HDR1011800201401012951600
OIL CROPS OUTLOOK                                            October 12, 1995
            Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is published monthly (except January) by the Economic Research
Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  OCS--1095.  
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Oil Crops Outlook                                                     OCS-1095
United States Department of Agriculture              Economic Research Service
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Approved by the World Agricultural Outlook Board              October 12, 1995
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HARVEST FOR 1995 IS UNDERWAY
 
Like a veteran boxer, the 1995 U.S. soybean crop keeps absorbing punishment
yet manages to stand upright.  With a late start, extreme summer heat, and an
early killing frost, this year's projected production is 2,191 million
bushels.  The national average yield would be 35.5 bushels per acre, down from
last month's forecast of 37.0 bushels.  But even with a relatively large cut
of 94 million bushels from the September forecast, this year's harvest would
still edge out 1992 as the third-largest crop on record.
 
In the week of September 17-23, freezing weather ended the growing season for
soybeans in much of the northern Midwest.  This is a normal frost date for
soybeans in Minnesota and the Dakotas.  These areas were generally planted on
time so there were few fields that had not reached maturity.  By October 8,
harvesting was 31 percent completed, compared with the 36-percent average for
the previous 5 years.  Early planted fields were generally yielding very well.
 
However, the frost descended farther south, setting several new record low
temperatures for that time of year and freezing about 2 weeks earlier than
normal.  Many soybean fields in this area had been planted late or double-
cropped and were not yet mature.  Temperatures below 28 degrees Fahrenheit for
more than 2 hours can severely damage soybeans that have not dropped leaves. 
By September 24, only 26 percent of soybeans in Nebraska had dropped leaves,
compared with the 5-year average of 68 percent.  So, parts of Nebraska and
South Dakota sustained severe frost damage.  The average expected Nebraska
soybean yield declined to 31.0 bushels per acre, down from 34.0 bushels in
September.
 
Farther east, other at-risk areas, such as Missouri, Illinois, Indiana, and
Ohio, escaped with scattered frost damage.  But yields in these States,
particularly Indiana, were lower than last month as the adverse effects of the
summer heat became better known.
 
Also, projected yields in the Delta declined as the consequences of dryness
and high temperatures became apparent.  The average Arkansas yield declined to
28.0 bushels per acre, down from 30.0 bushels last month and 33.0 in 1994/95. 
Louisiana and Mississippi yields also fell, causing the region's production to
drop 17 million bushels from last month.
 
CARRYOUT SOYBEAN STOCKS FOR 1995/96 TIGHTEN ON SMALLER YIELDS, ROBUST DEMAND
 
With lower carryin stocks and production, total supplies in 1995/96 will be
200 million bushels less than 1994/95's record of 2,731 million.  Despite
lower supply, U.S. soybean crush and exports are unchanged from the September
forecasts of 1,395 million and 800 million bushels, respectively.
 
Healthy U.S. soybean exports are expected to continue for 1995/96, although
they are projected to fall 5-percent from last year, when they wer the third
largest on record.  Steady demand for soybean meal will keep crush relatively
unchanged, so that smaller U.S. supplies will reduce availability for soybean
exports.  Brazil is not expected to repeat economic conditions that triggered
soybean imports from the U.S. of 710,000 metric tons last year.  On the other
hand, Brazil's supplies are forecast to decline, implying less competition for
U.S. exports.  Higher soybean prices and sinking soybean oil prices will
likely reduce gross crush margins, especially in importing countries.  Major
importing countries--such as the European Union, Japan, Korea, and Taiwan--
could boost soybean meal imports at the expense of soybeans, or reduce overall
imports.  The latter scenario is less likely given current feed grain prices. 
But soybean imports by major importing countries will fall negligibly because
the projected decline in crush margins follows a year of near-record margins.
 
Given this steady demand, projected U.S. ending stocks in 1995/96 would plunge
by one-third to 220 million bushels.  If realized, this would be the leanest
carryout, as a percentage of use, since 1978/79.  The tighter supply-to-use
situation will substantially raise prices.  The 1995/96 U.S. season average
price was increased 75 cents per bushel this month, to $6.25-$7.25 per bushel. 
The improved price outlook makes planting soybeans in 1996 more attractive,
thus raising this year's estimated seed use by 1 million bushels.
 
The sharply higher soybean price also pulls up the soybean meal price, which
is now expected to average $30 per ton higher than in September, to $195-$220
per ton.  Rising feed prices will also throttle the rate for domestic
disappearance of soybean meal.  This year's projected U.S. disappearance is
27.0 million tons, down 100,000 from September and just 1.1 percent higher
than 1994/95.
 
Despite a significant drop in U.S. soybean production and higher meal prices,
the 1995/96 soybean meal export forecast rose to 6.1 million tons this month
in response to keen world demand and smaller expected Brazilian meal exports.
 
U.S. soybean oil exports for 1995/96 are projected at 1,950 million pounds,
down nearly 30 percent from the 1994/95 record.  U.S. soybean oil exports to
China accounted for nearly 50 percent of all U.S. soybean oil exports during
1994/95.  The importance of China's soybean oil imports, which are anticipated
to fall 30 percent in 1995/96, suggests the potential for significantly
smaller exports from the United States.  Strong domestic oilseed production
and the considerable amounts of edible oil already imported during 1994/95
will likely reduce the volume of Chinese edible oil imports for 1995/96.  The
amount of China's soybean oil imports relative to other oils will likely
depend on their relative prices.
 
The steady production of U.S. soybean oil and the decline in export demand
should lower its price, which averaged 27.6 cents per pound last season.  U.S.
average soybean oil prices this year are expected to range from 24.0 to 28.5
cents per pound, down 0.5 cent from the previous forecast.  A lower price
should provide a small boost for domestic disappearance of soybean oil, which
is now 50 million pounds higher, at 13.1 billion pounds.
 
SOYBEAN PRODUCTION REVISED DOWN FOR 1994/95 BASED ON LOWER ENDING STOCKS
 
The recent Grain Stocks report found September 1 U.S. soybean stocks of 335
million bushels, which is 20 million bushels below last month's forecast. 
Given the lower than expected carryout, USDA revised 1994/95 soybean
production down 41 million bushels to 2,517 million.  The U.S. average yield
declined from 41.9 bushels per acre to 41.4 bushels.  Despite the reduction,
production and yield remained record high.  Acreage harvested also fell
270,000 acres to 60.9 million, based on lower area in Illinois, Indiana,
Mississippi, and South Dakota.  There were 19 States with lower average
yields, with the largest production changes occurring in Illinois (-9.3
million bushels), Minnesota (-5.6 million), and Indiana (-4.7 million).
 
Although still larger than ever, the residual use category declined to a more
normal 74 million bushels.  With crush finishing at 1,405 million bushels and
exports expected to tally 845 million, total use for 1994/95 would be 2,396
million bushels, more than 200 million bushels greater than the previous high.
 
Higher crush raised domestic soybean oil production 55 million pounds to
15,632 million.  Based on outstanding sales and shipments, U.S. soybean oil
exports will be record high in 1994/95, estimated at 2,750 million pounds, up
25 million from last month.  Domestic use is seen 25 million pounds higher
than the September forecast of 13,000 million.
 
SMALLER U.S., BRAZILIAN SOYBEAN HARVESTS CUT 1995/96 WORLD EXPORTS
 
Foreign oilseed production in 1995/96 is expected to remain nearly unchanged
from last month, but fall 2 percent from the 1994/95 estimate.  Brazil's
soybean production is projected down 1 million metric tons, which more than
offset small increases in Chinese peanut, Argentine sunflowerseed, and
European rapeseed production.  The projected fall in Brazil's soybean
production resulted from lower domestic prices and rising interest rates,
which caused Brazilian farmers to lose significant income during the 1994/95
crop year.  Furthermore, the Brazilian government has announced that soybean
farmers will not receive either a minimum price or subsidized credit during
the upcoming 1995/96 marketing year.  Therefore, despite potentially higher
international prices, the dim domestic prospects will likely discourage
Brazilian soybean plantings.  Swelling world prices for rice, cotton, and corn
also invite farmers to plant these crops.
 
In Argentina, the 1994/95 sunflower production estimate was raised to 5.65
million tons, reflecting substantial increases in crush, exports, and stocks. 
Prospective production for 1995/96 was also raised based on excellent returns
for farmers during the past 2 years.  The extended drought in Argentina has
also aided the planting of sunflowers at the expense of wheat.  China's peanut
production is projected up 3 percent from last month in response to excellent
growing conditions.  Superb profits obtained by rapeseed farmers in Poland
during 1994/95 motivated those farmers to raise rapeseed area planted by 62
percent from last year.  Likewise, French farmers responded to favorable
edible oil prices and a larger set-aside that encourage rapeseed plantings for
biodiesel production.
 
Global soybean exports are expected to fall 1 percent from a month ago and 3
percent from 1994/95.  Reduced supplies in the United States and Brazil and
below-average crush margins suggest greater soybean meal trade.  The 1995/96
world soybean crush is predicted up slightly from last year's estimate as
crush margins (although down from last year's near-record levels) remain
relatively profitable, especially in producing countries.  However, reduced
supplies in Brazil and Mexico this month brought global crush down 1 percent. 
World soybean meal production, trade, and use is forecast to reach a record
for the third consecutive year.  Rising meat production and high grain prices
are driving soybean meal demand in the United States, the European Union,
Asia, and Latin America.  Nevertheless, reduced supplies expected in Brazil
accounted for roughly all the decline in global soybean meal exports compared
with the September estimate.
 
The 1994/95 world soybean and soybean meal exports were lowered this month to
reflect slower shipments from Brazil and Argentina.  In China, soybean exports
were also reduced as provincial policies discourage interprovincial commerce
and overseas exports of soybeans.  Despite larger U.S. soybean exports to
Mexico during September-August 1994/95, a significant drop in Argentine
exports to Mexico contributed to a 9-percent decline in overall Mexican
imports.
 
Both Brazilian and Chinese trade in soybean oil have reached remarkable
records in 1994/95.  The tight situation in the world vegetable oil markets
and China's large demand for soybean oil imports pushed Brazilian shipments. 
On the other hand, China's soybean oil imports were realized on the heels of
rapid economic growth and less government intervention of imports.
 
ANOTHER LARGE U.S. SUNFLOWER HARVEST FUELS A BANNER YEAR FOR CRUSH AND EXPORTS
 
Harvested area of all sunflower types in 1995 will be nearly 3.5 million
acres.  Although harvested area is 54,000 acres higher, 1995's sunflower yield
will not come close to the bumper yields of the previous year.  This is not to
disparage this year's good fortune; the U.S. average sunflowerseed yield is
projected at a very respectable 1,313 pounds per acre.  As a result, 1995
sunflowerseed production is projected at 4,574 million pounds.
 
The Grain Stocks report finds September 1 carryin stocks of 219 million
pounds.  This was up 41 percent from a year earlier but considerably lower
than the September forecast due to unexpectedly high nonoil use in 1994/95. 
With such ample supplies, crush will likely again exceed 2.8 billion pounds
this season.  While down 23 million pounds from 1994/95, U.S. exports of
sunflowerseed will also remain strong at 540 million pounds.  Total demand
will be 275 million pounds less than last year, so carryout stocks will likely
build to about 273 million pounds.
 
A still favorable price outlook for sunflower oil compared to sunflowerseed
prices will keep crushing plants active.  Production of sunflower oil for
1995/96, at 1,131 million pounds, will rank just behind last year's record. 
U.S. sunflower oil exports are expected to drop little, from 893 million
pounds to about 805 million this season.
 
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---------------------------
 
1993/94     292    6    1,871    2,170     1,276    589     96    1,961    209
1994/95 1/  209    6    2,517    2,731     1,405    845    146    2,396    335
1995/96 2/  335    5    2,191    2,531     1,395    800    116    2,311    220
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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-----------------------------
 
1993/94     204     30,514    30,788       25,283   5,356   30,638    150
1994/95 1/  150     33,335    33,550       26,700   6,600   33,300    250
1995/96 2/  250     33,040    33,350       27,000   6,100   33,100    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---------------------------
 
1993/94     1,555   13,951   15,574       12,941   1,529   14,471   1,103
1994/95 1/  1,103   15,632   16,750       13,025   2,750   15,775     975
1995/96 2/    975   15,695   16,680       13,100   1,950   15,050   1,630
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1/ Estimated.  2/ 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
 
1993/94:
September      6.21  104.00    14.20    32.00   4.24
October        6.01  112.00    11.20    30.00   4.09
November       6.32  122.00    11.60    29.50   4.05
December       6.64  123.00    13.00    29.70   4.18
January        6.72  126.00    13.60    36.10   4.38
February       6.71   97.00    15.10     NA     4.61
March          6.73     NA     15.00     NA     4.64
April          6.57     NA     15.00     NA     4.60
May            6.77     NA     15.60     NA     4.43
June           6.72     NA     14.20     NA     4.25
July           5.92     NA     12.40     NA     4.28
August         5.58   89.00    12.60     NA     4.52
 
1994/95
September      5.47  101.00    10.70    30.60   4.54
October        5.30   96.00    10.80    28.60   4.49
November       5.36  107.00    10.60    25.90   4.51
December       5.41  104.00    10.30    25.80   4.71
January        5.47  101.00    10.60    25.70   4.75
February       5.40   97.00    10.80     NA     4.94
March          5.51    NA      10.40     NA     5.15
April          5.55    NA      10.70     NA     5.10
May            5.56    NA      10.50     NA     4.93
June           5.68    NA      10.50     NA     5.13
July           5.90    NA      11.50     NA     5.10
August         5.83  100.00    11.40    30.70   5.16
September1     5.92   99.00    11.30    30.50   5.15
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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    22.30   23.60  45.50  27.50 
1991/92       19.10    20.10   21.60  27.30  25.82 
1992/93       21.40    25.00   25.30  27.40  20.90 
1993/94       27.09    27.78   31.00  43.20  26.38 
                                                   
                                                   
1993/94:                                           
October       22.96    24.79   26.33  40.20  22.25 
November      25.43    26.69   28.20  43.33  23.06 
December      28.27    30.39   32.11  43.17  26.93 
January       29.91    33.16   35.08  46.10  28.00 
February      28.85    29.96   33.68  46.12  29.89 
March         29.03    29.60   33.48  44.50  30.30 
April         27.90    29.06   33.00  43.40  29.63 
May           29.10    29.66   33.50  44.25  29.48 
June          27.60    27.55   31.34  43.75  29.43 
July          24.53    24.20   28.89  44.00  27.20 
August        25.38    23.71   28.13  45.00  25.02 
September     26.12    24.51   29.28  43.10  24.87 
                                                   
1994/95                                            
October       27.06    23.64   28.90  46.00  24.73 
November      29.84    24.85   29.40  50.88  24.75 
December      30.61    25.50   30.63  53.80  24.75 
January       29.04    26.41   29.25  50.25  28.01 
February      28.15    25.63   27.66  41.83  27.26 
March         28.33    26.41   27.97  41.00  28.17 
April         26.30    24.00   26.89  41.25  27.30 
May           26.00    24.24   26.34  40.25  26.42 
June          26.78    26.72   27.30  39.00  26.61 
July          27.60    28.25   28.69  39.13  27.38 
August        26.56    27.09   27.50  41.50  26.35 
September1    26.26    26.50   27.13  41.30  25.93 
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1 Preliminary 2 Decatur 3 Valley points 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
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                        $/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
 
1993/94:
October     194.50  173.10   90.00  196.00  147.50
November    209.40  181.00   90.00  197.00  161.80
December    206.00  180.00   89.40  200.00  155.25
January     198.30  170.30   97.00  209.00  140.25
February    198.40  173.10   98.75  207.50  136.25
March       195.40  174.00    N/Q   198.75  127.20
April       188.90  166.25    N/Q   191.00  125.50
May         193.75  157.75  105.00  187.50  125.00
June        195.50  154.10  102.50  163.75  111.90
July        181.10  152.50   97.50  164.00  114.90
August      178.60  144.50   90.75  153.75  111.60
September   174.50  145.00   85.00  114.80   NA
 
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
September1  180.99  137.55    NA    142.00  106.25
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills
 
The next release of the Oil Crops Outlook is scheduled for 4:00 p.m. ET
Monday, November 13.
 *****************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils    (202) 219-0838
Scott Sanford    Peanuts, Cottonseed                        (202) 219-0835
Jaime Castaneda  World Oilseeds                             (202) 219-0826
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