OIL CROPS OUTLOOK                                              May 13, 1997
            Approved by the World Agricultural Outlook Board
==============================================================================
OIL CROPS OUTLOOK is a monthly report issued electronically by the  Economic
Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  
No printed copies available.  OCS-0597.  
==============================================================================

Good Outlook for 1997 Soybean Planting To Ease Tight U.S. Market

As of May 11, very favorable conditions had pushed soybean planting to 20
percent complete, compared to the preceding 5-year average of 12 percent.  Firm
(but not short of moisture) soils have advanced soybean planting in Ohio
(39 percent complete), Indiana (31 percent), and Illinois (35 percent) to a
record pace.  This is a stark reversal from last year's late start and bodes
well for yields.  The opportunity to harvest some soybeans in August (when
prices will be very strong) makes early planting quite appealing.  Planting
conditions are also shaping up favorably in the Southeast. In the Delta,
excessive wetness during April hampered corn and cotton planting, which may
increase Delta soybean acreage by as much as 250,000 acres over intentions.  In
the Northern Plains, stronger wheat prices may prompt farmers to plant more
grains at the expense of oilseeds.  However, saturated soils have kept Northern
Plains farmers from much fieldwork this month, and continued delays could result
in higher oilseed acreage there.

USDA's initial 1997/98 projection starts with planted acreage at 68.8 million,
as indicated in the Prospective Plantings report.  Harvested acres are projected
at 67.5 million, based on a typical proportion between harvested and planted
area.  The average yield of 38.5 bushels per acre is based on recent trend
growth that best reflects the benefits from recent varietal improvements and
higher seeding rates.  Thus, an alltime high 2.6-billion-bushel soybean crop is
projected for 1997/98.  This would be 9 percent larger than 1996/97 and 3
percent above the 1994/95 record.

Projected world oilseed production for 1997/98 is 273.0 million metric tons (up
6 percent), of which U.S. oilseeds account for 80.8 million tons (up 8 percent). 
The increase in U.S. soybean production makes up nearly 40 percent of the
world's gain in 1997/98 oilseeds production.  Foreign oilseed production is
expected to climb 5 percent to 192.2 million tons.  Such a large increase would
quickly ease currently tight stocks.  The average soybean farm price is
expected to fall to $5.50-$7.00 per bushel.  But, dry weather this summer is
always possible, and the 125-million-bushel carryover from 1996/97 would not
moderate a price surge from that contingency.

Once the new U.S. crop arrives this fall, expected tight stocks in South America
by September 1 would portend a brisk start to 1997/98 U.S. exports.  The
transition between fall and summer of 1997 should be radical, as summer quarter
shipments are expected to be very slow.  USDA forecasts next season's soybean
trade at 890 million bushels, just 5 million below this year's considerable
shipments.  Domestic soybean crush is projected at 1,450 million bushels, up 25
million from this season.  Year ending stocks would build to a more comfortable
260 million bushels, more than double the 1996/97 quantity.

The rebound in U.S. supplies of soybean meal (up 2.5 percent to 34.8 million
short tons) should bring down prices from the current peak.  Meal prices are
forecast to average $190-$225 per short ton, well below the estimated 1996/97
average of $262.  Strong consumption growth in Asia and Latin America will
support U.S. protein meal exports, although slower demand from Europe and Japan
will shave 1997/98 exports to 6.6 million tons.  At home, lower prices
and a recovery for livestock populations will nudge U.S. soybean meal
disappearance up to 28.0 million tons.

U.S. 1997/98 production of vegetable oils is projected to be 8.6 million metric
tons, where soybean oil constitutes 85 percent of the total.  The spurt in
domestic soybean oil disappearance seen this season would revert to more modest
growth in 1997/98, rising 3 percent to 18,050 million pounds.  U.S. soybean oil
exports, projected to rise to 1,900 million pounds, will benefit from continued
strength in world consumption and low global oil stocks.  Even with much
higher U.S. supplies, prices for soybean oil are likely to range between 22.0
and 26.0 cents per pound, little changed from this year.  Domestic oil stocks
may reach 1,950 million pounds, near levels for the previous 2 years.

Drought Curbs South American Soybean Production

Still suffering from more than 2 months without rain, Argentine 1996/97 soybean
production is forecast at 12.4 million metric tons, down from 13.25 million last
month and virtually even with 1995/96 production.  Yields are seen at the
lowest level since the 1988/89 drought.  Unlike Brazil, Argentina's crushing
industry will remain fully engaged, processing a record 10.8 million tons.  The
brunt of the production shortfall will be borne by lower stocks and soybean
exports.  The 950,000 tons of soybean exports anticipated this year are less
than half the 2.1 million tons shipped last season.  However, the dry weather
has expedited the soybean harvest, with Argentine farmers now 63 percent
finished, compared to 22 percent last year.  This means Argentine soybean
exports will be delivered onto the world market earlier than normal, although
the cumulative volume will be much less by next fall.

Poor weather also has dropped forecast Argentine sunflowerseed production to 5.2
million tons.  The reduced supplies and an expanding domestic crushing industry
substantially diminish Argentina's potential to export sunflowerseed to only
about 100,000 tons.  Argentina has little domestic consumption of the
sunflowerseed products, so most must be exported.  With adequate domestic oil
supplies but a deficit of protein meals, the Netherlands, United Kingdom, and
other EU countries have increased imports of sunflower meal from Argentina
rather than seed.  Projected EU sunflower meal imports from all sources are a
record 2.5 million tons this year.

The 1996/97 soybean harvest in Brazil is nearly complete.  USDA's production
estimate dropped from 27.0 to 26.5 million tons this month.  Although record
soybean crops are being observed in most Brazilian states, a serious drought
during pod filling in Rio Grande do Sul has tempered the national average yield. 
Expected Brazilian soybean exports for 1996/97 were raised to 6.5 million tons. 
All Brazilian exporters must be registered with the government and obtain export
licenses.  As of May 2, 6.3 million tons of soybeans had been registered for
export with the Secretariat of Foreign Trade, already well above the total
1995/96 volume of 3.5 million tons.  Waiting times for vessels loading soybeans
at Paranagua have fallen to 6 days (down from 28 days last month) as a wide
price inverse has encouraged farmers to quickly market their harvests.  Actual
soybean shipments to date from Paranagua are more than double a year earlier,
while soybean meal exports have lagged as berths have been switched to
accommodate the torrent of soybeans.  Brazilian 1996/97 soybean oil exports are
projected at 1.5 million tons, of which 545,000 tons have been registered.

While the elimination of the value added tax on Brazilian exports has vitalized
foreign soybean trade, domestic crushing has languished.  Brazil's crush is now
projected at 20.3 million tons, down from 21.6 million in 1995/96.  The brisk
export demand is expected to decrease September 30 soybean stocks to no more
than 4 million tons, the tightest in many years.

Elsewhere in South America, previous 1996/97 soybean production forecasts for
Paraguay and Bolivia were reduced to 2.6 million and 1.0 million tons,
respectively.  However, the revised forecasts would still be record harvests for
both countries.  Lower supplies would principally affect Paraguay's exports,
which are accordingly reduced to 1.65 million tons.  Bolivia's domestic crush
(565,000 tons) and exports of soybeans (400,000 tons) and meal (352,000 tons)
would all slip from previously expected highs.

Soybean Imports From Brazil to Extend U.S. 1996/97 Supplies

In April, the first-ever shipment of soybeans from Brazil to the United States
arrived at the Gulf, with reports of other vessels to follow.  These uncommon
imports are made possible by a widening price differential between the Gulf and
Brazilian ports.  USDA raised its forecast of 1996/97 soybean imports to 10
million bushels to account for the trade.  This will be a short-lived
phenomenon, as it is quite likely that the Brazil will itself become a net
importer later this year, when prices should be lower and available supplies to
Brazilian crushers have been depleted by the active summer export trade.

Although slipping lower each week, U.S. crushing is still comparatively solid. 
As smaller supplies dim prospects for South American meal exports, foreign
demand for U.S. soybean meal will continue to buoy crushing.  This year's
domestic soybean crush was forecast 5 million bushels higher this month, to
1,425 million.  The 1996/97 average farm price for soybeans is forecast at $7.35
per bushel, up from $6.72 in 1995/96.

Assuming an October-September crush of 1,420 million bushels, 1996/97 soybean
meal production is forecast higher this month to 33.7 million short tons.  U.S.
exports of soybean meal were expected to rise to 6.75 million tons, from 6.0
million in 1995/96.  Despite larger supplies in China, swelling domestic use is
raising Chinese soybean meal imports (up to 2.5 million metric tons), which has
given a large boost to 1996/97 world trade.  Domestic meal disappearance is
projected 50,000 tons higher, from the April projection of 27.0 million tons. 
The basis for this forecast is enduring strength in year-to-date domestic meal
disappearance and freeze damage to winter wheat that will likely reduce summer
wheat feeding.  The 1996/97 soybean meal price is expected to average $262 per
short ton, the highest annual average ever.

Despite a larger crush, 1996/97 soybean oil production was forecast only 25
million pounds higher because of a modest reduction in the oil extraction rate. 
This year's large domestic supplies have reduced U.S. imports of soybean oil,
now expected down to 50 million pounds.  With no change in total supply this
month, robust domestic offtake of 13,950 million pounds will shrink 1996/97
carryout oil stocks to 1,800 million pounds.  The season average oil price is at
23.5 cents per pound, implying nominally stronger prices through the summer.

The 1996/97 forecast for domestic sunflowerseed crush was reduced to 1.57
million hundredweight, as cumulative crush continues to lag a year earlier. 
Greater nonoil use completely offsets the change, rising to 1.2 million
hundredweight.  Ample competing exports from Russia, Ukraine, and the recently
completed Argentine harvest have made penetration of traditional EU markets very
difficult this year for U.S. oil-type sunflowerseed.  For sunflower oil, U.S.
exports to Mexico are doing fine, but a rebound in domestic oil supplies in the
important Middle East, North African, and EU countries have slowed the pace of
imports.  The 1996/97 export forecast for U.S. sunflower oil was cut to 476
million pounds this month, down nearly one-fourth from last season.

The next Oil Crops Outlook is scheduled for release at 4:00 pm ET Friday, June
13.


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    5    2,382    2,576     1,425    895    131    2,451    125
1997/98 1/  125    5    2,600    2,730     1,450    890    130    2,470    260
------------------------------------------------------------------------------
1/ Forecast.


Table 2--Soybean meal:  U.S. supply and disappearance
------------------------------------------------------------------------------
                 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 3/  212     33,663    33,975       27,050   6,750   33,800    175
1997/98 1/  175     34,475    34,825       28,000   6,600   34,600    225
------------------------------------------------------------------------------
1/ Includes imports.  2/ Estimated.  3/ Forecast.


Table 3--Soybean oil:  U.S. supply and disappearance
------------------------------------------------------------------------------
                 Supply                           Disappearance 
        ----------------------------     ------------------------------------
Year 
begin.       Beg.   Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks    tion      1/                 ports            stocks
------------------------------------------------------------------------------

         -------------------------- Million pounds---------------------------

1995/96     1,137   15,240   16,472       13,465     992   14,457   2,015
1996/97 3/  2,015   15,485   17,550       13,950   1,800   15,750   1,800
1997/98 3/  1,800   16,170   18,050       14,200   1,900   16,100   1,950
------------------------------------------------------------------------------
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
1995/961       6.77  106.00    11.50    29.30   5.25
1996/971       7.35  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
April1         8.03   NA       11.80     NA     6.59
--------------------------------------------------------
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      23.50    25.50   24.00  41.50  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
April1        23.17    25.10   23.38  45.00  24.60
---------------------------------------------------
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  202.70  159.05
1996/971    262.00  200.00  139.50  232.00  170.00

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 1/    288.55  198.13  124.00  233.75  168.00
---------------------------------------------------
1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 
4/ Minneapolis 5/ 50% SE mills

END_OF_FILE