OIL CROPS OUTLOOK                                          September 15, 1997
September 1997, OCS-0997
             Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is a monthly report issued electronically by the Economic 
Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  
No published copies are available.   
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Timely August Rains Support Good 1997 Soybean Yields

The 1997/98 U.S. soybean production forecast of 2,746 million bushels, was
about unchanged from last month's forecast.  While some dry pockets remain and
additional rain this month would be welcome for later planted fields, rains
during August secured good yield potential in several Midwestern States. 
Below average temperatures also helped moderate moisture needs during this
definitive period and warmer temperatures by the end of August helped advance
growth.  Pod development has been slightly ahead of average, and well ahead of
last year's pace.  Consequently, the risk from an early frost this fall is
much diminished.  In the western Corn Belt, September pod counts were the
highest ever recorded.

The soybean harvest is underway throughout the South.  Yields in the Delta and
Southeast have slipped this year because of summer dryness.  However, some
Southern farmers are able to take advantage of prices for September delivery
that are at least $1.00 per bushel higher than prices for October delivery. 
That price incentive makes applying chemical drying agents, or even incurring
moisture discounts for soybeans that haven't fully field dried, profitable
actions for accelerating the harvest.  As the harvest spreads into northern
producing States in late September, U.S. cash market prices will drop.

Beginning stocks for 1997/98 will be known from the September 30 Grain Stocks
report.  Given the existing production estimate, USDA forecasts the 1996/97
soybean carryover down to 115 million bushels.  This very tight level results
from a seasonally robust summer crushing rate that lifted expected 1996/97
crush to 1,435 million bushels.  Export sales of soybean oil and meal have
continued their strong showing, and 1996/97 shipments were forecast up to 2.0
billion pounds and 6.9 million short tons, respectively.  The huge demand for
soybean meal in 1996/97, both domestic and export, has pushed the season
average price forecast to a record $270 per short ton.

U.S Soybean Exports To Make a Fast Start

One sign of the strong current demand for soybeans is the narrow spread
between November and January soybean futures, which encourages producers to
market more supplies quickly versus storing them on farm.  USDA's September
forecast anticipates the season average farm price will rise from the August
projection, to $5.60-$6.70 per bushel.  Soybean crushing in 1997/98 is
projected to reach 1,495 million bushels.  Record domestic soybean meal
disappearance (28.0 million short tons) and exports (7.6 million tons) are
seen driving the prodigious crush.  Yet, domestic soybean oil consumption will
continue its gradual ascent in 1997/98 and U.S. oil exports of 2.25 billion
pounds will rank second only to the record 1994/95 export volume.  The
accumulation of year ending soybean oil stocks will be modest, considering the
large crush increase.

This month, USDA raised its 1997/98 soybean export forecast to a record 950
million bushels.  One explanation for this optimism is that current export
sales have been very fast-paced and should stay brisk for several months.  As
of September 4, 285 million bushels have been sold, 30 percent of projected
1997/98 exports.  These sales are 69 percent higher than a year ago, which at
the time was also considered a rapid pace.  Much of the current rate can be
attributed to strong sales to China, the EU, and Brazil.  And, if oilseed
production problems develop elsewhere in the world, the United States is now
well positioned to further expand its export gains.  For now, South American
farmers are poised to produce bumper oilseed harvests next year.

The tremendous surge in Brazilian soybean exports since February (nearly 8
million metric tons) has recently slowed as Brazilian supplies are greatly
depleted.  Brazilian crushers will soon be compelled to use U.S. supplies,
being one of the few sources available to sustain operations until the
Brazilian 1998 harvest.  Steady supplies of soybean meal are needed by
Brazil's rapidly expanding poultry sector.  

However, Brazilian legislation requiring approval of imports of genetically
modified organisms has added much uncertainty to Brazil's import prospects.  A
decision clarifying the government's position on this matter will be made
early next month.  Even with a favorable ruling allowing GMO soybeans, the
uncertainty may have already trimmed potential soybean imports from the United
States, which are forecast down from last month's 2.25 million tons to 2.0
million.  This would also curtail Brazil's 1997/98 soybean crush and exports
of meal and oil.

Projected Argentine soybean production in 1997/98 was increased to a record
14.2 million tons this month based on larger expected planted area and
improved yields.  With little relief from the previous drought, soils in Santa
Fe and Cordoba were too dry for Argentine farmers to finish planting winter
wheat, and the recommended plant-by dates have now passed.  Record plantings
of soybeans (6.5 million hectares) and sunflowerseed (3.3 million hectares)
will replace the unplanted wheat area.  With fewer soybeans double cropped
after wheat, a considerably greater percentage of the area planted will be
higher-yielding first-crop soybeans.  Ample 1997/98 supplies will permit a
solid rebound in Argentine exports and crush, to 1.5 million and 11.7 million
tons, respectively.  Argentine sunflowerseed production in 1997/98 is also
projected up to a record 6.0 million tons, from 5.2 million this season. 
Sunflower planting will commence once sufficient precipiation has been
received.

Mexican soybean imports for 1997/98 were projected higher, to 3.1 million
tons, based largely on a new crushing facility that began operating last
spring.  Larger soybean imports by the EU were also anticipated, rising to
15.1 million tons.  The additional domestic meal production trimmed expected
EU soybean meal imports to 15.5 million tons. 

Large Chinese Needs To Spark World Soybean Trade 

Total Chinese oilseed production in 1997/98 is forecast down 2.8 million tons
from 1996/97.  Projected Chinese peanut production was cut 1.0 million metric
tons from the previous estimate to 8.0 million (in-shell basis).  Drought in
the major northern producing provinces of Shandong, Henan, and Hebei has
damaged peanut yields.  China's peanut exports will drop by half, as many of
its traditional Southeast Asian buyers, including Indonesia, are expected to
scale back imports because of struggling economies.  Chinese consumption of
peanuts for food is relatively inelastic, so most of the shortfall will reduce
peanuts crushed for oil.  This decreases peanut meal supplies by nearly
200,000 tons.  Consequently, China's 1997/98 soybean and soybean meal imports
are anticipated higher to bridge the deficit in protein meal and vegetable oil
supplies.  Chinese soybean imports would rise to 3.0 million tons and soybean
meal imports to 3.75 million tons.

China is also the world's largest consumer of high protein fish meal.  Chinese
fish meal imports are forecast down 17 percent in 1997/98, which also
highlights the need to import more soybeans and soybean meal.  World fish meal
production is projected down to 6.4 million tons, off 5 percent from 1996/97. 
The principal reason is that Peru, the world's largest producer, has imposed a
seasonal fishing ban during the spawning period to prevent overfishing.  The
catch of sardines and anchovies for reduction into fish meal declines as a
result.  Concerns about the developing El Nino also led to the ban.  This
climatic phenomenon involves an abnormal warming of equatorial Pacific Ocean
waters.  Fish move to deeper waters and normal migration patterns are altered,
hampering the South American coastal fish harvests.  Current fish meal prices
are about 10 percent higher than a year ago and will probably continue to
increase.

The Canadian canola harvest is about one-third finished and the frost risk
appears to have faded, despite the late start this year.  The 1997 Canadian
harvest was forecast down to 6.1 million tons this month, but will still be
the country's third largest ever.  Hot and dry summer weather pinched yields
in Saskatchewan, Canada's largest canola producing province.  Smaller forecast
production will restrict the volume of Canadian canola seed exports to about
2.5 million tons.  Reflecting this estimate, expected seed imports by Mexico
and Japan, two major buyers, were also decreased this month.

Indonesian palm oil production in 1997/98 was projected up to 5.5 million tons
based on a greater proportion of trees at peak productivity and an upward
revision in the tree population.  A portion of the palm oil increase will be
consumed domestically, with the remainder raising Indonesian exports to 2.25
million tons.  On the demand side, China's palm oil imports are forecast up to
1.7 million tons, from 1.5 million in 1996/97.

The next Oil Crops Outlook is scheduled for 4:00 pm ET Tuesday, October 14.


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---------------------------

1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183   10    2,382    2,576     1,435    880    136    2,451    115
1997/98 2/  115    5    2,746    2,866     1,495    950    135    2,580    285
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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      1/                   ports           stocks
------------------------------------------------------------------------------

         ---------------------------1,000 short tons--------------------------

1995/96     223     32,527    32,825       26,611   6,002   32,613    212
1996/97 2/  212     33,883    34,200       27,100   6,900   34,000    200
1997/98 3/  200     35,525    35,850       28,000   7,600   35,600    250
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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---------------------------

1995/96     1,137   15,240   16,472       13,465     992   14,457   2,015
1996/97 2/  2,015   15,585   17,650       14,050   2,000   16,050   1,600
1997/98 3/  1,600   16,670   18,330       14,300   2,250   16,550   1,780
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1/ Includes imports.  2/ Estimated.  3/ Forecast.


Table 4--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        6.77  106.00    11.50    29.30   5.25
1996/971        7.38  125.00    11.85    28.50   6.25

1995/96
September      5.98  101.00    11.00    29.70   5.11
October        6.16   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        6.78  106.00    11.10    29.80   5.27
February       7.00  117.00    11.50     NA     5.18
March          7.00    NA      12.10     NA     5.28
April          7.43    NA      12.70     NA     5.31
May            7.69    NA      13.50     NA     6.03
June           7.41    NA      14.30     NA     5.88
July           7.62    NA      13.70     NA     6.19
August         7.82  118.00    12.70     NA     6.15

1996/97
September      7.79  129.00    12.00    27.70   5.89
October        6.95  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     6.03
July           7.53   NA       10.70     NA     6.07
August 1       7.10  112.00    11.10     NA     5.23
--------------------------------------------------------
1 Preliminary.


Table 5--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  25.55 
1996/971      22.50    25.25   22.60  40.60  24.00 
                                                   
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
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   23.20  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
August1        22.06    27.11   22.02  48.00  25.36
-------------------------------------------------------------------------
1 Preliminary 2 Decatur 3 PBSY Greenwood MS
4 Minneapolis 5 Southeast mills 6 Chicago



Table 6--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  190.92  159.05
1996/971    270.00  193.00  117.50  235.00  160.00

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
December    250.60  224.50  113.35  172.67  171.65
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 1    273.30  176.25   85.00  213.00  126.25
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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
                                                           mash@econ.ag.gov
George Douvelis   World oilseeds, Meals, and oils            (202) 219-0765
Scott Sanford    Peanuts, Cottonseed                         (202) 219-0835
                                                       ssanford@econ.ag.gov

END_OF_FILE