OIL CROPS OUTLOOK                                              March 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--0396.  
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DOMESTIC SOYBEAN CRUSH SUFFERS FROM SLUGGISH PRODUCT EXPORTS
 
Although there is usually a seasonal dip in February crushing, this year's
decline has been more pronounced.  Pending a rebound in export business for
soybean products, crushers are having a hard time running mills at the levels
of a year ago.  This month, USDA lowered its projection for 1995/96 soybean
crush 10 million bushels to 1,370 million.
 
The cutback in the crush forecast, while leaving U.S. exports unchanged,
results in a larger soybean carryout of 200 million bushels.  The 1995/96
season-average farm price forecast was also reduced to $6.60-$7.00 per bushel. 
Although this season's projected stocks-to-use ratio of 8.7 percent would
still be the lowest since 1976, soybean prices have not quite increased to the
heights seen then.  This can be partly explained by the improved ability of
the market to manage scarce inventories.  Greater efficiencies in timing
deliveries make it easier to carry smaller stocks without disrupting the
processing industry.  Thus, prices are less volatile at a low carryover than
they were 2 decades ago.
 
U.S. SOYBEAN MEAL EXPORTS PROJECTED LOWER; DOMESTIC USE UP
 
Expected 1995/96 production of soybean meal dropped 210,000 short tons this
month, to 32.7 million.  Weaker meal production primarily stems from a softer
export market for soybean products.  The listless pace of soybean meal export
sales leaves little room for optimism for the remainder of the 1995/96 season. 
With outstanding export sales well behind last year and new South American
supplies due within weeks, not much acceleration in U.S. sales is anticipated. 
Projected exports for 1995/96 are 5.6 million tons, down from the February
forecast of 5.8 million and 1.1 million tons below the 1994/95 volume.  The
U.S. market share of world soybean meal exports could decline to around 16
percent, versus 19 percent in 1994/95.
 
The 1995/96 forecast for domestic soybean meal disappearance is 27.2 million
tons, an all-time high.  This forecast is based on exceptionally strong
domestic offtake in the first quarter of 1995/96.  Many livestock feeders have
relied on cheaper meal saved from last season or had forward-priced at more
favorable prices than now available.  But the coverage that buyers had from
such supplies is running out, so meal disappearance in the last half of
1995/96 could look quite different than the first half.
 
Burdened by rising feed costs and lagging exports, several major U.S. poultry
producers have announced their intent to scale back production.  This would
begin slowing domestic disappearance of soybean meal within weeks.  Given the
robust growth in meal use so far this season, a significant slowdown is
implied by the current projection.  On March 29, two USDA reports will provide
further insights for the direction of the feed market.  The Grain Stocks
report will indicate how strong domestic use of soybeans has already been,
while the Hogs and Pigs report will suggest how much feed would be needed for
the remainder of the crop year.  A third report, Prospective Plantings, should
also be a bellwether for soybean and product prices later this year.
 
Strong domestic offtake and a slowdown in the crushing pace have generally
buoyed U.S. soybean meal prices.  But protein meal prices drifted down in
February as prospects for South American production improved and exports of
old-crop soybean meal from Brazil and Argentina were above average. 
 
WEAKER EXPORTS SEND U.S. SOYBEAN OIL STOCKS CLIMBING
 
This year's expected oil outturn is 15,345 million pounds, off 180 million
from the February forecast.  This was based on a lower crush and oil
extraction rate.  Year-to-date data justified a slight decline in the oil
extraction rate to 11.2 pounds per bushel, down from 11.25 previously.
 
In its March forecast, USDA reduced 1995/96 soybean oil exports to 1,650
million pounds, down from 1,800 million last month.  Export commitments for
soybean oil to formerly major importers, such as Algeria, Tunisia, Morocco,
and Turkey, are very sluggish to date.  Total U.S. export shipments through
February 29 were 447 million pounds, compared with 1,157 million a year
earlier.  And to further complicate matters, world vegetable oil output
continues to rise in exporting and importing countries.  This should keep
pressure on oil prices for the remainder of 1995/96.
 
Annual domestic disappearance of soybean oil was raised this month to a record
13,150 million pounds, up 100 million pounds from February.  Some of this
year's increase in domestic disappearance may be attributed to the building of
"invisible stocks," which are held by commercial users of oil.  Such stocks
may be increasing as users take advantage of falling prices.  The Census
consumption data also support this premise, which indicates that soybean oil
consumption through January 1996 is 4 percent below a year earlier.
 
Projected yearending oil stocks at mills and warehouses were down moderately
to 1,705 million pounds, based on the lower expected crush and greater
domestic disappearance.  However, stocks of soybean oil were up again at the
end of January to 1.5 billion pounds because of lethargic exports and the
seasonal dip in domestic disappearance.
 
The current spread between March 1996 and July 1996 soybean oil futures prices
has widened almost 50 cents per hundredweight since last fall (with July at a
premium to March).  This makes carrying oil stocks longer less costly.  Last
year, the market was inverted as July 1995 futures were priced well below the
March 1995 contract. Suppliers were then signaled to sell their inventories as
quickly as possible.  The 1995/96 average price forecast for soybean oil
dropped again this month, to 23.0-25.0 cents per pound.  Despite lower U.S.
production, the price reduction is based on higher world production of
vegetable oils and smaller U.S. exports.
 
U.S. CONSUMPTION OF OILS DIPS IN 1995
 
Preliminary data are available to analyze the production and consumption of
vegetable oils in calendar year 1995.  The evidence confirms that swelling
prices last year rationed use in the oils market.  Edible use of all oils
declined more than 2 percent to 15,027 million pounds.  Consumption of soybean
oil for edible products, at 12,049 million pounds, declined 1 percent from
1994.
 
Total production of baking and frying fats declined 2 percent to 6,002 million
pounds.  Of that amount, soybean oil contributed 4,673 million pounds, which
was also 2 percent lower than in 1994.
 
Margarine production again declined in 1995, down 5 percent to 2,490 million
pounds.  Total consumption of margarine last year was the smallest since 1984. 
Consumption of soybean oil for margarine fell 6 percent to 1,684 million
pounds.  By comparison, U.S. butter production also fell in 1995, declining 3
percent to 1,254 million pounds.  While commercial butter disappearance
increased slightly in 1995, USDA removals declined dramatically, as exports
under the Dairy Export Incentive Program were more than halved.  Yearending
butter stocks dropped to 19 million pounds, the lowest since 1975.
 
The sole area of growth in the vegetable oils market last year was for salad
and cooking oils.  U.S. production of salad and cooking oils was up nearly 3
percent in calendar 1995 to a record 6,725 million pounds.  Consumption of
soybean oil for salad and cooking oils increased nearly 5 percent to 5,469
million pounds, as soybean oil raised its share versus those of competing
oils, particularly cottonseed and olive.
 
Consumption of oils for inedible uses (fatty acids, feed, lubricants, etc.)
also declined last year.  Use of soybean oil in inedible products dropped 8
percent to 290 million pounds.
 
WORLD OILSEED PRODUCTION CONTINUES TO RISE
 
World oilseed production for 1995/96 is projected up 2.5 million metric tons
from last month to 254.9 million tons.  The production forecast for China and
India surged 4 percent to a record high of 68.3 million metric tons.  Record
rapeseed and peanut crops in China and record soybean and rapeseed output in
India account for most of all foreign oilseed expansion this month.
 
Higher vegetable oil prices combined with provincial and central government
policies pushed farmers in China to raise rapeseed and peanut area to new
heights.  Production of high-oil content seeds was encouraged to reduce import
dependency and to compensate for soybean area lost to coarse grains.  
 
This month, projected soybean production for India was raised nearly 12
percent to a record 4.5 million tons.  Recent estimates out of India show that
area planted increased 23 percent from last season to 4.8 million hectares. 
India's rapeseed production is also forecast up 9 percent from last month to a
record 6.5 million tons.  Excellent growing conditions are expected to push
yields to record highs.
 
LARGER FOREIGN VEGETABLE OIL SUPPLIES CURB U.S. SOYBEAN OIL EXPORTS
 
Despite robust increases in global vegetable oil consumption this month,
global vegetable oil imports and U.S. exports are expected down.  China is
projected to reduce palm oil and rape oil imports by 100,000 and 50,000 tons,
respectively.  After successfully controlling inflation in 1995, and raising
vegetable oil production and stock levels, China's demand for oilseeds and
oilseed products is expected to dampen in 1995/96.  Meanwhile, India's
expanding oilseed sector will also limit the level of vegetable oil imports.
Lower world import demand and increasing supplies of high-oil content seeds
are pushing U.S. soybean oil exports downward 8 percent to 748 million tons.
 
Soaring supplies of EU rapeseed oil, and FSU and Argentine sunflowerseed oil
have dampened demand for soybean oil in several regions, but especially in
North Africa and the Middle East.  Palm oil prices are falling rapidly to be
able to  compete with strong sales of other edible oils.  At this time, lower
palm oil supplies have limited palm oil stocks, but it is expected that palm
oil output will surge during the last half of the year, putting greater
pressure on vegetable oil prices.
 
INCREASED COMPETITION TRIMS U.S. SOYBEAN MEAL EXPORTS
 
Sharp gains in Indian and Argentine soybean meal exports, and small growth in
world soybean meal demand are pushing U.S. soybean meal exports down almost 4
percent this month to about 5 million metric tons.  Despite port problems,
India's soybean meal exports have strengthened over the last 4 months and are
expected to reach a record 2.5 million tons.  India's exports are expected to
offset lower soybean meal exports from China.  In Argentina, the 1994/95
soybean crop was raised to a record 12.5 million tons, leading to greater
carryover and higher crush in 1995/96.
 
On the demand side, small poultry producers in many developing countries are
scaling back production due to climbing feed costs and stagnant poultry
prices.  In addition, Thailand, Japan, Mexico, and the EU, among other
countries, have boosted their import of soybeans at the expense of soybean
meal.  Cumulative U.S. soybean meal shipments to date to the EU are down 42
percent from a year earlier, while U.S. soybean shipments are down only 8
percent.
 
In a probable final decision, the Russian government concluded that U.S.
poultry exporters were complying with all Russian health certification
requirements and a threatened ban was not needed.  This decision is key to the
growth in domestic demand for soybean meal and crush margins for oilseed
processors.  Although reduced poultry imports will likely result in greater
domestic production, Russian soybean meal imports would not compensate for a
potential drop in U.S. disappearance from smaller U.S. poultry exports. 
Factors restricting Russian soybean meal imports and consumption include a
lack of foreign currency, an inability to raise credit levels, and inefficient
compound feed milling and feeding industries.
 
******************************************************************************
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 Friday, April 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
------------------------------------------------------------------------------
 
         -------------------------- Million bushels---------------------------
 
1993/94     292    6    1,871    2,170     1,276    589     96    1,961    209
1994/95     209    6    2,517    2,731     1,405    838    153    2,396    335
1995/96 1/  335    5    2,152    2,492     1,370    810    112    2,292    200
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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-----------------------------
 
1993/94     204     30,514    30,788       25,283   5,356   30,638    150
1994/95     150     33,265    33,479       26,538   6,717   33,256    223
1995/96 1/  223     32,657    32,950       27,150   5,600   32,750    200
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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---------------------------
 
1993/94     1,555   13,951   15,574       12,941   1,529   14,471   1,103
1994/95     1,103   15,613   16,733       12,916   2,680   15,596   1,137
1995/96 1/  1,137   15,345   16,500       13,150   1,650   14,800   1,705
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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        5.45  101.00    10.60    29.00   4.65
 
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    10.50    28.60   4.49
November       5.36  107.00    10.60    25.90   4.51
December       5.41  103.00    10.30    25.80   4.71
January        5.47   95.00    10.60    25.70   4.76
February       5.40   70.00    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         5.84  100.00    11.70    30.70   5.16
 
1995/96
September      5.99  100.00    11.00    29.70   5.11
October        6.15   99.00    11.00    28.80   5.11
November       6.39  114.00    10.80    29.50   5.13
December       6.76  116.00    10.90    28.30   5.03
January        6.78   98.00    11.00    29.80   5.27
February1      6.90  120.00    11.50     NA     5.25
--------------------------------------------------------
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.
                                                   
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       27.09    30.30   31.08  43.20  26.38 
1994/95       27.55    29.23   28.10  44.30  26.47 
                                                   
1993/94:                                           
October       22.96    27.94   26.33  40.20  22.25 
November      25.43    31.86   28.20  43.33  23.06 
December      28.27    36.00   32.11  43.17  26.93 
January       29.91    34.75   35.08  46.10  28.00 
February      28.85    31.91   33.68  46.12  29.89 
March         29.03    32.27   33.48  44.50  30.30 
April         27.90    31.69   33.00  43.40  29.63 
May           29.10    31.07   33.50  44.25  29.48 
June          27.60    28.56   31.34  43.75  29.43 
July          24.53    25.54   28.89  44.00  27.20 
August        25.38    26.23   28.13  45.00  25.02 
September     26.12    25.81   29.28  43.10  24.87 
                                                   
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         27.16    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     26.21    28.61   27.41  41.30  25.93 
 
1995/96
October       26.57    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
February1     23.65    24.35   24.23  36.00  24.30
----------------------------------------------------
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
 
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
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
February1   228.30  203.75  130.00  215.00  143.75
---------------------------------------------------
1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 
4 Minneapolis 5 50% SE mills
 
                       END-END-END