OIL CROPS OUTLOOK                                            November 12, 1998
November 1998, OCS-0798
             Approved by the World Agricultural Outlook Board
---------------------------------------------------------------------------
OIL CROPS OUTLOOK is issued six times a year by the Economic Research 
Service, U.S. Department of Agriculture, Washington, DC 20036-5831. 
Electronic release only; no published copies are available.   
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Advancing Harvest, Sluggish Demand Pressure Soybean Prices To 11-Year Low

Although it is 60 million bushels above last year's record, the
November forecast for 1998 soybean production dipped 6 million
bushels from the October forecast to 2,763 million.  Growing
conditions were very favorable for soybeans in 1998, resulting in
record pod counts in some States.  However, a late summer dry
spell limited pod filling and trimmed the U.S. average yield to
38.6 bushels per acre.  Drought cut 1998 yields in the Delta
region nearly 5 bushels per acre from last year.  Timely rains
prevented even greater stress on Southeastern fields, which
dropped nearly 2 bushels per acre from 1997.  Tropical storms
along the Gulf coast added more damage and delays to the harvest. 


A late frost, extending an already long growing season, and a dry
autumn created very good harvest conditions throughout the United
States.  As of November 8, 94 percent of U.S. soybeans had been
harvested, compared to the 5-year average of 90 percent.  The
expedited harvest will exert formidable pressure on prices for
the near term.  The U.S. average farm price fell to $5.18 in
October, the lowest since 1987.  USDA expects the 1998/99 average
price to be $5.15-$5.75 per bushel, higher than last month but
still well below last year.

The large U.S. grain and oilseed harvests have created challenges
for the storage and transportation system, which may also weaken
the current price basis.  A wide spread between nearby and
deferred futures prices suggests that demand for storage will be
strong.  U.S. grain storage capacity (on-farm plus off-farm)
declined 18 percent from December 1, 1987 to December 1, 1997. 
Over the same time period, grain and oilseed production increased
about 18 percent. An acute shortage of storage space in several
locations for the glut of new crops will compel handlers to
temporarily pile soybeans and corn outdoors, exposing them to
quality deterioration from weather if left too long.  While grain
transportation has become more efficient over the past decade,
such a surge would normally intensify the task of allocating
enough railcars to the neediest locations in a timely fashion for
shipping to processors and ports.

However, soybean stocks are backing up at interior locations
because of the larger crop and weaker foreign demand from a year
ago.  As of October 29, U.S. export commitments of soybeans were
down 22 percent from the fast pace a year earlier.  Shipments for
1998/99 are forecast down 40 million bushels from 1997/98 to 840
million.  However, this volume is up 10 million from the October
forecast based in part on likely concessional sales to Russia. 
Crushing this fall has been brisk based on strong fundamentals
for soybean oil demand, and is expected to total 1,615 million
bushels for the current season.  While improved from last summer,
current gross crush margins are well below levels of the last 2
years.  Within a few months, though, crushing will moderate as
foreign soybean meal demand falls and domestic meal use slows. 
Carryout soybean stocks are forecast 83 percent higher than
1997/98, at 365 million bushels.

Low harvesttime prices will induce farmers to scrutinize their
best marketing options.  Expectations formed about future prices,
and the capability for on-farm storage, will determine the method
selected.  If farmers take out a 9-month Commodity Credit
Corporation (CCC) nonrecourse loan, the stocks are held in
storage until prices rise above the loan rate or they are
forfeited to CCC in repayment of the loan.  The 1998/99 U.S.
average loan rate is set at $5.26 per bushel, the maximum allowed
under the 1996 farm legislation.  

Producers may also reduce interest charges by selling the crop,
even when priced below the loan rate.  If the marketing loan is
paid off when USDA's posted county price (PCP) is less than the
county loan rate, the difference the farmer receives is known as
a marketing loan gain.  This provides income support to farmers
with less accumulation of CCC-owned stocks.  Supplies are sold to
the market more quickly than under the 9-month loan, with a
larger nearby price drop.  As of November 12, soybeans from the
1998 crop put under the loan program are a relatively modest 119
million bushels.

Alternatively, if the price is not expected to rise enough to
cover interest and storage costs, another option allows farmers
to sell and receive a direct cash payment (loan deficiency
payment), but precludes taking out a CCC loan.  Given the premium
for off-farm storage this fall, this choice had been popular. 
However, falling freight rates and the firming of prices
following the October crop estimate may limit its future
application.  To date, approximately $265 million of loan
deficiency payments have been made on 600 million bushels of
soybeans.

The September 25 Hogs and Pigs report indicated that the
September 1 breeding herd was slightly below a year earlier. 
Farrowing intentions this fall and winter are 2 and 3 percent
higher, respectively, compared with 10 and 8 percent higher a
year earlier.  Despite indications from producers, continued
expansion of the swine herd later in 1999 looks less likely, with
current slaughter rates for sows well above a year ago. 
Slaughter hog prices have dropped to the lowest in 27 years and
40 percent from a year ago.  At $20-$30 per cwt, returns on
Midwestern hog production will not cover variable costs.  On the
other hand, the economics for broiler chicken production are much
better, as feed costs have substantially declined and broiler
prices have risen.  However, prices could slip as economic
turmoil in Russia has eroded a major market for U.S. leg quarter
exports.  Domestic disappearance of soybean meal is expected up 3
percent to 29.6 million tons, compared with 5 percent growth in
1997/98.

Projected U.S. soybean meal exports were raised to 8.65 million
short tons this month, based on 0.3 million tons of concessional
sales offered to Russia.  Current soybean meal export commitments
are down 25 percent from a year ago, largely because of the
dramatic turnabout in Argentina's supplies from last year.  A
rebound in South American fishmeal production will also add to an
already ample world protein meal outlook.  The softening of
demand relative to record supply will pressure soybean meal
prices to $135-$155 per short ton, compared with the 1997/98
average of $186 and the 1996/97 average of $271.

Due to a large September crush, carryin stocks of soybean oil on
October 1 were slightly higher than expected at 1,384 million
pounds.  Nevertheless, the 1998/99 beginning oil inventory is the
smallest in 3 years.  A large buildup of soybean oil stocks will
be hampered by a weaker outlook for soybean meal.  While warm
summer temperatures during pod filling held down soybean yields,
the same is anticipated to produce an above average oil
extraction rate around 11.3 pounds per bushel.  Year ending
stocks are projected to rise 15 percent to 1,590 million pounds.

Compared to soybeans and soybean meal, a more optimistic picture
is seen for soybean oil exports.  U.S. export commitments of
soybean oil are 16 percent higher than last year at this time. 
Although 1998/99 shipments are not expected to surpass last
season's 3.2-billion-pound record, they should reach a relatively
high 2.7 billion pounds.  Although down slightly from last month,
oil prices for 1998/99 are forecast higher, to 25.5-28.0 cents
per pound from 25.8 cents last season.

Weaker Protein Meal Prices Narrow Foreign Soybean Crush Margins 

In Brazil, crushing margins have sunk, forcing several plants to
halt processing until new crop supplies arrive.  Soybean stocks
in southern Brazil, where most of the crushing capacity is
located, are nearly 50 percent higher than last year. 
Consequently, Brazilian imports from the United States under the
drawback program will be minimal this year.  Recent weather
patterns in Brazil have been near normal, with very favorable
topsoil moisture conditions for soybean planting that is about
one-fifth completed.  Although Brazilian farmers will benefit
from the recent price rally, it's too late to significantly alter
their planting decisions.  The still low price environment is
forecast to cut Brazilian soybean area 1.5 percent to 12.8
million hectares.  While weather in 1999 is not expected to match
the superb conditions this year, 1999 yields are still expected
to be among the best ever.  Brazil would produce its second-
largest crop, at 29.0 million metric tons.  Improving
productivity has also boosted soybean production in Paraguay,
which was revised up for 1997/98 and 1998/99 to 2.8 and 3.1
million tons, respectively.

Although planting conditions have been dry in Argentina, it is
too early to speculate on any lasting yield impact.  If normal
conditions eventually prevail, Argentina is forecast to harvest
16.5 million tons in 1999.  This would be exceeded only by this
year's 18.5 million tons.  Argentine soybean meal exports are
projected 11 percent higher to 11.0 million tons.  Argentine
soybean exports are expected to rise more modestly from 2.2
million tons in 1997/98 to 2.3 million.

The plethora of soybean meal supplies from South America and the
United States has narrowed margins for crushers around the world,
including the European Union.  For 1998/99, EU imports of soybean
meal are expected to overshadow soybean imports.  Current U.S.
soybean export commitments to the EU are down 46 percent from a
year ago.  For the season, EU soybean imports are forecast down
slightly to 15.5 million tons.  EU soybean meal production is
projected only 0.5 percent higher for 1998/99 to 12.1 million
tons, while soybean meal imports are forecast 4 percent higher to
16.95 million tons.

Sluggish Palm Oil Growth Provides Trade Opportunities for
Competing Oils

Global palm oil production is projected to recover in 1998/99,
although not sharply enough to quickly ease prices.  Currently
wide premiums for palm oil will moderate consumption for major
importers such as China and India, shifting proportionately more
food demand toward substitute oils.  World consumption of palm
oil is forecast to rise 1 percent for 1998/99, compared with 4
percent for rapeseed, sunflower, and soybean oil.  Malaysian
1997/98 palm oil production was estimated lower to 8.5 million
tons.  For the year ending September 30, Malaysian stocks fell to
a very tight 0.7 million tons and are forecast to increase to
just 0.8 million in 1998/99.

Philippine 1997/98 exports of coconut oil were revised upward
based on updated trade data.  Philippine producers have gained at
the expense of Indonesian exporters of palm kernel oil and
coconut oil, who have been deterred by imposition of export
taxes.  The supply of copra to Indonesian coconut oil producers
has dwindled as more copra (which is not subject to an export
tax) has been exported.  However, damage from last year's drought
and several recent typhoons are expected to cut 1998/99
Philippine coconut oil production and exports by more than 10
percent.

Given rising vegetable oil prices, crush margins for high oil
content oilseeds like sunflowerseed and rapeseed are somewhat
better.  EU import demand for sunflowerseed is comparatively
stronger, as lower area and disappointing yields in France and
Spain are projected to cut EU sunflowerseed production 6 percent
to 3.8 million tons.  A major devaluation of the ruble will spur
even more exports of Russian sunflowerseed to the West.  Output
from the large Argentine sunflowerseed area now being planted is
also expected to swell exports of sunflowerseed and sunflowerseed
products later this season.  The surge in soybean oil imports by
the Middle East and North Africa in 1997/98 should decline as
greater availabilities of sunflower oil in 1998/99 will allow
these countries to better satisfy consumer preferences.

Similarly, Japanese oilseed processors are expected to emphasize
more rapeseed than soybeans in 1998/99.  Japanese soybean imports
are forecast down 3.6 percent to 4.7 million tons, while rapeseed
imports are anticipated 0.4 percent higher to 2.1 million tons. 
Canadian rapeseed crushing has proceeded briskly on the heels of
a record 7.3-million-ton harvest.  Canadian rapeseed trade with
China and Japan will be active until competition from the bumper
Australian harvest develops next January.  Canada will also
export growing volumes of rapeseed, rapeseed meal, and rapeseed
oil to the United States, filling a gap left by a smaller
supplies of cottonseed and cottonseed products.

The next release of the Oil Crops Outlook is scheduled for 4:00
p.m. ET Monday December 14, 1998.  This report is also available
electronically at the ERS website http://www.econ.ag.gov

Information Contact:

Mark Ash          Soybeans, minor oilseeds, oils               
(202) 694-5289
mash@econ.ag.gov

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  residual        stocks
------------------------------------------------------------------------------
         -------------------------- Million bushels---------------------------

1996/97    183    9    2,382    2,575     1,436    882    125    2,443    131
1997/98 2/ 131    5    2,703    2,839     1,597    870    171    2,639    200
1998/99 2/ 200    6    2,763    2,968     1,615    840    148    2,603    365
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.
Table 2--Soybean meal:  U.S. supply and disappearance
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                     Supply                           Disappearance 
        --------------------------------  ------------------------------------
Year 
begin.      Beg.   Im-   Produc-   Total    Domestic   Ex-     Total    End.
Oct. 1    stocks  ports   tion                        ports           stocks
------------------------------------------------------------------------------

         ---------------------------1,000 short tons--------------------------

1996/97     212   102    34,209    34,523     27,322   6,994   34,316    210
1997/98 2/  210    55    38,171    38,436     28,868   9,350   38,218    218
1998/99 2/  218    50    38,232    38,500     29,600   8,650   38,250    250
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

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

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

1996/97     2,015   53   15,743   17,811     14,247   2,045   16,291   1,520
1997/98 2/  1,520   58   18,143   19,721     15,159   3,175   18,334   1,384
1998/99 2/  1,384   56   18,250   19,690     15,400   2,700   18,100   1,590
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 4--Cottonseed:  U.S. supply and disappearance
------------------------------------------------------------------------------
                   Supply                          Disappearance 
        -------------------------------- ------------------------------------
Year                                                             
begin.     Beg.   Im-   Produc-  Total     Crush   Ex-   Other   Total   End.
Aug. 1   stocks  ports   tion                     ports                 stocks
------------------------------------------------------------------------------
         -------------------------- 1,000 Short tons--------------------------

1996/97     517   20    7,144    7,681     3,860    116   3,182   7,158    523
1997/98 2/  523   65    6,935    7,522     3,885    146   2,929   6,960    563
1998/99 2/  563  138    4,963    5,664     2,650     25   2,814   5,489    175
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 5--Cottonseed meal:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     Supply                           Disappearance 
        --------------------------------  ------------------------------------
Year 
begin.      Beg.   Im-   Produc-   Total    Domestic   Ex-     Total    End.
Oct. 1    stocks  ports   tion                        ports           stocks
------------------------------------------------------------------------------

         -------------------------1,000 Short tons---------------------------

1996/97      51     4     1,752     1,807     1,649     132    1,781     26
1997/98 2/   26     0     1,767     1,793     1,595     110    1,705     88
1998/99 2/   88     0     1,195     1,283     1,250      10    1,260     23
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 6--Cottonseed oil:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     Supply                         Disappearance 
           -----------------------------     --------------------------------
Year 
begin.       Beg.   Im-  Produc-   Total     Domestic  Ex-     Total     End.
Oct. 1     stocks  ports  tion                        ports            stocks
------------------------------------------------------------------------------

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

1996/97        94   0.3   1,216    1,310      1,012     232    1,244      66
1997/98 2/     66   0.1   1,223    1,289      1,006     205    1,211      79
1998/99 2/     79   0.3     850      929        784     100      884      45
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.


Table 7--Peanuts:  U.S. supply and disappearance
------------------------------------------------------------------------------
                     Supply                         Disappearance 
           -------------------------  ----------------------------------------
Year 
begin.     Beg.   Im-  Produc- Total  Dom.   Crush  Seed&  Ex-  Total     End.
Oct. 1     stocks ports tion          Food         resid. ports         stocks
------------------------------------------------------------------------------

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

1996/97       758  127  3,661  4,545   2,029   692   363  666    3,751     795
1997/98 2/    795  141  3,537  4,473   2,099   544   301  681    3,624     848
1998/99 2/    848  152  3,706  4,707   2,135   700   321  700    3,857     850
------------------------------------------------------------------------------
1/ Estimated.  2/ Forecast.

Table 8--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
1995/96        6.72  106.00    11.50    29.30   5.19
1996/97         7.35  126.00    11.70    28.10   6.37
1997/981       6.45  121.00    11.85    26.10   5.75

1997/98
September      6.72  115.00    11.30    27.10   5.72
October        6.50  119.00    10.60    25.40   5.81
November       6.85  124.00    11.00    23.60   5.71
December       6.71  122.00    11.00    26.90   5.72
January        6.69  121.00    11.10    28.40   5.86
February       6.57  107.00    11.90     NA     6.27
March          6.40   NA       12.00     NA     6.24
April          6.26   NA       12.60     NA     6.22
May            6.26   NA       13.80     NA     6.34
June           6.15   NA       14.40     NA     6.18
July           6.13   NA       15.90     NA     6.17
August         5.43  113.00    14.60     NA     5.45

1998/99
September      5.25  113.00    11.40    26.80   5.09
October1        5.18  120.00    10.80    25.00   4.98
--------------------------------------------------------
1 Preliminary.  NA = Not available.

Table 9--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  25.24 
1996/97       22.50    25.58   22.64  43.70  24.05 
1997/98       25.80    28.85   27.00  49.00  28.94
                                                   
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
April         23.17    25.10   23.50  45.00  24.60
May           23.68    25.19   23.21  46.20  24.66
June          22.97    25.01   22.33  47.88  24.82
July          21.89    26.53   21.73  48.06  25.34
August        22.06    27.11   22.02  48.00  25.36
September     22.88    28.03   22.90  47.25  25.15

1997/98
October         24.31    28.47   24.51  49.63  25.20
November      25.73    29.11   26.41  51.00  26.25
December      25.08    26.78   26.36  51.25  26.28
January       25.09    27.69   25.75  51.60  26.04
February      26.51    29.37   25.91  51.00  27.31
March         27.09    30.46   26.51  51.00  28.50
April         28.10    32.47   28.50  50.00  30.93
May           28.28    33.13   31.06  47.20  33.20
June          25.83    30.22   28.40  45.50  32.82
July          24.88    29.40    NA    44.00  31.52
August        23.99    30.11    NA    43.75  29.93
September     25.13    33.26    NA    43.88  29.25

1998/99
October1      25.21     33.29    NA    46.00 29.46
------------------------------------------------------
1 Preliminary 2 Decatur 3 PBSY Greenwood MS
4 Minneapolis 5 Southeast mills 6 Chicago

Table 10--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  159.00
1996/97     262.00  192.00  110.60  232.00  158.75
1997/98     185.30  144.40   84.20  209.60  110.00

1996/97
October     248.50  183.25  116.00  170.00  167.50
November    251.50  196.60  105.00  146.13  168.30
December    250.60  224.50  113.35  172.67  170.00
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       288.60  197.25  124.00  233.75  168.00
May         306.40  193.75  120.00  222.00  188.30
June        287.90  188.44  106.25  235.00  171.25
July        273.60  170.75   84.00  220.00  124.00
August      273.30  176.25   85.00  213.00  126.25
September   278.30  192.00   89.20  210.00  136.70

1997/98
October     229.30  189.10   96.90  210.00  140.60
November    245.30  189.10   88.10  210.00  161.25
December    222.50  190.50  100.00  210.00  150.50
January     202.85  153.10   90.00  210.00  130.00
February    192.75  139.10   75.87  210.00  121.25
March       174.20  128.70   72.60  210.00  116.25
April       162.50  116.25   64.90  210.00  102.50
May         160.00  105.00   66.90  210.00   96.25
June        168.55  129.40   88.35  210.00  100.00
July        183.40  146.65   97.50  210.00  117.50
August      146.25  130.30   85.00  207.50  101.00
September   135.80  115.60    NA    205.00   90.00

1998/99
October1     135.70  106.20   50.00  202.50   85.00
-----------------------------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

END_OF_FILE