean imports are forecast down 3 percent to 38.9 million
metric tons.  EU crushers have run down supplies of rapeseed and
sunflowerseed, so a short term acceleration in U.S. export sales
of soybeans and soybean meal is likely.  However, given the
comparatively large stocks remaining in South America, U.S.
export commitments continue to trail last year's fast pace.  This
month, USDA reduced its U.S. soybean export forecast to 830
million bushels, which is down 40 million from 1997/98. 

Soybean crush was at an alltime high in the first quarter
(September-November).  But, unlike a year ago, the outlook for
U.S. crushers is likely to stagnate.  USDA trimmed its 1998/99
soybean crush forecast 10 million bushels from last month to
1,595 million, which is now slightly less than the 1997/98 crush. 
The stark change in the crush market is due to much lower soybean
meal prices.  Competition from Brazil and Argentina has also
picked up from a year ago.  Soybean meal has fallen to just 55
percent of the soybean's crush value, compared with a normal
average of 65-70 percent.  Based on November cash prices for
soybeans, meal, and oil, the estimated gross crushing margin fell
to $0.50 per bushel, compared with a very attractive $1.40 in
November 1997.  Lower total soybean demand raises 1998/99
expected ending stocks to 390 million bushels.  The U.S. 1998/99
average farm price range was shaved to $5.10-$5.60 per bushel.

Every improvement in growing conditions for the new South
American crop pressures potential U.S. soybean meal exports. 
Total U.S. export commitments are down one-third from a year ago. 
The 1998/99 U.S. export forecast was reduced 0.25 million short
tons this month to 8.25 million, down from 9.33 million in
1997/98.

USDA's Hogs and Pigs report indicated a December 1 U.S. hog
inventory that was up 2 percent from last year, compared with an
11-percent increase in 1997.  This current supply of animals will
be enough to sustain growth in U.S. soybean meal disappearance
from 28.9 million last year to 29.6 million short tons.  Despite
record slaughter this fall, constrained meatpacking capacity and
snowstorms have delayed marketings and increased the percentage
of market hogs in the largest weight classes (which consume the
most feed per head).  But large global meat supplies have sharply
cut prices, which will lead to decreased pig production and
soybean meal consumption by the summer of 1998/99 and into
1999/2000.  Hogs kept for breeding are down 4 percent from a year
earlier.  Farrowing intentions this winter are down 1 percent and
intentions for next spring are 7 percent lower than a year
earlier.  The cutbacks would weaken soybean meal prices further
and likely constrain soybean crushing in 1999/2000.  USDA
forecasts the 1998/99 average soybean meal price down to $130-$150 per
short ton, compared with the December forecast of $135-$155 and the 
1997/98 average of $186.

Global soybean oil imports for 1998/99 are forecast higher this
month, with all of the gain accruing to Argentina and Brazil. 
With U.S. soybean oil production down 73 million pounds from
1997/98, projected 1998/99 exports remain unchanged this month at
2,700 million pounds.  Even this forecast still implies a round
of heavy U.S. sales in the next several months.  Current domestic
disappearance of soybean oil appears firm, edging this season's
forecast back up to 15,450 million pounds.  The anticipated
strengthening of use and softening of output would constrain
1998/99 ending stocks at 1,360 million pounds, slightly below
current stocks.  This would suggest that the soybean oil price
would have to rise from the December average of 24 cents per
pound to reach the projected yearly average of 25.0-27.0 cents
per pound.

U.S. Sunflowerseed and Canola Demand Brisk

A major increase U.S. sunflower acreage in 1998, to 3.6 million
acres, pushed sunflowerseed production to 5,247 million pounds. 
This is the third largest U.S. harvest, behind 1979 and 1982. 
Given the rebound in yields and harvested area, oil-type
sunflowerseed production increased 49 percent, while output of
non-oil varieties rose 14 percent.
 
Domestic sunflowerseed crushing was slowed this fall because of
relatively tight carryover stocks.  The Census of Agriculture
data reflected this situation with an 86-million-pound downward
revision in the 1997 harvest to 3,677 million (see ERS Autofax
document numbers 12350 and 12351).  But with the influx of new
crop production, crushing to date has caught up to last year's
rapid pace.  This season's U.S. sunflowerseed crush is forecast
higher at 2,765 million pounds, compared with 2,338 million in
1997/98.

Smaller French and Spanish sunflowerseed crops have swelled
imports from Russia and Ukraine.  But dry weather produced
disappointing 1998 harvests in the latter exporting countries,
shrinking supplies available to western European crushers. 
Consequently, demand for U.S. exports of oil-type sunflowerseed
has been robust last fall and this winter.  The fast pace
(cumulative export inspections are currently 3 times the year ago
volume) should continue until the expected bumper Argentine
harvest becomes available beginning in March.  Total 1998/99
sunflowerseed exports are forecast to rise to 520 million pounds,
the largest since 1994/95.

Despite robust domestic and foreign demand, 1998/99 year ending
sunflowerseed stocks are expected to soar to 565 million pounds
from the tight 1997/98 carryout of 202 million.  With good
Argentine weather, sunflowerseed prices should recede somewhat
from the current level of 10.4 cents per pound.

Like soybean oil, demand for U.S. sunflower oil exports
(particularly by Mexico and India) should be brisk.  Current
export commitments for sunflower oil are 10 percent higher than a
year ago.  U.S. exports for 1998/99 are forecast at 935 million
pounds, not quite equaling the 1994/95 record of 978 million.

U.S. canola acreage surged again in 1998 to 1.1 million acres
from a recently revised 671,000 in 1997 (see ERS Autofax document
number 12365).  Excellent yields also helped increase canola seed
output to a record 1,590 million pounds.  Rising domestic
supplies are reducing U.S. import needs.  In addition, Canada's
canola seed supplies have been committed to unprecedentedly high
exports to China (nearly 1.0 million tons so far).  The United
States has gained in exports of canola seed to the EU, which
moderates the increase in 1998/99 domestic canola crush.  Yet,
Canadian crushing has been very brisk, and is expected to
generate a record volume of canola oil and meal, much of which
will be exported to the United States.  A depreciated Canadian
dollar and relatively tight U.S. vegetable oil supplies will draw
in about 1.1 billion pounds of canola oil from Canada in 1998/99. 
Expected canola meal imports near 1.5 million short tons would
contribute to an already ample domestic supply of protein meals
and further pressure prices.

Rain Boosts South American 1999 Oilseed Output and Export
Potential

Brazil's government, in defending the value of the currency and
protecting foreign investment, allowed domestic short term
interest rates to soar last year.  Farmers' borrowing costs for
the current growing season escalated as a consequence.  Because
farmers have applied fewer inputs, Brazilian 1999 soybean yields
are not expected to equal last year's record.  However, improved
rainfall in December and early January has calmed earlier
concerns about dryness.  The timing is especially good as
development for much of the crop will soon reach the reproductive
stage.  While still below Brazil's record 1998 soybean harvest of
31.0 million metric tons, this month's 1999 production forecast
was raised 0.5 million to 29.5 million.  The increase is
anticipated to push Brazilian soybean exports and crush to 8.45
million and 20.7 million tons, respectively.  Larger supplies
also would lift soybean meal exports to 10.6 million tons, up
from 10.3 million in 1997/98.

Recent precipitation also benefited Argentine oilseed producers. 
But soil moisture deficits persist in some areas and more rains
will be necessary in January and February to complete crop
development.  Projected 1999 Argentine soybean output was raised
to 17.5 million tons from last month's 17.0-million-ton estimate. 
Higher Argentine production raises projected soybean crushing to
a record 14.7 million tons (October-September), although this
would still leave some slack in the capacity utilization rate. 
All of the increased production of Argentine soybean meal and oil
would be exported, boosting foreign trade to 11.6 million and 2.4
million tons, respectively.

USDA offset a portion of the South American increase by reducing
its estimate of India's 1998 soybean production from 5.7 million
tons to 5.5 million tons.  Rains during the harvest in October
and November in the main growing region of Madhya Pradesh damaged
soybean yields.  A corresponding reduction in crushing cut
projected 1998/99 soybean meal production and exports to 3.8
million and 2.95 million tons, respectively.  Given lower soybean
oil output and high prices for palm oil, projected Indian soybean
oil imports were raised to 0.25 million tons.

Cheaper prices for imported soybean meal are supporting global
consumption, particularly within the EU.  However, the high rates
of crushing in the major soybean producing countries will also
weaken crush margins in the EU.  Thus, EU nations will import
more soybean meal in 1998/99 (rising to 17.2 million tons from
16.3 million a year earlier) than soybeans.

Soybean Oil Gains at Palm Oil Expense

Rising domestic consumption within the major palm oil producing
nations is anticipated to absorb production gains and continue
drawing down 1998/99 global stocks.  Price premiums are deterring
palm oil imports in countries where soybean and sunflower oil are
competitive, such as the Middle East, North Africa, and South
Asia.  This is a major impetus for the high soybean crushing
rates in Argentina, Brazil, and the United States.  Malaysian
palm oil production is expected to increase slightly from 8.5
million to 8.8 million tons in 1998/99.  Although monsoon rains
have ended the drought in Southeast Asia, this year's gains are
not based on better yields but on a gradual increase in mature
trees.

Indonesia will exhibit a similar pattern in palm oil output. 
Indonesian exports in 1998/99 are expected to modestly rise to
2.45 million tons from 2.3 million in 1997/98.   Soon, the
Indonesian government is expected to incrementally reduce the 
60-percent export tax on crude palm oil, which would free up more
supplies for export markets.

The next release of the Oil Crops Outlook is scheduled prior to
9:30 a.m. ET Wsday, February 11, 1999.  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, 
mash@econ.ag.gov
Robert Skinner--Cottonseed, peanuts(202) 694-5313 
skinner@eco.ag.gov

Table 1--Soybeans:  U.S. supply and disappearance
------------------------------------------------------------------------------
                   Supply                          Disappearance 
        ------------------------------    ------------------------------------
Year                                                     Seed,  
begin.    Beg.  Im-   Produc-   Total     Crush   Ex-    feed,   Total   End.
Sept. 1  stocks ports  tion                      ports  residual        stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1992/93    278    2    2,190    2,471     1,279    770    130    2,179    292
1993/94    292    6    1,870    2,168     1,276    589     95    1,959    209
1994/95    209    5    2,515    2,729     1,405    838    151    2,395    335
1995/96    335    4    2,174    2,514     1,370    851    109    2,330    183
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     1,595    830    148    2,573    390
------------------------------------------------------------------------------
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    34,211    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    37,807    38,075     29,600   8,250   37,850    225
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 3--Soybean oil:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     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   18,070   19,510     15,450   2,700   18,150   1,360
------------------------------------------------------------------------------
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.
Aug. 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     523   96    6,935    7,553     3,885    149   2,957   6,990    563
1998/99 2/  563  200    5,182    5,945     2,650     75   3,020   5,745    200
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 5--Cottonseed 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      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     1,250      10    1,260     23
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 6--Cottonseed oil:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     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
------------------------------------------------------------------------------
                     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   2,135   775   321  750    3,982     950
------------------------------------------------------------------------------
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
1997/98        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
December1       5.27  138.00    10.40    21.50   4.90
--------------------------------------------------------
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
                                                   
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
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
December1      23.99    33.57  24.55   44.25  29.88
------------------------------------------------------
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

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
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
December1    146.45  117.90   63.00  103.75  102.50
-----------------------------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills.

END_OF_FILE