OIL CROPS OUTLOOK                                              January 14, 1998
January 1998, OCS-0198
             Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is issued monthly by the Economic Research Service, 
U.S. Department of Agriculture, Washington, DC 20036-5831.  Electronic 
release only; no published copies are available.   
-----------------------------------------------------------------------------

USDA's Crop Production--1997 Summary reported a final 1997 U.S.
soybean production estimate of 2,727 million bushels, down 9
million from the previous forecast.  The change reflects mostly
offsetting yield revisions in the major production States, with
the largest reductions occurring in Minnesota, Arkansas, Iowa,
and Ohio.  The final U.S. average soybean yield settled to 39.0
bushels per acre, ranking behind only 1994 as the highest yield
ever.

By January 1, U.S. soybean exports had already reached half of
the revised 1997/98 forecast of 975 million bushels.  With the
lower revised soybean harvest, the current year carryout stocks
projection slips to 250 million bushels.  A disappointing pace in
corn exports prompted the central Illinois corn price to decline
10 cents in December.  Similarly, the December average soybean
price fell to $6.85 per bushel from $7.13 in November.  Based on
a weaker price outlook for soybean meal, the 1997/98 projected
average farm price for soybeans is reduced to $6.10-$6.90 per
bushel.

Despite no change in soybean crush this month, a smaller expected
meal extraction rate trimmed soybean meal production 150,000 tons
from the December forecast of 35.6 million short tons.  Greater
competition from South American exporters also pares the forecast
for U.S. soybean meal exports to 7.3 million short tons, which
would still be a record volume.  Although the brisk current pace
of sales justifies a year-to-year increase, there should be a
dramatic export slowdown by next summer.  Most of the present
demand originated from the EU, where U.S. export commitments are
nearly four times those of a year ago.  With a stronger world oil
market foreseen in coming months, the current rapid crush pace is
expected to continue.  Weaker corn prices, dimmer prospective
Asian demand, and indications of potentially larger South
American supplies have also pressured soybean meal prices.  The
monthly average price slid $20 per ton in December to $225.  The
1997/98 soybean meal price forecast was lowered this month to
$195-$220 per ton.

The December Hogs and Pigs report indicated that the total swine
herd was a robust 7 percent above a year earlier.  Last summer's
expansion should continue, with fall farrowings 8 percent higher
than a year earlier and intended winter farrowings up 9 percent. 
However, recent hog prices have dropped $15 per hundredweight
since last summer, due to the large herd and a less optimistic
outlook for pork exports to Asia.  Spring farrowings were
forecast a modest 3 percent higher than a year earlier, but this
pig crop would have less impact on 1997/98 feed consumption.  By
comparison, this year's expansion in poultry production will
remain subdued.  Domestic soybean meal disappearance is forecast
up 3.4 percent in 1997/98 to 28.3 million short tons.

Higher Area Boosts 1997 Domestic Production of Minor Oilseeds

With 1997 U.S. sunflowerseed acreage rebounding to 2.9 million
acres, sunflowerseed production increased to 3,763 million pounds
from 3,587 million in 1996.  Despite an increase in harvested
area, production of non-oil varieties fell 4 percent because of
lower yields.  This season's sunflowerseed crush is forecast
higher to 2,195 million pounds.  The major reason for the surge
in crushing is that cumulative 1997/98 exports of sunflower oil
are up 145 percent from a year ago.  That growth in demand
considerably reduces anticipated year-ending sunflowerseed stocks
following 2 years of large carryover.  A stronger world vegetable
oil market this year supports prices of high oil content oilseeds
such as sunflowerseed.

U.S. sunflowerseed oil exports were projected up this month to
805 million pounds, compared to 709 million in 1996/97.  This is
mainly because year-to-date exports to Mexico are triple the
volume of a year earlier and shipments to North Africa have
rebounded.  Current monthly sunflower oil stocks have increased
from the rapid crushing pace but should tighten by next fall. 
The spurt in sunflower oil production has caused an unusually
small price premium relative to soybean oil.

Final 1997/98 U.S. cottonseed production was 7.3 million short
tons, slightly higher than the previous estimate and the second
largest output ever.  With moderate increases in cottonseed crush
and feeding, 1997/98 ending stocks are forecast higher to 550,000
tons.  Cottonseed prices should ease somewhat from 1996/97
levels.  U.S. canola acreage soared in 1997 to 728,000 acres from
366,000 in 1996.  Production of canola rose to a record 914
million pounds.  U.S. safflowerseed production increased a modest
2 percent in 1997 to 430 million pounds.

Excellent Conditions Favor Bumper South American Soybean Crop

Soybean planting is complete in Brazil, with indications for a
record area of 12.86 million hectares.  Timely planting and
generous rainshowers throughout South America have been quite
favorable for soybean development.  Topsoils have become dry in
the Center-West states, but subsoil moistures are generally
adequate.  Based on prospects for better than average yields,
Brazil's soybean production was forecast higher to 30 million
metric tons.  While more abundant U.S. soybean stocks and
uncertain foreign demand later this year will not allow
duplication of Brazil's massive 1997 exports, a record harvest
would lift 1997/98 Brazilian export potential to 7.4 million
tons.  Anticipated Brazilian soybean crush is raised to 20.75
million tons.  The resulting increase in soybean meal production
pushes the export forecast to 10.9 million tons.  Brazilian
soybean oil exports are also forecast higher to 1.35 million
tons.

Until the expected record 1998 harvest becomes available,
Argentina's soybean imports are seen rising to an unprecedentedly
high 0.9 million tons.  By itself, the United States has already
shipped more than a half million tons to Argentina.  Greater
supplies raise projected 1997/98 Argentine soybean crush to 12.1
million tons.  This would permit Argentina to reexport more
soybean meal, with 1997/98 exports estimated at 9.35 million
tons, up from 8.7 million in 1996/97.

Financial Turmoil Clouds Asian Soybean Markets 

A financial crisis forced Thailand to float its currency, the
baht, last July. Thailand's action triggered a wave of
devaluations throughout Asia.  Currencies in Thailand, Indonesia,
and the Philippines have fallen to historical lows against the
U.S. dollar.  In return for economic and banking reforms, several
Southeast Asian countries have accepted multi-billion-dollar loan
packages from the International Monetary Fund, which may
alleviate the short term debt crises.  The baht has fallen about
80 percent against the U.S. dollar in the last year.  As a
consequence, prices of agricultural imports in dollar terms have
risen dramatically.  

Thailand had already begun reducing tariffs, pulling in a record
volume of soybeans and soybean meal.  The U.S. market share in
1996/97 was 28 percent for soybeans and 16 percent for meal.  To
help Thailand compensate for the steep rise in import prices,
USDA increased Thailand's credit under the Export Credit
Guarantee Program (GSM-102) from $100 million to $300 million. 
Changes in Thailand's soybean and meal imports will be moderated
by a still vital poultry export trade, which has been supported
by the devaluation and Hong Kong's wholesale poultry slaughter
(to control transmission of the bird flu).  Thai soybean imports
are projected at 0.6 million tons, although 1997/98 soybean meal
imports are forecast down 1 percent to 0.9 million.  

South Korea is struggling to cope with a serious short term debt
problem.  Korea's GDP growth in 1998 may drop in half from 1997's
6 percent.  It is the world's eighth largest soybean importing
country and the sixth largest importer of U.S. soybeans.  The
United States accounts for 90 percent of South Korea's soybean
imports.  So far in 1997/98, U.S. soybean exports to Korea are
lagging 25 percent from a year earlier.  USDA has approved $100
million in GSM-102 credit for South Korea to help purchase
soybeans.  Total South Korean soybean imports in 1997/98 are
projected at 1.4 million metric tons, down from 1.5 million a
year earlier.  South Korea imports comparatively little soybean
meal from the United States, but market access gains under the
Uruguay Round agreement may encourage more soybean meal imports
in the future.

Indonesia's rupiah has lost nearly three-fourths of its value in
the last year.  USDA increased Indonesia's total GSM-102
allocation from $250 million to $400 million.  Indonesia had
already dropped the import duty on soybeans to zero last summer. 
Indonesian soybean imports should be stable as they are used
directly as a food staple and are not processed to produce inputs
for the meat production sector.  Indonesia imported 0.8 million
tons of soybeans in 1996/97 (nearly all from the United States)
and is expected to import 0.87 million this year.  But 1997/98
soybean meal imports may stagnate as swelling feed costs trim
meat consumption.  India is the major supplier of soybean meal to
Indonesia, with a typically much smaller share held by the United
States.

To restore dollar reserves to service foreign debt, Indonesian
exports (including palm oil) need to expand greatly, which raises
the domestic prices for these goods.  However, the Indonesian
government has enacted a 3-month ban, effective January 1, on all
exports of crude palm oil.  This restriction supercedes the
recent export quota that limited palm oil exports to 20 percent
of exporters' production.  Customary imports of palm oil from
Malaysia would only exacerbate the foreign exchange difficulties. 
While the ban stabilizes palm oil prices for Indonesian
consumers, world market prices have become more volatile. 
Malaysian palm oil prices have risen 9 percent since last summer
to $530 per metric ton in December.  This narrows its discount
under soybean oil and favors more world soybean oil trade. 
Complicating the economics of export demand is the continuing
drought, which adds uncertainty to this year's palm oil
production potential.  Indonesia is projected to export 2.15
million tons of palm oil in 1997/98, unchanged from last year. 
Short oil supplies and the obstacles in retaining capital
throughout the economy have also encouraged the Indonesian
government to drop last year's restrictions on foreign investment
in palm plantations.

By revising down 1996/97 soybean imports by Malaysia, 1997/98
imports were also forecast down this month, to 0.55 million tons. 
U.S. 1997/98 shipments of soybeans to Malaysia are 44 percent
behind last year's pace.  The Malaysian ringgit has declined more
than 40 percent since last summer.  USDA extended a new credit
line of $100 million to help Malaysia purchase U.S. agricultural
commodities.  On the other hand, the currency devaluation and the
restrictions on Indonesian exports have made Malaysian palm oil
exports more competitive.  Malaysia's 1997/98 palm oil exports
are forecast to rise to 7.5 million tons from 7.4 million in
1996/97.

While Taiwan's consumption of pork has recovered from last year's
outbreak of foot and mouth disease in hogs, the loss of its pork
exports to Japan will continue to suppress Taiwanese soybean
consumption.  The slaughtering of the poultry flocks in Hong Kong
may also represent an opportunity for Taiwan to expand chicken
production and exports.  Taiwan's soybean imports are projected
to decline from a revised 1996/97 level of 2.6 million tons to
2.5 million this season.

Even the relatively stable Japanese yen has fallen 16 percent
from a year ago to the lowest level versus the dollar in 5 years. 
Rising meat imports will also slightly cut Japanese soybean
imports and soybean meal consumption.  China has not yet
experienced the financial problems of its neighbors, but Chinese
economic growth should eventually slow as export competition from
the other countries intensifies.  Based on reports of better
yields, China's 1997 soybean harvest was also revised upward this
month to 13.8 million tons.  U.S. 1997/98 soybean shipments to
China have already surpassed the 1996/97 total.  However, with a
better 1997 Indian harvest, U.S. soybean meal trade to China has
significantly slowed.

The next release of the Oil Crops Outlook is scheduled for 3:00
p.m. ET Friday April 10, 1998.

Information Contact:

Mark Ash     Soybeans, minor oilseeds, oils      (202) 694-5289



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

1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 1/  183    9    2,382    2,575     1,436    882    125    2,443    132
1997/98 2/  132    4    2,727    2,863     1,500    975    137    2,617    250
------------------------------------------------------------------------------
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--------------------------

1995/96     223    75    32,527    32,825     26,611   6,002   32,613    212
1996/97 1/  212   102    34,209    34,523     27,322   6,994   34,316    207
1997/98 2/  207   125    35,443    35,925     28,250   7,300   35,700    225
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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---------------------------

1995/96     1,137   95   15,240   16,472     13,465     992   14,457   2,015
1996/97 1/  2,015   53   15,743   17,811     14,247   2,045   16,291   1,520
1997/98 2/  1,520   60   16,725   18,305     14,350   2,400   16,750   1,555
------------------------------------------------------------------------------
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.
Sept. 1  stocks  ports   tion                     ports                 stocks
------------------------------------------------------------------------------
         -------------------------- 1,000 Short tons--------------------------

1995/96     551    0    6,849    7,399     3,882    114   2,886   6,882    517
1996/97 1/  183    0    7,144    7,661     3,860    116   3,162   7,138    523
1997/98 2/  132    0    7,278    7,801     3,900    125   3,226   7,251    550
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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
------------------------------------------------------------------------------

         ------------------------------Short tons---------------------------

1995/96      47     0     1,748     1,795     1,632     111    1,744     51
1996/97 1/   51     4     1,752     1,807     1,649     132    1,781     26
1997/98 2/   26     0     1,755     1,781     1,645      95    1,745     36
------------------------------------------------------------------------------
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---------------------------

1995/96        82   0.3   1,229    1,311        996     221    1,217      94
1996/97 1/     94   0.3   1,216    1,310      1,012     232    1,244      66
1997/98 2/     66   0.3   1,250    1,317      1,015     220    1,235      82
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.


 Table 7--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
1996/971        7.35  126.00    11.70    28.50   6.37

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     6.03
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
December1      6.68  122.00    10.50    25.60   5.74
--------------------------------------------------------
1 Preliminary.  NA = Not available.



Table 8--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 
1996/971       22.50    25.58   22.64  43.70  24.05 
                                                   
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
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
December1      25.08    26.78   26.36  51.25  26.28
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1 Preliminary 2 Decatur 3 PBSY Greenwood, MS
4 Minneapolis 5 Southeast mills 6 Chicago



Table 9--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
1996/971    262.00  192.00  110.60  232.00  158.75

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  176.25
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  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
December1    222.50  190.50  100.00  210.00  150.50
----------------------------------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

END_OF_FILE