------------------- ocs-0195.asc follows --------------------
                             Economic Research Service
                          U.S. Department of Agriculture
                            Washington, D.C. 20005-4788
 
Oil Crops Outlook                                                     OCS-0195
United States Department of Agriculture              Economic Research Service
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Approved by the World Agricultural Outlook Board              January 13, 1995
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Soybean Crush Accelerates; Huge Stocks Remain
 
Once again, the U.S. soybean crush established a new monthly record in
November at 121.9 million bushels.  Crushing plants are running near full
capacity in most parts of the country but Illinois still has excess capacity.
Crush for the 1994/95 marketing year is forecast 5 million bushels higher in
January, at 1,360 million bushels.  This is 7 percent above the 1993/94 crush
and tops the 1992/93 peak by 81 million bushels.  Relatively high soybean oil
prices are adding to the crush margin.  Soybean oil's share of soybean product
value is the highest since 1984/85.  Export shipments of soybeans to date are
comparable to the amount shipped by this time in 1992/93.
 
But despite excellent demand, the latest Grain Stocks report shows record-high
soybean stocks for December 1, at 2,101 million bushels (see ERS Autofax
Document #2316).  This month's Crop Production--1994 Summary reported a final
U.S. soybean production estimate of 2,558 million bushels, up 35 million from
the previous report.  Most of the production gain is absorbed into higher
ending stocks for 1994/95, now projected at 510 million bushels.  The increase
is based on a higher yield, from 41.5 bushels per acre to 41.9.  A record
soybean yield was either equalled or set in 24 States in 1994.  Harvested
acreage also is 300,000 acres larger than previously reported, at 61.1 million
acres.  Much of the change is due to higher harvested acreage for Illinois and
Ohio.
 
USDA raised its forecast for the 1994/95 soybean price to $5.20-$5.50 per
bushel from $5.00-$5.60 per bushel last month.  However, the prospects for
another large harvest from South America put a ceiling on how much higher U.S.
prices and exports can go this year.  USDA is projecting an even higher record
1994/95 crop in Argentina of 12.7 million metric tons.  Brazil's crop is
projected at 24.0 million tons, slightly below last year's record.  The
soybean oil market continues to undergird soybean prices, but may soon peak
without significant new export sales.
 
New export sales of soybeans have slowed from their rapid pace last fall. 
China is importing more soybeans and soybean oil as vegetable oil consumption
rises.  USDA announced in December that it was providing China with $100
million in credit under the GSM-102 program for fiscal 1995.  That allocation
includes $10 million for vegetable oils, $10 million for protein meals, and $7
million for oilseeds.
 
This season resembles the pattern that began the 1984/85 crop year.  That year
followed the low-acreage, drought-reduced 1983 soybean crop with a much better
output.  Soybean ending stocks in 1984/85 were almost double their year-
earlier level.  Farm prices declined $2 per bushel from their 1983/84 high. 
Soybean prices were contraseasonal, starting higher in September ($6.09) and
ending lower in August ($5.10) under expectations of a large 1985 crop. 
However, unlike 1984/85, in which soybean and products exports dropped,
1994/95 exports are expected to increase from the previous year.  This should
prevent prices from falling as steeply as they did in 1984/85.  Despite higher
soybean oil production in 1984/85, tight carryout stocks were lower than
carryin.  Domestic use rebounded more than exports fell in 1984/85 so that oil
prices were still high.  Meal prices began to fall in summer of 1984 and slid
throughout the marketing year due to of the large crush (led by the oil
market) and weakening exports.  Low prices generated in record domestic meal
consumption at the time.
 
Soybean Oil Supplies Still Tight
 
Despite a larger soybean crush forecast, 1994/95 U.S. soybean oil production
is cut 120 million pounds this month to 15,112 million because of a lower
expected extraction rate.  Previously 11.24 pounds per bushel, the oil
extraction rate is reduced to 11.11 pounds (see Document #2311).  This
adjustment is based on the 10.95 pounds reported in the November Census crush
data, which typically gives the first good look at the average oil extraction
rate for the crop year.
 
Despite the nearly 9 percent increase in production over 1993/94, the tight
oil stocks situation is not easing.  U.S. edible consumption of soybean oil
fell in November, but heavy export demand kept domestic supplies from
rebuilding.  Forecast 1994/95 domestic disappearance is cut 150 million pounds
in January to 13.0 billion (see Document #2313).  Partly offsetting this is
higher expected exports of 1,950 million pounds, with China accounting for
most of the increase.  Given the lower production forecast, expected ending
stocks fall 70 million pounds to 1,280 million.  This should keep a firm floor
under prices for the whole vegetable oil sector, at least for few months until
new South American supplies become available.  USDA raised its 1994/95 average
price range 0.5 cent per pound to 25.5-28.5 cents.  In December, the monthly
soybean oil price at Decatur exceeded 30 cents per pound for the first time
since June 1985.
 
Potential for U.S. Soybean Meal Use Contracts
 
The inventory of all hogs and pigs on December 1 was 3 percent higher than a
year ago but 4 percent below September 1.  The December 1 breeding hog
inventory was down 3 percent from a year earlier and down 6 percent from
September 1.  Intended sow farrowing for December 1994-May 1995 is down 4
percent from a year earlier.  While current soybean meal consumption has been
robust (resulting in this month's 100,000 ton increase to 26.3 million), the
smaller hog inventory and farrowing intentions suggest a weaker domestic meal
demand outlook for the last half of 1994/95.
 
Soybean meal supplies, while ample, are anticipated to become even more so
with another 5 million bushels crushed.  This change was offset by a slight
reduction in the meal extraction rate, resulting in a 70,000-ton net gain in
expected production this year (see Document #2314).  Prices for soybean meal
continue to slide, as the Decatur price averaged about $157 per ton in
December, or $45-$50 per ton less than in December 1993 (see Document #2318).
 
Lower Mexican Soybean and Soybean Meal Imports Expected
 
Expected soybean meal consumption in Mexico is down marginally from last
month's forecast.  The peso devaluation is projected to reduced imports of
livestock more than domestic production, which means a small impact on U.S.
soybeans and soybean meal trade.  Total U.S. soybean exports for 1994/95
expanded again as climbing imports in Asian countries more than offset
Mexico's projected decline.  China's soybean imports are forecast up by
150,000 metric tons.  Despite the anticipated large crop in China, internal
transportation problems make it difficult to move soybeans from producing
areas in the north to markets in southern China.
 
U.S. soybean exports for 1994/95 are expected at 790 million bushels (21.5
million metric tons), up 5 million from December and 201 million from 1993/94
(see Document #2312).  On the other hand, estimated U.S. soybean meal exports
(at 5.3 million MT), fell slightly from last month but are still up 8 percent
from 1993/94.  Lower Mexican imports and increasing supplies in South America
support the small downward revision in the U.S. soybean meal export forecast.
 
Improved weather conditions in Argentina, coupled with higher soybean and
soybean oil prices, have boosted soybean area planted and projected area
harvested to 5.5 million hectares.  Soybean double-cropped area in 1994/95 is
expected to rise to about 31 percent, a 29-percent increase from average
levels of 24 percent during the last 4 years.  A dry spring also contributed
to slow corn planting, prompting farmers to switch to soybeans.  Additional
Argentine soybean area, and slightly better yields, will likely push soybean
production to a record 12.7 million tons.  The expected record Argentine
soybean production will drive South American soybean output to a record 39.3
million tons, up 2 percent from last year.  Included in this total is a
Brazilian crop of 24 million tons, down slightly from last year's record.
 
Limited global supplies and higher world prices for palm oil, combined with
strong soybean oil buying from China, have raised expected 1994/95 U.S.
soybean oil exports 6 percent this month to 885,000 tons, the highest level
since 1982.  New South American supplies and a recovery in palm oil production
should slow down U.S. soybean oil exports for the final months of the
marketing year.
 
Other Oilseeds
 
Sunflowerseed
 
U.S. Sunflowerseed Production in 1994/95 Totals 4.8 Billion Pounds
 
USDA's January annual Crop Production revised upward the 1994 sunflowerseed
production to 4.8 billion pounds.  The is the third largest in the history of
sunflowerseed statistics (1979=7.2 billion pounds and 1982=5.3 billion).
 
Total demand for sunflowerseed is expected to reach 4.1 billion pounds, up
almost 57 percent from 1993/94.  Data for the first 2 months of the marketing
year indicate a very strong export pace.  In October alone, sunflowerseed
exports reached 80.4 million pounds, of which 69.2 million was exports of the
oil-type seed.  The major destinations were France, Spain, and the
Netherlands.  In 1994/95 exports are expected to reach 551 million pounds, up
more than 151 percent from last year.
 
As supplies outgrow demand this year, ending stocks of all sunflowers are
expected to rise substantially to 895 million pounds.  Strong demand for
sunflowerseed this year is expected to mitigate the impact of rising stocks on
the prices.  The average price is expected to range between $9.45 and $10.35
per hundredweight.
 
The situation for sunflowerseed oil is expected to mirror that of the seed. 
Total demand for sunflowerseed oil is expected to reach 898 million pounds in
1994/95, up 55 percent from 1993/94, while supplies are expected to increase
by 58 percent in 1994/95 and reach 1,018 million pounds.
 
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     292    6    1,869    2,167     1,272    589     97    1,958    209
1994/95 1/  209    5    2,558    2,775     1,360    790    115    2,265    510
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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 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     32,265    32,475       26,350   5,825   32,175    300
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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---------------------------
 
1992/93     2,239   13,778   16,027       13,053   1,419   14,472   1,555
1993/94     1,555   13,906   15,528       12,896   1,529   14,425   1,103
1994/95 1/  1,103   15,112   16,230       13,000   1,950   14,950   1,280
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1/ 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  159.75
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        5.64   21.30  193.10    NA     26.76  153.00
July        6.57   24.13  229.90    NA     30.74  170.30
August      6.55   23.46  219.10  111.00   30.45  178.50
September   6.21   23.61  199.90  110.00   28.98  193.75
 
1993/94:
October     6.01   22.96  194.50  107.00   24.79  173.10
November    6.32   25.43  209.40  116.00   26.69  181.00
December    6.64   28.27  206.00  115.00   30.39  180.00
January     6.72   29.91  198.30  122.00   33.16  170.30
February    6.70   28.85  198.40   95.00   29.96  173.10
March       6.74   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  105.00   24.51  145.00
 
1994/95
October     5.30   27.06  168.50   99.00   23.64  134.40
November    5.36   29.84  161.00  109.00   24.85  120.50
December 1/ 5.43   30.61  156.90  119.00   25.50  111.67
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                   Sun-    Sun-
Marketing  Sun-    flower flower          Peanut  Peanut
 year     flowers   oil    meal   Peanuts   oil    meal
---------------------------------------------------------
           $/cwt Cents/lb  $/s.t. ---Cents/lb.---  $/s.t.
 
1990/91     10.90   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
 
1993/94:
October     11.20   26.33   90.00   29.80   40.20  196.00
November    11.70   28.20   90.00   28.20   43.33  197.00
December    13.10   32.11   89.40   29.70   43.17  200.00
January     13.66   35.08   97.00   36.00   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       14.90   33.00    N/Q     NA     43.40  191.00
May         15.50   33.50  105.00    NA     44.25  187.50
June        14.30   31.34  102.50    NA     43.75  163.75
July        12.50   28.89   97.50    NA     44.00  164.00
August      12.30   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 1/  9.87   30.62   55.00   27.20   53.80  127.00
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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
******************************************************************************
 
The next release of the OIL CROPS OUTLOOK is scheduled for 4:00 p.m. ET
Monday, February 13.