OIL CROPS OUTLOOK                                          September 12, 1996
            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-0996.

Note: Tables in this report will not be properly formatted unless printed or
displayed with both a fixed-pitch font, such as Courier, and an 80-character
line width. 
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LAGGING DEVELOPMENT AND FROST FEARS TRIGGER HIGHER SOYBEAN PRICES
 
Beneficial rains in August and early September fell on Midwestern soybean
fields during the critical pod filling stage.  However, below normal
temperatures this summer have persisted, preventing development of the
late-planted fields from catching up.  Yield potential has been lost even if
all fields reach maturity prior to frost.  The vulnerability in some States to
a September or early October frost has driven November futures prices up
toward $8.00 per bushel.
 
USDA's September soybean yield forecast is 35.8 bushels per acre, down from
36.2 bushels last month.  Less auspicious yields in the eastern Corn Belt have
brought down the forecast.  The Ohio average yield, reduced 3 bushels per acre
from the August forecast to 32 bushels, would be the poorest since 1989. 
Yield prospects were also downgraded in Minnesota, Illinois, Iowa, Michigan,
and Wisconsin.  September pod counts in these States were well below recent
years.  On the other hand, Nebraska and Kansas appear to have bounced back
from disappointing 1995 yields with an excellent current outlook.  Near record
yields throughout the Delta and Southeast are also buoying output.
 
Forecast soybean production for 1996 totals 2,270 million bushels, down 30
million from August and up 118 million from 1995.  However, given much lower
beginning stocks, this year's increase will not be enough to allow for growth
in offtake.  Although soybean oil demand should rebound somewhat from a
lackluster 1995/96, soybean crush will be hampered by weaker soybean meal
demand.  Crush for 1996/97 is expected to drop slightly to 1,355 million
bushels from 1,365 million last season.  Carryover stocks for this crop year
will further tighten to 160 million bushels, compared to 170 million ending
the 1995/96 crop year.
 
The forecast range for the 1996/97 average farm price is $7.00-$8.00 per
bushel, compared with $6.76 last season.  These lofty prices will eventually
ration soybean export demand, which is forecast down 5 million bushels this
month to 815 million bushels and down from 840 million bushels in 1995/96. 
The early U.S. export pace should be vigorous but will likely stall later as
attractive prices encourage a greater acreage response from South American
producers.
 
Already high-priced soybean meal will become even more costly next season,
ranging from $245 to $265 per ton, versus $235 in 1995/96.  Shorter supplies
are the chief reason.  Meal production is expected to drop nearly 400,000
short tons to 32.2 million based on a lower crush and meal extraction rate. 
Higher meal prices and minimal growth in livestock populations will pare
domestic meal disappearance about 1 percent to 26.6 million tons.  Although
Asian demand for U.S. soybean meal is anticipated to stay robust, imports by
the EU (still the largest import market) are likely to substantially decline. 
This would shave next season's U.S. soybean meal exports 50,000 tons from the
5.8 million tons forecast for 1995/96.
 
Despite smaller crushings that would cut 1996/97 soybean oil production 1
percent, the huge inventory carried over from 1995/96 will swell projected
total supply to a record 17.3 billion pounds.  Projected demand probably will
not be able to grow fast enough to shrink the glut, so that the ample oil
inventory will remain above 2 billion pounds.  The outlook for U.S. exports
has dimmed as Chinese import demand for vegetable oil has been scaled back
from earlier projections.  The forecast for U.S. soybean oil exports was
reduced from 1,750 million pounds to 1,650 million this month.  This year's
increase in domestic disappearance of soybean oil will not repeat the
substantial 1995/96 gains, which were due to an accumulation of invisible
stocks.
 
WORLD OILSEED SUPPLIES TO TIGHTEN
 
Projected world production of all oilseeds for 1996/97 declined 1.4 million
metric tons from last month and 0.9 million tons from 1995/96.  Expected
1996/97 world soybean production declined nearly 1 million tons because of
smaller U.S. and Indian harvests.  India's soybean crop was reduced 300,000
tons to 4.2 million as a later than normal monsoon has taken a toll on yield
potential.  Despite improved prospects for Canadian and Hungarian rapeseed
yields, this month's net decrease in projected 1996/97 world rapeseed
production was 275,000 tons.  This decline was based on much lower yields in
Germany that cut the anticipated harvest by 600,000 tons.  The 6.7-million-ton
EU crop would be the smallest since 1993.  World cottonseed production is
expected down 286,000 tons this month due to smaller Chinese and U.S. output,
which were partially offset by a production increase from higher Indian cotton
area and yields.  Partly offsetting these other reductions is global
sunflowerseed output, which is expected 180,000 tons larger given higher
yields in Hungary and Yugoslavia.
 
Argentina could raise its 1996/97 soybean crush to a record high 10.1 million
tons by reducing soybean exports and stocks.  The additional supplies of meal
and oil (also at record levels) likely would be exported.
 
Mexico is projected to import a record quantity of soybeans in 1996/97, up 7
percent from a large 1995/96 trade volume.  The strengthening Mexican economy
is maintaining an active crush rate to accommodate rapid livestock feed
demand.
 
Because of the drop in EU rapeseed output, crush and production of rapeseed
meal and oil will plummet.  But a large EU grain harvest and higher world
soybean prices will constrain imports of soybeans and soybean meal.  Lower
supplies and higher prices for EU rapeseed oil are forecast to reduce Chinese
imports of EU rapeseed oil by 50,000 tons.
 
Prospects for smaller Chinese oilseed harvests and incessant demand growth are
initiating greater trade opportunities in 1996/97.  The Chinese government is
more likely to favor palm oil versus other vegetable oils, however, when
implementing import quotas and tariff rates.  While the forecast for palm oil
imports was trimmed 100,000 tons this month, 1996/97 imports would still be up
39 percent from 1995/96.
 
Smaller Indian soybean supplies and crushing would also slow the rapid growth
of Indian soybean meal exports of recent years.  Expanding domestic poultry
production is also limiting available supplies for export.
 
As India's supplies of domestic vegetable oils stagnate, imports (principally
palm oil) are anticipated to reach a record volume (800,000 tons) to satisfy
booming demand.  Population growth and rising living standards, as well as
lower import duties on edible oils, have contributed to this surge.
 
1995/96 SEASON FINISHING STRONG FOR MEAL, WEAK FOR OIL
 
The U.S. soybean crush set a record for July at 111.9 million bushels.  This
seasonally late spurt in crush portends a brisk processing pace this fall.
 
Domestic disappearance of soybean oil was forecast 50 million pounds higher to
13,450 million pounds.  U.S. soybean oil imports were raised to 110 million
pounds for the season and a slight increase in the oil extraction rate raised
total supplies to 16,535 million pounds.  Given the relative inactivity in
foreign demand, USDA revised down its 1995/96 soybean oil export forecast to
1,075 million pounds from 1,200 million in August.  U.S. exports of soybean
oil slowed to a crawl in June at 16 million pounds, just slightly above June
imports of 10 million pounds.  Consequently, total domestic oil stocks at the
end of July swelled to over 2 billion pounds.  Oil stocks may stay near this
higher level through the end of the marketing year.
 
A modest reduction in the meal extraction rate reduced forecast 1995/96
soybean meal production 50,000 tons to 32.6 million tons.  This change was
balanced by a parallel reduction in carryout stocks.  The August average
soybean meal price jumped to $261 per ton from $252 in July.  This helped
raise the average 1995/96 soybean meal price forecast from $230 to $235 per
ton.
 
******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
******************************************************************************
 
The next Oil Crops Outlook will be released at 4:00 pm ET, October 15, 1996.
 
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    6    2,517    2,731     1,405    838    153    2,396    335
1995/96 1/  335    5    2,152    2,492     1,365    840    117    2,322    170
1996/97 1/  170    5    2,270    2,445     1,355    815    115    2,285    160
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1/ Forecast.
 
Table 2--Soybean meal:  U.S. supply and disappearance
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Year 
begin.      Beg.    Produc-   Total      Domestic   Ex-     Total    End.
Oct. 1    stocks     tion                           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 1/  223     32,572    32,875       26,850   5,800   32,650    225
1996/97 1/  225     32,185    32,500       26,550   5,750   32,300    200
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1/ 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                         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/  1,137   15,288   16,535       13,450   1,075   14,525   2,010
1996/97 1/  2,010   15,175   17,260       13,550   1,650   15,200   2,060
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1/ Forecast.
 
Table 4--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.
                                     
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       6.80  106.00    11.35    29.30   5.25
 
1994/95
September      5.47  101.00    10.70    30.60   4.55
October        5.30   96.00    10.50    28.60   4.52
November       5.36  107.00    10.60    25.90   4.52
December       5.41  103.00    10.60    25.80   4.72
January        5.47   95.00    10.50    25.50   4.76
February       5.40   70.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.13
April          5.55    NA      10.70     NA     5.10
May            5.56    NA      10.60     NA     4.91
June           5.68    NA      10.70     NA     5.03
July           5.90    NA      11.50     NA     5.11
August         5.83  100.00    11.40    30.60   5.21
 
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    10.60    28.60   5.03
January        6.77   98.00    11.00    29.80   5.27
February       7.01  120.00    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
August1        7.71  118.00    12.70     NA     5.91
--------------------------------------------------------
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 
---------------------------------------------------
                     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      25.00    26.24   25.50  40.00  25.55 
                                                   
1994/95                                            
October       27.06    27.81   28.90  46.00  24.73 
November      29.84    30.72   29.40  50.88  24.75 
December      30.61    31.83   30.63  53.80  24.75 
January       29.04    28.70   29.25  50.25  28.01 
February      28.15    29.95   27.66  41.83  27.26 
March         28.33    27.14   27.97  41.00  28.17 
April         26.30    27.61   26.89  41.25  27.30 
May           26.00    27.51   26.34  40.25  26.42 
June          26.78    30.04   27.30  39.00  26.61 
July          27.60    30.63   28.69  39.13  27.38 
August        26.56    30.26   27.47  41.50  26.35 
September     26.26    28.61   27.41  41.30  25.93 
 
1995/96
October       26.56    27.61   27.49  42.50  26.05
November      25.41    26.27   26.25  41.63  25.54
December      24.76    26.10   25.98  39.20  24.99
January       23.69    24.45   24.65  37.25  24.52
February      23.65    24.35   24.23  36.00  24.30
March         23.60    24.25   24.28  36.60  24.34
April         25.82    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
August1       24.00    27.81   24.78  42.60  24.33
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1 Preliminary 2 Decatur 3 PBSY Greenwood MS
4 Minneapolis 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
---------------------------------------------------
                        $/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    230.00  189.38  130.00  190.00  133.60
 
1994/95
October     168.50  134.40   75.00  151.25  122.50
November    161.00  120.50   69.50  147.50  110.00
December    156.90  114.20   52.50  127.00   95.60
January     156.40  106.75   50.00  105.00   82.40
February    151.30   97.50   46.88  107.50   85.25
March       156.90  100.30   52.50  119.00   90.00
April       161.90   98.10   62.50  125.00   94.40
May         159.10   92.75   60.90  123.75   85.00
June        160.40  108.75   62.38  134.00   85.00
July        170.45  116.90   73.75  138.75   92.50
August      166.70  116.50   83.75  136.25   95.00
September   180.99  137.60    NA    142.00  112.50
 
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
August1     261.20  192.83  126.25  227.00  170.00
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
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