OIL CROPS OUTLOOK                                              June 13, 1997
            Approved by the World Agricultural Outlook Board
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OIL CROPS OUTLOOK is issued electronically once a month by the 
Economic Research Service, U.S. Department of of Agriculture, Washington,
DC 20005-4788.  No printed copies available.  OCS-0697.  
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BRAZILIAN SOYBEAN EXPORTS DOMINATE CURRENT WORLD MARKET

Argentina's 1997 soybean harvest is nearly complete, and preliminary
expectations for a bumper crop have withered under a severe drought.  The
latest USDA production estimate is 12.0 million metric tons, less than the
record 1996 harvest of 12.5 million.  Given the preferential treatment that
Argentina crushers get from differential export taxes and recent investments
expanding crush capacity to around 21.5 million tons, the production decline
mainly affects soybean exports.  Argentina's 1996/97 soybean exports are
anticipated to plunge to 0.5 million tons, or less than one-fourth the volume
of the preceding season.

Brazilian farmers have great incentive to sell soybeans as quickly as
possible, given the very wide price inverse between July (old U.S. crop) and
November (new U.S. crop) soybean futures (as large as $2.00 per bushel at one
point).  Competition in the soybean market from Argentina will be nominal, so
Brazilian soybean export registrations continue climbing to an unprecendented
level.  USDA's 1996/97 export forecast for Brazil is 7.5 million metric tons,
up 1 million tons from last month and 4 million higher than a year ago. 
Greater exports were balanced by a reduction in crush and stocks to 19.8
million and 3.4 million tons, respectively.  Smaller supplies of meal and oil
will cut back Brazil's exports of these products.

The current rapid pace of Brazilian shipments has slowed U.S. exports to a
crawl for the remainder of 1996/97, although a brisk start for 1997/98 exports
is foreseen.  A buildup in EU soybean stocks and maturing new-crop rapeseed
also should sustain the EU until the new U.S. crop becomes available.  Based
on indications of further U.S. purchases of Brazilian soybeans, expected
imports were raised to 20 million bushels.  The irony of this situation is
that the United States exported almost as many soybeans to Brazil last fall (7
million bushels) as it has repurchased for this summer.  The U.S. imports will
supply a rebound in the remarkably buoyant domestic crush market, now forecast
up to 1,430 million bushels.  U.S. year ending stocks are also slightly
increased to 130 million bushels.

This year's U.S. soybean meal production goes up to 33.8 million short tons,
with the increase distributed between domestic disappearance, exports, and
ending stocks.  Hog slaughter this year has been down and slaughter weights
up.  This implies that hogs have been feeding longer, driving up soybean meal
consumption.  Expected production of soybean oil for 1996/97 stays unchanged
this month, despite an increase in soybean crush.  The oil extraction rate was
forecast lower, to 10.87 pounds per bushel, completely offsetting the higher
throughput.  The average oil price was shaved from 23.5 to 23.25 cents per
pound.

Declining imported stocks and a recent dip in prices have inspired a Chinese
buying spree for soybeans and soybean meal.  USDA raised its forecast of
China's 1996/97 soybean imports 200,000 tons to 2.1 million, also boosting
crush to 8.7 million tons.  Soybean meal imports and consumption were expected
up to 2.7 million and 9.4 million tons, respectively.  These latest imports
should supplement China's requirements until its own oilseed harvests next
fall.

Rising soybean meal prices loosened more supplies held back by Indian soybean
producers, suggesting they had a slightly bigger 1996 harvest.  India's
1996/97 soybean output was revised upward to 4.1 million tons.  A larger crop
permits an expansion of soybean meal exports to 2.5 million tons.  However,
India's domestic oilseed supplies have about run out and the Indian
government, citing phytosanitary concerns, recently rejected pleas from the
crushing industry to permit duty-free soybean imports.  During this period,
India transforms into an importer, with expectations for larger imports of
soybean oil (110,000 tons) this year.  These should begin to eclipse sunflower
oil imports, which had previously swelled because of comparatively higher palm
oil prices.

As in Argentina, drought and severe whitefly damage slashed Ecuador's 1996/97
soybean production to 40,000 metric tons.  This is one of Ecuador's poorest
harvests ever, and is down from 193,000 tons in 1995/96.  The shortfall
necessitates importing more soybean meal and soybean oil, which are forecast
up to 102,000 tons and 57,000 tons, respectively.  While Argentina is likely
to gain most of the increased trade in oil, the GSM-102 credit program gives
U.S. soybean meal exports an edge in cash-strapped Ecuador.

FAVORABLE WEATHER SETS STAGE FOR GOOD 1997 PRODUCTION

Unlike the slow start of the previous 2 years, U.S. soybean planting this
spring has been the most advanced since 1994.  As of June 9, 84 percent had
been planted, compared to 57 percent last year and the 5-year average of 70
percent.  While the early progress does not guarantee high yields, the longer
growing season improves the odds for an excellent harvest and lessens the
potential harm from autumn frosts.  Cool temperatures have slowed emergence,
losing some of the benefit of early planting, but have also preserved mostly
good soil moisture conditions.

Given the lean carryover and continuing robust world demand, a 1997 soybean
harvest as large as the 1994 record crop is essential to replenish stocks. 
This is precisely the current outlook for 1997/98.  Year ending stocks are
expected to build to a more comfortable 240 million bushels.  The average
soybean farm price will fall from its current heights, to $5.60-$7.00 per
bushel next season and soybean meal prices decline to $190-$225 per short ton.

The smaller Argentine harvest boosts the 1997/98 outlook for U.S. soybean
exports, which were forecast higher this month from 890 million bushels to 910
million.  The tight U.S. carryover and high prices from this season have
deferred more deliveries until the new crop arrives this fall.  This has
ballooned current 1997/98 sales, which are more than 50 percent above year-
earlier sales.  In fact, Argentina has purchased up to 200,000 tons of
soybeans from other countries.  This includes the first ever purchase of
soybeans from the United States, totaling 60,000 tons to date.  These will
enter through Argentina's drawback system, which allows soybean imports if the
meal and oil produced are exported.  Similarly, Brazil has booked 30,000 tons
so far from the United States, and will certainly import much more beginning
next fall, as its record exports this summer deplete domestic supplies.  An
indicator of these events is the very wide price spread between November 1997
and January 1998 soybean futures.

Domestic soybean crush for 1997/98 also edges up, to 1,455 million bushels. 
The additional quantity of meal goes into export (6.7 million short tons),
while the oil accumulates in ending stocks (2.0 billion pounds).

Sunflower planting had been lagging because of wet soils.  However, sunny
skies prevailed throughout May and accelerated drying, allowing farmers to
catch up on planting.  By June 9, North Dakota producers had planted 86
percent of sunflower acreage, compared to an average 82 percent by this date. 
But the drying has proceeded too far in the Northern Plains, and rain would
now be welcome to promote development.

The next Oil Crops Outlook is scheduled for 4:00 pm ET Monday, July 14.


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      1/            ports  residual        stocks
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         -------------------------- Million bushels---------------------------

1995/96     335    4    2,177    2,516     1,370    851    112    2,333    183
1996/97 2/  183    5    2,382    2,586     1,430    895    131    2,456    130
1997/98 3/  130    5    2,600    2,735     1,455    910    130    2,495    240
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1/ Includes imports.  2/ Estimated.  3/ 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     33,788    34,100       27,100   6,800   33,900    200
1997/98 1/  200     34,550    34,900       28,000   6,700   34,700    200
------------------------------------------------------------------------------
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
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         -------------------------- Million pounds---------------------------

1995/96     1,137   15,240   16,472       13,465     992   14,457   2,015
1996/97 2/  2,015   15,485   17,550       13,950   1,800   15,750   1,800
1997/98 3/  1,800   16,220   18,100       14,200   1,900   16,100   2,000
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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
April          8.23   NA       12.40     NA     6.49
May1           8.42   NA       12.20     NA     6.21
--------------------------------------------------------
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 
---------------------------------------------------
                     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
April         23.17    25.10   23.50  45.00  24.60
May1          23.68    25.19   23.20  46.20  24.66
-------------------------------------------------------------------------
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       288.60  197.25  124.00  233.75  168.00
May1        306.40  193.25  120.00  222.00  188.30
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1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills

******************************************************************************
Information Contacts:
Mark Ash         Soybeans, Minor Oilseeds, Fats and Oils                        
                                     
E-mail:  mash@econ.ag.gov

Scott Sanford    Peanuts, Cottonseed                         
E-mail:  ssanford@econ.ag.gov

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