OIL CROPS OUTLOOK                                             August 13, 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-0896.  
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SMALLER SUPPLIES, HIGHER PRICES TO RATION SOYBEAN USE
 
Precipitation during the last half of July and early August in formerly dry
midwestern and southeastern locations sent soybean prices plummeting from
their early July highs.  Central Illinois soybean prices fell back from a high
of $8.35 per bushel on July 12 to $7.63 by month's end.
 
However, futures prices have begun to creep back up.  The rains missed the
southern halves of Illinois and Indiana and cool summer temperatures have
slowed development of the late planted crop.  Progress reports indicate that
plant height and blooming are well behind average in the eastern Corn Belt. 
The western Corn Belt soybean crop is in generally good condition.  As of
August 4, just 51, 52, and 35 percent of Indiana, Ohio, and Michigan soybean
acreage had reached the blooming stage, compared to the 5-year averages of 91,
92, and 76 percent.  These fields will need more time to develop this year, so
prices should be supported until a large proportion of the soybeans reach
maturity prior to autumn freezes.
 
The national average soybean yield is projected up to 36.2 bushels per
harvested acre from 34.9 in 1995.  Aside from the eastern Corn Belt, most
States are indicating yields at or above last season's yields.  Iowa is
expected to retain its role as the leading soybean producing State and record
its second highest average yield of 45.0 bushels per acre.  But, the average
soybean yield for Indiana is expected to drop to 35.0 bushels per acre from
39.0 in 1995.  Similarly, the Ohio yield is forecast to fall from 38.0 bushels
per acre in 1995 to 35.0 bushels, while the Michigan yield slips from 40.0 to
34.0 bushels.
 
Drier weather in the last half of June allowed farmers to finish planting 64.3
million acres, up 420,000 from the June Acreage report.  Indiana accounted for
most of the higher acreage, with a 400,000-acre increase from the previous
forecast.  The increase came mostly at the expense of corn, as time to plant
corn expired amid early June wetness.  With harvested area of 63.4 million
acres, total soybean production would be 2.3 billion bushels.  The larger crop
is not expected to appreciably ease the tight market.  Total 1996/97 supplies
would be 17 million bushels less than last year's 2,492 million.  Expected
ending stocks for 1996/97 will remain at a relatively tight 175 million
bushels, just 5 million more than this season's forecast carryout.
 
The reduction in supplies raises prices and trims demand from 1995/96.  The
soybean average farm price increases to $6.75-$8.25 per bushel from $6.80 this
year, with part of this change prompted by rising corn prices.  A higher
soybean price narrows the crushing margin further.  Domestic crush for 1996/97
would be shaved 10 million from July and 5 million from 1995/96 to 1,360
million bushels.
 
Higher prices will also likely hinder more soybean exports, now forecast at
820 million bushels for 1996/97 and down 20 million from this year.  U.S.
soybean exports for 1996/97 should be heavily weighted to the first half of
the crop year.  Brazil is expected to have record soybean production of 26
million metric tons next year.  Stronger prices and better farm finances
should raise Brazilian soybean acreage.  Brazilian yields should also improve
from 1996, when the crop received fewer inputs and was planted late owing to
lack of moisture.  But surging domestic consumption in Brazil will somewhat
restrain its growth in supplies for export.
 
Higher corn and soybean meal prices will curb domestic meal disappearance to
26.7 million short tons, down 0.6 percent from 1995/96.  With a price between
$235 and $270 per ton for soybean meal (the highest since 1988/89), livestock
and poultry feeders will be hard pressed to maintain production if demand for
their products does not also strengthen.
 
Foreign demand for U.S. soybean meal exports is not expected to greatly suffer
from a higher price trend, based on strong demand from Asian countries.  USDA
forecasts U.S. meal trade at 5.75 million short tons, only 50,000 less than
the 1995/96 estimate.  
 
The increase in 1996/97 carryin stocks outweighs the decline in expected
soybean oil production.  There was no change in projected demand from July, so
ending stocks would rise to 1,930 million bushels, up 90 million pounds from
this season's carryout and the third highest yearend stocks ever.
 
U.S. soybean oil exports should benefit from larger grain and smaller oilseed
production in 1996 for the EU and China.  While this shifts EU imports more
toward soybeans than soybean meal, crushing lower oil-content soybeans also
means that EU exports of vegetable oil will probably decline.  This should
boost U.S. oil exports into markets such as North Africa and China.
 
WORLD OILSEED SUPPLIES TO FALL FURTHER IN 1996/97
 
This month's lower projected production pulls 1996/97 world oilseed supplies
down to 276.3 million metric tons, 1 percent below last month's estimate. 
Projected foreign oilseed production is down 1.7 million tons from July's
estimate of 184 million tons.  Foreign sunflowerseed output is projected
almost 6 percent under the previous estimate to 21.7 million tons.  Russia and
Ukraine account for most of the nearly 1.3-million-ton drop in foreign
sunflowerseed production.  Unfavorable weather--a cold spring and a dry summer
in Russia and Ukraine grain regions--has caused widespread damage to the grain
crops, including sunflowerseed.
 
Global oilseed ending stocks are projected 460,000 tons lower this month as
global oilseed demand outpaces production.  Soybeans regularly account for
about 85 percent of all oilseed stocks.  Projected world soybean ending stocks
for 1996/97 (the lowest in more than 13 years) are supporting internationally
traded soybean prices to their highest level since 1988/89.  Soybean meal
prices continue to drive the increase in soybean prices, while the softness in
soybean oil prices persists.  A tight supply of feed grains has pushed soybean
meal demand up, while slower demand from major oil markets has driven soybean
oil stocks up and prices down.  However, a sharp reduction in global outturn
of high oil-content seeds in 1996/97 is expected.  This could offset robust
palm and soybean oil production, leading to more stable vegetable oil prices.
 
CURRENT OIL STOCKS CLIMB ON REVIVED CRUSH, SLUGGISH U.S. EXPORTS
 
The recent upturn in soybean crush is the catalyst for raising this month's
1995/96 estimate to 1,365 million bushels.  Outstanding export sales of
soybeans were the highest ever for August 1 at 71 million bushels, which may
mean a strong finish for the 1995/96 season.  The full amount is unlikely to
be shipped by September 1 as several countries have the flexibility to roll
over sales into early 1996/97.  Importers have an incentive to do so as this
fall's U.S. harvest exceeds a year earlier and prices usually exhibit seasonal
decline over the next several months.  Consequently, USDA raised its export
estimate for 1995/96 to 840 million bushels this month, virtually even with
1994/95 exports.  The greater use drops estimated carryover stocks to 170
million bushels, which is the lowest in 20 years.
 
Production of soybean oil for 1995/96 is forecast up 55 million pounds to
15,210 million.  Based on stronger meal demand, higher soybean crush in June
lifted end-of-month soybean oil stocks to 1,890 million pounds.  This is the
highest oil inventory in 3 years.  With a further reduction in soybean oil
exports to 1,200 million pounds, 1995/96 carryout stocks are expected to
settle at 1,840 million pounds.  Expectations for larger supplies dropped the
monthly average soybean oil price to 24.1 cents per pound in July, the lowest
since October 1993.  Prices are now anticipated to remain below 24 cents for
the next few months, which trimmed the 1995/96 average price forecast to 24.7
cents per pound.
 
Heading in the opposite direction is the soybean meal price, which jumped to
more than $250 per ton last month.  The average price for the year is forecast
slightly up, to $231.50 per ton.  Domestic disappearance is expected to stall
in July-September with very large wheat feeding and smaller livestock herds.  
U.S. disappearance was estimated 150,000 short tons lower this month from 27.0
million tons in July.  But U.S. meal exports should benefit as port congestion
and increasingly tight supplies slow Brazilian shipments.  Lower freight rates
from the United States are also encouraging recent soybean and soybean meal
trade.  U.S. meal exports were forecast up 300,000 short tons this month to
5.8 million.  The promising export outlook this fall should keep pipeline
stocks of soybean meal relatively ample.
 
******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0712
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
Jaime Castaneda  World Oilseeds                             (202) 219-0826
******************************************************************************
 
The next Oil Crops Outlook is scheduled for 4:00 pm ET Thursday, September 12.
 
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    2,300    2,475     1,360    820    120    2,300    175
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1/ 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 short tons--------------------------
 
1994/95     150     33,265    33,479       26,538   6,717   33,256    223
1995/96 1/  223     32,622    32,925       26,850   5,800   32,650    275
1996/97 1/  275     32,310    32,675       26,700   5,750   32,450    225
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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   15,210   16,440       13,400   1,200   14,600   1,840
1996/97 1/  1,840   15,265   17,180       13,500   1,750   15,250   1,930
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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
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              $/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
July1          7.76    NA      14.00     NA     6.21
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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 
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                     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
July1         24.10    28.25   24.58  43.00  25.46
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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
July1       252.50  201.56  135.00  224.56  174.00
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
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