Oil Crops Outlook                                                     OCS-0295
United States Department of Agriculture              Economic Research Service
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Approved by the World Agricultural Outlook Board          February 13, 1995
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Domestic and Foreign 1994/95 Soybean Crush Soars

Domestic crush for 1994/95 is forecast up another 5 million bushels this month
to 1,365 million.  December's 127.9-million bushel crush was by far the
largest monthly crush on record.  Crush margins are historically high and
should sustain intense activity at U.S. crush plants for at least several more
months.  The export market for soybean oil and meal is still quite strong,
maintaining product prices and good crush margins.  U.S. soybean prices have
slipped since January.

Expected 1994/95 exports are reduced 5 million bushels to 785 million.  Fewer
soybean exports mainly reflect the larger Brazilian exportable supplies.
Increased soybean meal exports are due to higher import demand, mainly by
Asian countries.  This change fully offsets the lower soybean exports and
results in no change from the 510-million-bushel ending stocks forecast for
the year.

Brazil's soybean production forecast is raised 900,000 metric tons to 24.9
million, the largest harvest on record.  The bigger crop will allow their
exports to expand.  Brazilian 1994/95 exports are 350,000 tons above January's
forecast but still nearly a half million tons below 1993/94.  Brazilian
exports climbed last season after U.S. supplies slumped.

With nearly every major exporter brimming with soybeans, world imports and
crush are also projected to reach historic highs in 1994/95.  Most importing
countries will likely take advantage of the lower prices and healthy crush
margins by using a record volume of soybeans this year.  India may increase
its soybean imports and crush on the basis of high internal oil prices and a
lack of domestic soybean supplies.

U.S. Soybean Oil Exports Surge

The November 1994 U.S. soybean oil export volume was 303.2 million pounds, the
second-highest monthly total on record, trailing only August 1981.  USDA
raised expected exports of soybean oil to 2,050 million pounds, up 100 million
from last month's forecast.  A strong Chinese presence in the market continues
to be a bullish factor for vegetable oil trade.  In spite of fewer year-to-
year oil exports by major exporters, the United States will not overtake
Argentina, the EU, and Brazil in 1994/95 as the top exporter of soybean oil.

Higher expected Malaysian palm oil output and exports (150,000 MT) also mean
greater competition for soybean oil, especially later in the marketing year.

Lower palm oil prices will likely boost U.S. imports, undercutting soybean oil
prices.

Driven by strong export demand, domestic prices for soybean oil exceeded 31
cents per pound late in 1994.  However, in the last 2 months, prices have
receded about 3 cents per pound.  This suggests that the oil price has peaked
and market participants are anticipating the April-May arrival of South
American supplies.  The abundant U.S. and global supplies of sunflower oil
should also weigh on the soybean oil price.  Sunflowerseed oil, which
typically has a price premium, is currently even with the soybean oil price.

This month's upward revision in forecast Argentine sunflower oil production
will add even more price pressure.

Forecast 1994/95 domestic production of soybean oil is raised 50 million
pounds from January to 15,162 million this month.  Expanding international
demand causes year-ending stocks of soybean oil to remain tight, however.

Soybean Meal Exports Healthy But a Slowdown Looms

Production of U.S. soybean meal for 1994/95 is expected higher (to 32.3
million short tons) based on a slightly larger crush and lower extraction
rate.  A generally warmer-than-normal winter to date has curbed seasonal
domestic meal disappearance as livestock feeders have not needed to boost
rations due to cold weather.  Carryout meal stocks were reduced 50,000 tons to
250,000 tons on the basis of the export market's strength.

This month, USDA raised forecast 1994/95 soybean meal exports 125,000 short
tons to 5.95 million.  Damage and disruption of soybean crushing plants in
Japan, resulting from the January 17 earthquake, will likely affect U.S. trade
with Japan.  Until repairs are completed, imports of soybean meal may be
needed more than soybeans.  U.S. soybean sales to Japan of at least 50,000
metric tons for February-March shipment were subsequently cancelled.  Some
crushing will likely shift to areas in Japan unaffected by the disaster,
although these plants cannot fully offset the near-term requirement for more
protein meals.  Japan's meal production for 1994/95 dropped 80,000 tons from
the January projection.

Projected 1994/95 Brazilian crush increased this month by 250,000 metric tons,
putting meal production at a record 14.4 million.  India's crush also
increased 75,000 metric tons based on higher projected soybean imports.

Although current soybean meal prices are low compared with recent years,
further declines are possible when South American and Indian supplies begin to
flood the market.  Exports of soybean meal from Brazil are expected to
approach their all-time high set in 1993/94, which exceeded 10 million tons.

Global and U.S. production and exports for 1994/95 of sunflower meal, rapeseed
meal, and peanut meal will also either approach or surpass previous highs.

Outlook For 1995 U.S. Soybean Acreage

Despite heading into the 1995/96 crop year with enormous carryin stocks, a
drop in soybean plantings could be less severe than normally would be the
case.  Concerns are emerging regarding high fertilizer prices.  Diammonium
phosphate prices, a major corn input, have nearly doubled since last year.

The tightening situation is due to U.S. fertilizer plants reaching maximum
capacity, smaller Russian exports, and strong fertilizer demand worldwide.

Escalating fertilizer prices raise the cost of corn production, as U.S.
farmers, on average, use more fertilizer on corn than any other crop (about 8
times the quantity applied to soybeans).  Higher interest rates this year may
also cause farmers to consider planting crops requiring fewer inputs to
control their borrowing costs.  This development portends more soybean acreage
coming at the expense of corn this spring.  The first planting intentions
information will be available in the March 31 Prospective Plantings report.

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

1992/93     278    2    2,190    2,471     1,279    770    130    2,179    292
1993/94 1/  292    6    1,871    2,170     1,272    589    100    1,961    209
1994/95 2/  209    8    2,558    2,775     1,365    785    115    2,265    510
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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                           ports           stocks
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         ------------------------------1,000 tons-----------------------------

1992/93     230     30,364    30,687       24,251   6,232   30,483    204
1993/94     204     30,417    30,691       25,185   5,356   30,541    150
1994/95 1/  150     32,340    32,550       26,350   5,950   32,300    250
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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.   Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks    tion                         ports            stocks
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         -------------------------- Million pounds---------------------------

1992/93     2,239   13,778   16,027       13,054   1,419   14,473   1,555
1993/94     1,555   13,906   15,528       12,896   1,529   14,425   1,103
1994/95 1/  1,103   15,162   16,280       13,000   2,050   15,050   1,230
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1/ Estimated.  2/ Forecast.

Table 4--Prices for selected oilseeds and products
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                            Soy-          Cotton- Cotton-
Marketing   Soy-  Soybean   bean  Cotton-  seed    seed
 year      beans    oil     meal   seed     oil    meal
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           $/bu. Cents/lb. $/s.t.  $/ton Cents/lb. $/s.t.

1990/91     5.74   21.00  181.40  121.00   22.30  130.75
1991/92     5.58   19.10  189.20   71.00   20.10  140.50
1992/93     5.56   21.40  193.75   97.50   25.00  161.78
1993/94     6.40   27.09  192.86  113.00   27.78  164.30

1992/93:
October     5.26   18.36  180.60   94.00   22.17  154.40
November    5.36   20.10  181.90  105.00   22.96  157.50
December    5.46   20.52  187.60  105.00   23.91  174.50
January     5.58   21.23  188.75  111.00   24.09  164.40
February    5.56   20.72  179.90  115.00   22.03  149.40
March       5.65   21.00  183.60    NA     22.24  153.50
April       5.73   21.24  187.40    NA     22.55  149.00
May         5.81   21.15  193.25    NA     22.70  143.10
June        5.90   21.30  193.10    NA     26.76  153.00
July        6.56   24.13  229.90    NA     30.74  170.30
August      6.56   23.46  219.10  111.00   30.45  178.50
September   6.21   23.61  199.90  104.00   28.98  193.75

1993/94:
October     6.01   22.96  194.50  112.00   24.79  173.10
November    6.32   25.43  209.40  122.00   26.69  181.00
December    6.64   28.27  206.00  123.00   30.39  180.00
January     6.72   29.91  198.30  126.00   33.16  170.30
February    6.71   28.85  198.40   97.00   29.96  173.10
March       6.73   29.03  195.40     NA    29.60  174.00
April       6.57   27.90  188.90     NA    29.06  166.25
May         6.77   29.10  193.75     NA    29.66  157.75
June        6.72   27.60  195.50     NA    27.55  154.10
July        5.92   24.53  181.10     NA    24.20  152.50
August      5.58   25.38  178.60   86.00   23.71  144.50
September   5.47   26.12  174.50  101.00   24.51  145.00

1994/95
October     5.30   27.06  168.50   96.00   23.64  134.40
November    5.36   29.84  161.00  106.00   24.85  120.50
December    5.41   30.61  156.90  119.00   25.50  114.20
January 1/  5.36   29.07  156.50  120.00   26.41  104.58
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                   Sun-    Sun-
Marketing  Sun-    flower flower          Peanut  Peanut
 year     flowers   oil    meal   Peanuts   oil    meal
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           $/cwt Cents/lb  $/s.t. ---Cents/lb.---  $/s.t.

1990/91     10.80   23.60   88.00   34.70   45.50  193.00
1991/92      8.69   21.60   76.80   28.30   27.30  154.50
1992/93      9.74   25.30   89.00   30.00   27.40  172.90
1993/94     12.90   31.00   94.00   30.40   43.20  194.91

1993/94:
October     11.20   26.33   90.00   30.00   40.20  196.00
November    11.60   28.20   90.00   29.50   43.33  197.00
December    13.00   32.11   89.40   29.70   43.17  200.00
January     13.60   35.08   97.00   36.10   46.10  209.00
February    15.10   33.68   98.75    NA     46.12  207.50
March       15.00   33.48    N/Q     NA     44.50  198.75
April       15.00   33.00    N/Q     NA     43.40  191.00
May         15.60   33.50  105.00    NA     44.25  187.50
June        14.20   31.34  102.50    NA     43.75  163.75
July        12.40   28.89   97.50    NA     44.00  164.00
August      12.60   28.13   90.75    NA     45.00  153.75
September   10.70   29.28   85.00   30.30   43.10  114.80

1994/95
October     10.80   28.90   75.00   28.80   46.00  151.25
November    10.60   29.40   69.50   25.60   50.88  147.50
December    10.30   30.63   52.50   25.40   53.80  127.00
January 1/   9.72   29.68   50.00   25.70   50.25  105.00
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 1/ Preliminary.

******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Fats and Oils                    (202) 219-0838
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
George Douvelis  Minor Oilseeds                             (202) 501-8550
Jaime Casteneda  World Oilseeds                             (202) 219-0826
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The next release of the OIL CROPS OUTLOOK is scheduled for 4:00 p.m. ET
Monday, March 13.