OIL CROPS YEARBOOK August 2, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- OIL CROPS YEARBOOK is published annually by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. OCS-1995. Please note that this release contains only the text of the OIL CROPS YEARBOOK--tables and graphics are not included. Printed copies of this yearbook are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #OCS-1995, $15. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- NOTE: Please use a monotype font (e.g., Courier) to display or print this document. Proportional fonts may not format the material correctly. ----------------------------------------------------------------------------- Contents Summary U.S. Soybean Situation and Outlook World Oilseed Situation and Outlook World Vegetable Oil Situation and Outlook Outlook for Other U.S. Oil Crops Cottonseed Peanuts Sunflowerseed Other Special Oilseeds Highlights Imported Oils Corn Oil Animal Fats List of Tables Situation Coordinator Scott Sanford (202)219-0835 Principal Contributors Mark Ash (202)219-0838 George Douvelis (202)501-8550 Jaime Castaneda (202)219-0826 Electronic Word Processing Mae Dean Johnson Data Coordinator Mae Dean Johnson Approved by the World Agricultural Outlook Board. Summary released July 27, 1995. Summaries and full text of Situation and Outlook reports may be accessed electronically. For details, call (202) 720-9045. See back cover for subscription information. Summary U.S. farmers planted 63.1 million acres of soybeans in 1995, up 1.2 million from 1994. Record acres were planted in most midwestern States. Acreage declines were most visible in the South as cotton plantings boomed. Despite large carryin stocks, 1995/96 soybean plantings did not drop as would be expected. A wet spring delayed grain planting in the upper Midwest beyond the recommended schedule, making soybeans the best alternative. Farmers also apparently responded to higher fertilizer costs last spring by substituting soybeans for higher-input corn acreage. With a slightly-below-trend yield of 36.0 bushels per acre and harvested area of 62.2 million acres, 1995 soybean production is projected to total 2.24 billion bushels. Soybean crush for 1995/96 is projected to drop slightly, to 1,385 million bushels. U.S. soybean exports are also expected to slip from 820 million bushels to 800 million based on lower available supplies and a moderate decline in crush margins in the European Union. Total U.S. demand will exceed production so that soybean ending stocks will decline from 385 million to 325 million bushels. The reduction in stocks will raise the 1995/96 expected average price range to $5.50-$6.50 per bushel, compared with the $5.45 preliminary estimate for 1994/95. Despite a large decline in world soybean production of 10.3 million metric tons, small increases in cottonseed, rapeseed, sunflowerseed, and palm kernel for 1995/96 and large carryin stocks should contribute to record global supplies of 281.3 million metric tons. World oilseed trade in 1995/96 is projected down 1 percent to 43.6 million metric tons, based on lower soybean and peanut exports. Ample soybean meal supplies and still favorably priced protein meal will result in slightly higher global protein meal consumption and trade. Global supplies of edible oils are expected to increase about 3 percent to 75.3 million metric tons on the strength of a rise in foreign production. World production of most edible oils is expected to increase, except for peanut, fish, and olive oil. World vegetable and marine oil trade is expected virtually unchanged from 1994/95's 25.8 million metric tons, as expansion in rapeseed and palm oil trade offset declines in the other oils. U.S. cottonseed production in 1994/95 was 7.604 million short tons, the largest crop since 1937/38's 7.844 million, and 20 percent above last season. With beginning stocks of 432,000 short tons, the large cottonseed crop pushed total supply to a record 8.036 million tons. All major use categories rose in the 1994/95 season. Cottonseed exports rose 43 percent from last season to 225,000 tons, crush rose 11 percent to 3.85 million, and "other use," primarily whole seed feeding, rose 24 percent to 3.29 million. U.S. cottonseed prices received by farmers averaged $101 per ton for the 1994/95 season, down from the $113 average last season. U.S. peanut production in 1994/95 totaled 4.247 billion pounds, up 25 percent from last season. Harvested area was 1.619 million acres on 1.641 million planted. The 1994 crop yielded a national average 2,624 pounds (in-shell, basis) per harvested acre, the highest since the 1985 season and 616 pounds per acre above last season's drought-reduced yield. Food use of peanuts in the 1994/95 season is expected to decline for the third consecutive season to 2.05 billion pounds, more than a quarter-billion pounds below 1989/90's record food use. The large supply of peanuts in 1994/95 has boosted both crush and exports, estimated to total 1.05 billion and 900 million pounds, respectively, up 57 and 62 percent from last season. The average price received by farmers for peanuts in 1994/95 fell to 29.0 cents per pound from 30.4 cents last season. U.S. sunflowerseed production in 1995/96 is expected to reach 4.4 billion pounds, down 400 million pounds from 1994/95 but still the fourth highest in history. According to USDA's June Acreage report, farmers have planted fewer non-oil type varieties this year, down to 513,000 acres, while the acres planted to oil type varieties are expected to increase by 2 percent to 3.1 million acres. Near record breaking crops for 2 consecutive years are expected to put downward pressure on the prices of sunflowerseed in 1995/96, despite the slight increase in total demand. Outlook for 1995/96 U.S. Acreage for 1995 Implies Continued Ample Oilseed Supplies Despite heading into the 1995/96 crop year with large carryin stocks, soybean plantings did not drop as would be expected. The modest increase was surprising considering the relatively attractive corn-to-soybean price ratio this spring and the Acreage Reduction Program (ARP) increase to 7.5 percent for corn. But a wet spring delayed grain planting in the upper Midwest beyond the recommended schedule, making soybeans the best alternative. Farmers also apparently responded to higher fertilizer costs last spring by substituting soybeans for higher-input corn acreage. Prices for diammonium phosphate, a major corn input, increased 20 percent since spring of 1994. The tighter situation was due to U.S. fertilizer plants reaching maximum capacity, smaller Russian exports, and strong fertilizer demand worldwide. Escalating fertilizer prices raise the cost of corn production, as U.S. farmers, on average, use more fertilizer on corn than any other crop (about 8 times the quantity applied to soybeans). Higher interest rates last spring may have caused farmers to consider planting crops requiring fewer inputs to control their borrowing costs. Farmers in the Delta and Southeast reacted to high cotton prices and a lower ARP by planting more cotton than in the last 20 years. As of early June, U.S. farmers planted or intended to plant 63.1 million acres of soybeans in 1995, up 1.2 million from 1994. Record acres are expected in most midwestern States (fig. 1). In the South, as cotton plantings boomed, intended soybean acres declined. Plantings are set to decline from 1994 in Arkansas (-100,000), Georgia (-190,000), Louisiana (-90,000), and most other southern States. USDA's 1995/96 supply and demand forecast assumes a slightly-below-trend U.S. soybean yield of 36.0 bushels per acre because of late planting. The U.S. trend yield is based on a weighted (by acres) average of regional trend yields. With projected harvested area of 62.2 million acres, 1995 soybean production is figured to total 2.24 billion bushels. While this is over 300 million bushels less than last year, it would still rank as the third largest U.S. harvest. Soybean crush is projected to drop slightly, to 1,385 million bushels. Exports are also expected to slip to 800 million bushels based on lower available U.S. supplies, a moderate decline in crush margins in the European Union (EU), and seasonally large exports of Brazilian soybean products in the fall of 1995. The U.S. share of world soybean exports in 1995/96 is forecast to remain virtually unchanged at 69 percent. Total U.S. demand will exceed production so that ending stocks will decline from this year. The 1995/96 average price range is $5.50-$6.50 per bushel, compared with a preliminary 1994/95 estimate of $5.45. Brazil and Argentina again may have sizable new soybean crops, and prospects for record supplies of other oilseeds may dampen price gains. Production of soybean oil, at 15.5 billion pounds, should about equal 1994/95's record output. A heavy soybean crush would allow for a healthy oil export picture and a rebuilding of carryover soybean oil stocks. However, oil exports may sink to 2.2 billion pounds, off 400 million from this year's boom. Abundant sunflower and soybean oil from South America, and a sharp increase (6.9 percent) in palm oil output means more competition for U.S. soybean oil exports. In addition, China's soybean oil imports are forecast to decline in 1995/96 in contrast to the sharp rise in 1994/95. So, next year's carryover may rise to about 1.4 billion pounds. Soybean oil prices could ease from the expected 1994/95 average of 27.25 cents per pound to 24.5-29.0 cents per pound in 1995/96. Despite a smaller crush, projected 1995/96 soybean meal production is nearly equal to 1994/95 by virtue of a trend extraction rate that is greater than this year's estimated rate. Like oil exports, U.S. meal exports are expected to drop to 5.9 million short tons. A much larger carryover of Brazilian soybeans dampens the prospects for U.S. meal exports next year, so the U.S. share of world exports drops from 17 to 16 percent. U.S. domestic meal disappearance rises 1.4 percent to 27.1 million tons, significantly down from this year's estimated 5.7 percent growth rate. Meal prices should slightly firm in 1995/96, ranging from $165-$190 per ton, compared with $157.50 per ton this season. U.S. Soybean Production Surpasses 2.5 Billion Bushels in 1994/95 The scant stocks remaining from the 1993 soybean crop created more than usual nervousness about the prospects for 1994 crop production. Although many analysts expected an expansion in area in 1994 to rebuild stocks and revive exports, few anticipated such a large increase. Farmers may have responded to a stronger soybean-to-corn price ratio in late-February and March. The leaching of soil nutrients in 1993's heavy rains raised fertilizer costs for corn production, which may have persuaded many producers to try soybeans instead. However, soybean prices dropped sharply after the announcement of farmer intentions. The market apparently felt farmers overreacted to planting incentives and wanted to see fewer soybeans and more corn. A very dry March in the Midwest considerably improved soil moisture conditions for field preparation and timely corn planting. Corn planting in all Midwest States was ahead of normal, and well ahead of 1993's rain-delayed crop. Midwestern farmers may have substituted more corn for soybeans because of ideal planting conditions and a soybean-corn price ratio that favored corn. Spring precipitation was well below normal in much of the Midwest. By mid-May, expectations of continuing dryness began to take hold of the commodity markets. Large price swings for soybean futures occurred with every new weather forecast. Had the dry spell persisted, it could have affected germination and slowed plant development. On the other hand, early dryness permitted rapid seeding in most States. Soybean planting progress was about 2 weeks ahead of the average and 3-4 weeks ahead of 1993's delayed crop. Early planting is generally beneficial for soybean yield, as it was for the previous record U.S. yield of 1992, when planting advanced just as rapidly as 1994. Record soybean acreage was seen in the Western and Eastern Corn Belt regions, staging a strong comeback from 1993's late crop. Missouri did not have record soybean acreage this year but harvested nearly a million acres more than last year's flood-affected crop. Expansion of acreage continued to occur along the northern and western fringes of the main production regions. In 1994, record or near-record acreage was observed for Minnesota, South Dakota, Nebraska, Kansas, Michigan, and Wisconsin. All these States have doubled or tripled soybean area since the late-1970's, while acreage in southern States has steadily contracted. Acreage held steady in the Southeast and fell 400,000 acres from 1993 in the Delta region. Delta planted area has steadily declined since 1979. An interval of showers in late June moved throughout the Corn Belt, resulting in excellent crop conditions. Cooler July weather slowed crop development, but crop progress was still well ahead of average. Conditions improved further toward the end of August with needed rain falling on drier areas such as Missouri and southern parts of Illinois and Indiana. The 1994 soybean harvest finished ahead of average in most major producing States as warm autumn weather hastened crop maturity. Fields were well enough along in 1994 to escape significant harm from frost, unlike 1993. The mostly dry harvest conditions and absence of frost not only helped yields and reduced abandonment, but also favored crop quality. The Crop Production--1994 Summary reported a massive final U.S. soybean production estimate of 2,558 million bushels that eclipsed the former record by nearly 300 million bushels. The huge corn and soybean crops created a temporary squeeze on harvest-time storage and transportation. However, based on year-to-date use and the Grain Stocks report, the higher than normal residual suggests that the 1994 production estimate may be overstated. Nonetheless, 1994's record output stemmed from an unusual combination of excellent yields occurring in States that had record acreage. Harvested acreage was 61.1 million acres. This was the largest soybean area harvested since 1985. The U.S. average yield increased from 32.6 bushels per acre in 1993 to 41.9 this season. Objective yield surveys reported very healthy pod count data, well above those observed during record yield years for most of the major producing States. The continuing expansion of conservation tillage practices accounts for much of the higher plant populations. Favorable conditions were pervasive, as record soybean yields were either equalled or set in 24 States. Iowa took the title of top producer this crop year, with yields at an astounding 51 bushels per acre, easily shattering the previous State high of 44 bushels set in 1992. U.S. Soybean Exports Expand Even though the 1994/95 season began with the smallest beginning stocks since 1989, the bumper crop pushed total supply to 2,773 million bushels, easily surpassing the previous record. The growth in soybean supply by 600 million bushels helped raise 1994/95 exports to 820 million bushels. Higher world prices for soybean oil and generally improved crush margins have expanded world soybean imports relative to soybean meal. The U.S. share of world soybean exports rebounded from a historic low (57 percent) in 1993/94 to 69 percent this season. Combined exports of soybeans and meal in 1994/95 will be the largest since 1987/88. Coupled with record soybean production, the lower valued dollar has made U.S. exports very competitive in 1994/95. Export sales of U.S. soybeans for 1994/95 had their best start in many years. Shipments last fall were heavy as importers and competing exporters began the marketing year with very low stocks. Outstanding 1993/94 sales that had not been shipped by September 1 also boosted trade in the first quarter of 1994/95. Part of this early spurt was due to Brazilian imports, which supplied Brazilian crushing mills last winter. U.S. exports of soybeans through March had already equaled the total for all of 1993/94. U.S. exports maintained their brisk pace longer because of slower March-May shipments from South America (fig. 2) While the Brazilian harvest progressed ahead of average, depressed prices for soybeans slowed the pace of farm sales and exports. Brazilian farmers regularly sell most of their crop before or soon after harvest because of a shortage of cash and storage. A combination of depressed prices and confusion regarding the implementation of farm policy, forced the Brazilian government to hold large stocks for the first time in 10 years, thus influencing the pace of sales and exports. Expectations for further devaluation of the real also contributed to a reduced pace in Brazil's early exports. Delays at overburdened Brazilian ports were experienced due to heavy imports of other goods, competition for transportation with other export commodities, and work stoppages by dockworker unions. In Argentina, farmer and export sales were also sluggish. The harvest pace was significantly below the average level, mainly because of an unusually large second soybean crop, which is planted in late December. U.S. Soybean Crush Began 1994/95 at a Torrid Pace Domestic crush for the 1994/95 marketing year is forecast at 1,395 million bushels. This is 9 percent above the 1993/94 crush and tops the 1992/93 peak by 116 million bushels. Unusually high gross crush margins pushed U.S. soybean crush to monthly volume records throughout the fall and winter (fig. 3). Crushers saw their best margins since 1987/88, but unlike that year (when meal prices vaulted upward), this boom was led by the oil market. Ample supplies of soybeans (resulting in lower soybean prices) and relatively high soybean oil prices added to the crush margin. Lower soybean meal and oil prices have reduced gross crushing margins from early in the marketing year, although U.S. margins are still well above last year. Soybean oil's share of soybean product value neared 50 percent and was the highest since 1984/85. Crushing plants ran near full capacity in most parts of the country. Projected ending stocks for 1994/95 are 385 million bushels, an 84-percent increase from the previous year. The record production dramatically shifted the ending stocks situation from one of unusual tightness to the third highest ever, behind the 1985/86 and 1986/87 carryouts. Rebuilt stocks are expected to return the 1994/95 ending stocks-to-use ratio to 16 percent, much higher than 1993/94's 8 percent. Despite excellent demand, the latest Grain Stocks report shows record high June 1 soybean stocks of 792 million bushels. Soybean Price Down on Bumper Crop The preliminary 1994/95 average soybean farm price of $5.45 per bushel is well below the $6.40 average for 1993/94. Soybean prices have not averaged this low since the 1986/87 season, which held the previous record for supply. Later than normal farm marketings, higher crush, and strong exports of soybeans and soybean oil buoyed prices, despite record U.S. soybean production. U.S. soybean prices began slipping in July 1994 but rallied on surges in oil and meal exports. Another large harvest from South America put a ceiling on U.S. prices and exports this year, although their marketings have been slow. USDA projected record 1994/95 soybean crops in Argentina and Brazil of 12.4 million and 25.5 million metric tons, respectively. Delays in planting corn weighed on soybean prices in 1995, as farmers substituted more soybean acreage. Post-harvest prices much lower than last year induced U.S. farmers to put 375 million bushels of soybeans into the USDA loan program, the highest level since 1985/86. Chinese Demand, Record U.S. Oil Output, Sparks Huge Exports With a record domestic crush and higher extraction rate, total outturn of soybean oil for 1994/95 swelled to an expected 15,487 million pounds, a record high and 1.5 billion pounds greater than 1993/94. At 10.85 pounds per bushel in 1993/94, the oil extraction rate increased to 11.1 pounds for 1994/95. Despite the lowest carryin since 1986 (1.1 billion pounds), total supply in 1994/95 will exceed the previous record (1991/92) by nearly 470 million pounds. The large domestic supply slowed imports of soybean oil to 10 million pounds from 68 million last season. High palm oil prices and strong vegetable oil demand by China, are expected to push U.S. soybean oil exports in 1994/95 to 2.60 billion pounds, second only to the 2.69 billion pounds of 1979. The United States accounts for 44 percent of the world's increased output of soybean oil in 1994/95. The increase in exportable supplies in the United States relative to the rest of the world made U.S. soybean oil exports the most price-competitive for a decade. The 1994/95 total also signifies the first year since 1991/92 that U.S. soybean oil exports have exceeded Brazil's, although both countries still trail Argentina by a wide margin. U.S. soybean oil exports to China accounts for most of this year's expansion. Cumulative U.S. soybean oil exports from October 1994 through May 1995 were 2.2 billion pounds, with China importing 1.2 billion pounds. China is expected to account for about 45 percent of total U.S. exports this year, compared with 11 percent and 0.5 percent in 1993/94 and 1992/93, respectively. Despite the 11 percent increase in production over 1993/94, the tight oil stocks situation will not ease much. U.S. stocks of soybean oil started the 1994/95 marketing year at a tight 1,103 million pounds. In each month since September 1994, U.S. soybean oil stocks have been less than total monthly use. This signaled the unusually severe tightness in this year's soybean oil market. While projected domestic consumption of soybean oil is nearly the same as last season, heavy export demand has kept U.S. supplies from rebuilding and kept a firm floor under prices for the entire U.S. vegetable oil sector. Soybean oil prices steadily increased between July and December 1994, exceeding 31 cents per pound for the first time since June 1985. The average price for 1994/95 is forecast at 27.25 cents per pound, little changed from 27.1 cents in 1993/94. Since January, prices have receded about 6 cents per pound. New South American vegetable oil supplies have eroded U.S. oil prices further. Soybean oil prices were further restrained by large production increases in U.S. corn, sunflowerseed, and cottonseed oil, and canola oil in both Canada and the United States. U.S. edible oil production from these competing oils rose by 682 million pounds over 1993/94. Soybean Meal Prices Plummet in 1994/95 Due to Heavy Crush With bullish oil export demand stimulating crush, 1994/95 will smash the record meal supply set only last year. The total soybean meal supply is forecast to reach 33.2 million tons, easily surpassing the 1993/94 record of 30.8 million tons. Prices for soybean meal tumbled since last summer because of record production (33.0 million tons) in 1994/95. The average soybean meal price for 1994/95 is expected to fall to $157.50 per ton, about $35 per ton less than last season. A glut of other protein meals has also helped depress prices to the lowest in 10 years. As feed prices fell relative to livestock prices, the improved profitability of feeding pushed projected domestic meal disappearance for 1994/95 to 26.7 million tons, 1.4 million tons higher than in 1993/94. Reduced wheat feeding promoted soybean meal use as more lower-protein corn was incorporated in animal rations. However, year-to-year growth in domestic soybean meal consumption was moderated by bigger supplies of competing protein meals, a relatively mild winter, and a more normal protein level for corn compared to 1993/94's low quality crop. Not all of this year's disappearance is immediately consumed, however. Low U.S. soybean meal prices should encourage larger pipeline stocks carried into next season by domestic meal buyers. Hog and broiler production continued to expand throughout the winter. U.S. hog producers increased sow farrowings for the September-November period by 5 percent from a year earlier, the highest level since 1980. Farrowings for the December 1994-February 1995 period were also 4 percent higher than a year earlier and 6 percent above 1992/93. The inventory of all hogs and pigs on December 1 was 3 percent higher than a year ago. The December 1994-February 1995 pig crop was record large. However, slaughter hog prices continued to slide, plunging to less than $30 per hundredweight last fall. While slaughter prices have since improved, this drop led to a smaller hog inventory and farrowing intentions for the spring and summer, causing weaker domestic meal demand. The rate of meal consumption will be slower for the last half of 1994/95 than the first half. Broiler production increased 5 percent this year, aided by strong export demand for poultry products. A large U.S. soybean meal availability enhanced opportunities for U.S. meal exports, although they have not matched the gains made by U.S. soybean exports. USDA forecasts U.S. soybean meal exports to rise to 6.3 million tons, up from 5.4 million in 1993/94. While favorable crushing margins in Europe and Japan favored importing soybeans, lower-priced soybean meal and smaller Indian exports helped U.S. soybean meal exports capture a larger share of Asian markets. Southeast Asia (especially the Philippines) purchased more U.S.-origin soybean meal this marketing year. High freight costs and a higher price from the United States usually encourages these countries to buy from India and China. In May, the dollar has declined about 18 percent from a year earlier against the Japanese yen and 15 percent versus the German mark, to its lowest level in 2 years. This helped exports in the important EU and Japanese markets. Total 1994/95 EU soybean imports are projected to be 548 million bushels. U.S. exports to the EU (September through May) totaled 286 million bushels, compared with 207 million a year earlier. EU crushing margins declined in the spring, but are still above previous years. This implies that while EU crushing will still be robust, a more favorable environment for EU soybean meal imports versus soybean imports is developing. Damage and disruption of soybean crushing plants in Japan, resulting from the January 17 earthquake, also affected U.S. trade with Japan. Japan's soybean imports and meal production for 1994/95 dropped slightly from the year before, while imports of soybean meal were up. 1995/96 WORLD OILSEED OUTLOOK World Oilseed Situation and Outlook Record Oilseed Supplies Forecast in 1995/96, Despite U.S. Drop Despite a projected large decline in soybean production of 10.3 million metric tons, expected small increases in cottonseed, rapeseed, sunflowerseed, and palm kernel, and large carryin stocks are expected to push global supplies to a record 281.3 million tons (table 1). Foreign oilseed production is expected to gain 1 percent to a new record of 181 million tons. World oilseed crush is projected to increase by 2.5 percent to a record 209 million tons. Consumption will exceed production, resulting in slightly lower stocks. Global oilseed trade in 1995/96 is projected marginally down, while protein meal exports are slightly up, and vegetable oil trade remains unchanged. Falling soybean supplies and reduced crush margins contributed to most of the projected decline in oilseed trade. In contrast, ample soybean meal supplies and more favorable prices over feed grains will result in increased protein meal consumption and trade. Although U.S. exports are likely to remain brisk, reduced domestic oilseed and product output will mean a smaller surplus available for exports in 1995/96. Season-average prices for soybeans are expected to be higher in 1995/96, as the value of soybean meal recovers and soybean oil remains relatively strong. The outlook for international prices is complicated by the tremendous influence that the European Union and China have on trade and prices of soybean meal and soybean oil, respectively. These factors, combined with a tight world edible oil stocks-to-use, could produce a very volatile market susceptible to sharp changes in prices. Also, additional production of other oilseeds, primarily high oil-content could take pressure off world vegetable oil prices. Small Decline Is Expected in Foreign Soybean Production World soybean production in 1995/96 is projected to fall to 127.6 million tons, down from 137.8 million estimated in 1994/95. Foreign soybean production is also forecast down, to 66.6 million tons, more than 2 percent below the 1994/95 record crop of 68.2 million tons (fig. 4). Because of the small drop, foreign producers will likely harvest their second largest crop in history. Although South American soybean sowing is still 3-4 months off, current conditions suggest that South American farmers will reduce soybean acreage for the first time in 4 years. Yields are expected to return to more normal levels, leading to gains in Argentina and Bolivia, but declines in Brazil and Paraguay production. South American soybean production is forecast at 39.6 million tons, down more than 3 percent from last year's record of 40.9 million tons. Brazil's 1995/96 soybean crop is forecast at 24.3 million tons, with area falling 300,000 hectares from the previous year. Area was reduced as a result of extremely low prices during harvest (April-June) that resulted in possible economic failure for many farmers. A new farm bill for 1995/96 that will exclude middle and large soybean farmers from obtaining minimum prices and government credit at subsidized rates, will force farmers to reduce plantings in the outyear, especially in the Center-West. However, there are few alternatives for switching to other crops in the Center-West, and a traditional lagged reaction to low prices by farmers in Brazil will maintain relatively strong soybean output. In Argentina, soybean production is forecast at a record 12.5 million tons, up slightly from last year. Planted area is projected to be unchanged at 5.5 million hectares, while yields are expected to show a slight recovery to 2.27 tons per hectare. Although the outlook for soybean returns is somewhat below those for wheat and corn, reasonable soybean prices will push farmers to alter their rotational patterns in 1995/96, and use more fallow land. Also, wheat area is likely to increase in Northern Buenos Aires and Southern Santa Fe, due to adverse weather in the southern region of Bahia Blanca and Las Pampas. This is likely to boost the potential for increasing soybean double cropping. Counter to Brazil, Argentine farmers benefit from significantly lower production costs and a better transportation structure. Because Argentine farmers produce at lower cost than their South American neighbors, they keep an edge that allows them to earn profits even at a reduced price. China's Soybean Output Projected Down After 2 consecutive years of rising output, China's 1995/96 production is expected to decline to 15 million tons, down 1.3 million tons from last year. Soybean area is projected to fall 6 percent to 9.4 million hectares as farmers switch heavily into production of corn. A sharp increase in domestic and world prices for corn and cotton have put pressure on China's scarce arable land. Despite the projected decline in soybean output, China is expected to remain the third largest producer in the world, as strong domestic soybean meal and vegetable oil consumption prevents domestic prices from falling very far. India is projected to recover from its 1994/95 failed soybean crop to match the 1992/93 record of 4 million tons. Soybean production in India is heavily dependent on a normal monsoon season. After a weak start, rains have begun to fall in Madya Pradesh (largest soybean producing state), however, normal rainfall and moderate temperatures for the remainder of the season is needed to achieve the projected output. Foreign Sunflowerseed, Cottonseed, and Rapeseed Production Forecast To Rise Foreign sunflowerseed production in 1995/96 is forecast at a record 21.7 million tons, 4 percent above 1994/95. Large increases in the Former Soviet Union (FSU) and Eastern Europe more than offset declines in the European Union countries of Spain, France, and Germany. Initial expectations call for area and yields to expand in the FSU and Eastern Europe in response to superb returns for farmers in 1994/95. Policy changes in the FSU and Eastern Europe are allowing farmers to sell their product to Western European buyers. Combining this with a tight situation in the vegetable oil market has encouraged producers to also increase input use when available. In the EU, drought in Spain and limited area in France and Germany contributed to the expected decline. Foreign rapeseed production is projected to reach a fourth consecutive record of 31.7 million tons, nearly a 6-percent increase from last year's crop. Expanding production in China, the EU, and Eastern Europe account for most of the gains in 1995/96. Political actions to encourage farmers to plant winter rapeseed on previously fallow land may have been behind the anticipated boost in China's area. Increased exports of Eastern European rapeseed have raised profitability of the crop. In spite of penalties for overplanting in the 1994/95 season, most EU countries kept area planted close to last year's levels. Rapeseed acreage will remain high as a result of increases in French planting of rapeseed for industrial use and farmers obtaining better returns because of lower support prices for grains. Canada rapeseed (canola) production is projected to decline almost 9 percent from 1994/95 to 6.6 million tons. Risk of heavy losses due to diseases and more favorable prices for wheat will encourage farmers to rotate land out of canola. High prices for cotton will push farmers to raise foreign cottonseed production by nearly 6 percent to 27.6 million tons. Most of the gain comes from small increases in the FSU, Pakistan, and Turkey. Foreign peanut production is expected to drop in 1995/96 to 23.7 million tons, down 4 percent from 1994/95. Most of the decline will come from Asian countries, particularly India. As of July 13, negligible monsoon rains throughout the Gujarat region, coupled with high temperatures, have hindered farmers from expanding area, while reducing yield potential. Brisk Demand for Foreign Oilseed and Protein Meal Consumption Foreign oilseed crush is forecast up more than 4 percent to a record 192 million metric tons. Crush increases are expected for all oilseeds, except peanuts. Foreign soybean crush is forecast at a record 109.9 million tons. Most of the gain will come from Brazil, Argentina, and India. Slow marketing of the 1994/95 Brazilian crop, coupled with increasing government stocks, are likely to significantly raise crush during the first 2 quarters of the October-September year. In the EU, extremely good processing margins during 1994/95 (fig. 5) boosted soybean crush to nearly 14 million tons. More moderate, but stable margins in 1995/96, combined with strong soybean meal demand, and the implementation of a new base area for EU oilseeds, will keep soybean consumption at about last year's levels. Foreign meal consumption for 1995/96 is projected up 3 percent to 142.3 million tons, with increases in all meals except for peanut meal. Foreign soybean meal consumption growth is likely to slow down from the unusually hefty growth of the last 2 years. The 1995/96 projected growth is more in line with expected economic and population growth, as well as price and market incentives. This growth is also perceived as adequate because the outlook for soybean meal consumption in the EU under Common Agricultural Policy (CAP) reforms is more optimistic than anticipated in previous years (see box). Expectations for soybean meal consumption growth in all regions, except for the former Soviet Union, reflect projections for global economic growth and market reforms. World Oilseed Trade Projected To Drop Only 1 Percent in 1995/96 World oilseed trade in 1995/96 is projected down 1 percent to 43.6 million tons, based on lower soybean and peanut exports. On the other hand, since late in 1993/94, tight global vegetable oil markets and very favorable crush margins in 1994/95 have stimulated production and trade of high-oil content seeds, such as rapeseed and sunflowerseed (fig. 6). Rapeseed exports are expected to grow less than 1 percent from 1994/95 to a record 6.1 million metric tons. The projected slow-growth in rapeseed exports comes after a strong expansion of 20 percent during 1994/95. A surge of exports out of Eastern Europe (primarily to the EU), as more supplies become available from the Czech Republic and Poland, will more than compensate for the anticipated decline in Canadian exports. Similar to rapeseed, sunflowerseed trade will marginally expand, but remain at a significantly higher level than 2 years ago. Tight supplies in the EU due to the 1994/95 Spanish drought, coupled with healthy supplies from Eastern Europe, the FSU, and Argentina, are pushing sunflowerseed trade to a projected record 3.5 million tons in 1995/96. World Trade Prospects for Soybeans and Soybean Meal Are Mixed While world trade in soybeans is likely to fall 2 percent to 31.6 million metric tons in 1995/96, soybean meal is projected to rise nearly 2 percent. Soybean trade has risen sharply in 1994/95 because of recovery in U.S. supplies, healthy crush margins in the European Union, and unusually high Brazilian imports. For 1995/96, the anticipated decline in soybean exports is based, among other factors, on the smaller supplies from the U.S., Brazil, and China. On the import side, world crush margins will partially subside, forcing the EU to reduce imports. Large domestic supplies in Brazil's and India's rebound in soybean meal exports are expected to reduce soybean import needs in both Brazil and Asia. Soybean imports will also suffer from further reduction in import tariffs for meat products and for soybean meal by a number of Asian countries. World soybean meal trade is projected to continue its striking growth (in response to lower prices and increasing demand) by reaching a new record of 31.5 million tons. Strong demand for vegetable oils during 1994/95 supported sharp increases in edible oil prices, which led indirectly to a dramatic growth in soybean meal production. A combination of relatively large soybean meal production and booming prices for feed grains projected for 1995/96, will likely support further soybean meal exports during that period. Import growth is expected in all regions, except for the former Soviet Union. Latin America and Asia will grow the most with 8 and 7 percent, respectively, over 1994/95. Most of the growth comes from small gains in several countries such as Chile, Colombia, and Peru in Latin America, and Thailand, Indonesia, and the Philippines in Asia. Stable economic growth in Eastern Europe will marginally lift imports of soybean meal. In addition, a growing segment of feed demand in Eastern Europe is assumed to come from the European Union as compound feeds. For the sixth consecutive year, EU soybean meal imports are again expected to reach another record at 16.8 million tons. In contrast, continued economic hardships in the FSU, coupled with more rigorous debt and credit management guidelines provided by the International Monetary Fund, will likely prevent any growth in FSU soybean meal imports. World Vegetable and Marine Oil Situation and Outlook Global supplies of edible oils are expected to increase more than 3 percent to 69.9 million metric tons (table 2), on the strength of greater U.S. and foreign production. World production of each edible oil is expected up, except for peanut, fish, and olive oil. The strong recovery of palm oil production that occurred in 1994/95 is expected to slow down from 10 percent to nearly 7 percent. In Malaysia (the world's largest producer), erratic monthly palm oil production in 1994/95 is providing additional volatility to the projected 1995/96 world palm oil production of 15.7 million tons. Tree stress, caused by either nature or human factors, has proven vital for future tree performance. During the 1994/95 price hikes, Malaysian palm trees may have been pushed to over-produce, with the stress inflicted on trees and the implications on the outyear production unclear. Indonesian palm oil output is expected to rise nearly 8 percent as young trees reach maturity. Rapeseed oil output is likely to experience the largest growth because of significantly higher crush in China, EU, and Eastern Europe. Improved prospects for sunflowerseed crush in the FSU, Eastern Europe, and Turkey for 1995/96, will lead to a record 8.2 million tons of world sunflowerseed oil production. World vegetable and marine oil consumption is forecast at a record 69.6 million tons, up just over 3 percent from 1994/95. This growth is considerably lower than the 6 percent achieved in the previous 2 years. As with production, high-oil content seeds and palm oil will lead the expansion in edible oil consumption. World Vegetable and Marine Oil Trade Virtually Unchanged from 1994/95 Expansion in rapeseed and palm oil trade offset declines in the other oils. Malaysian palm oil exports is projected up 470,000 metric tons, despite a significant growth in the Malaysian oleo-chemical industry, which reduces supply availability for exports. In Indonesia, the government imposed export taxes on palm oil to deter supplies away from world markets and into domestic consumption. Analysts agreed that currently the results of the program remain blurry, but a partial success is likely in 1995/96. Reduced imports of other oils in China, coupled with expected lower prices for palm oil, will lead to a boost in China's palm oil imports. The irregular monsoon rains in India is likely to affect internal production of oil, leading to larger imports of edible oils, especially palm. Global soybean oil trade in 1995/96 will remain virtually unchanged as South American exports replace lower U.S. soybean oil shipments. On the import side, small increases in India, Pakistan, Latin America, North Africa, and the Middle East regions offset a substantial decline in China's soybean oil imports. Small Increase in Global Stock-to-Use Ratio Although the steep hike in edible oil prices for 1994/95 is likely to gradually abate, the 1994/95 stock-to-use ratio (estimated at a 20-year low) will impede prices from falling drastically in 1995/96. Despite robust gains in palm oil production and the rebuilding of world stocks to 5.7 million tons, tightness in the market is reflected in the 1995/96 projected 8 percent stocks-to-use ratio (fig. 7). The 1995/96 stocks-to-use ratio and edible oil prices will likely remain volatile, responding primarily to palm oil production and stocks, and China's, Pakistan's, and India's demand for vegetable oil. Barring a major oilseed crop failure in 1995/96, economic and population growth throughout most regions (with the exception of sub-Saharan Africa and the FSU) will spur demand. This will put pressure on supplies, which will keep stocks low and prices relatively high. A Review of EU Soybean Meal Consumption Following CAP Reforms The EU announced a comprehensive reform of the CAP in 1992. EU support prices for grains were reduced by an average of 22 percent in 1993/94, and are scheduled to decline by a total of 33 percent in 1995/96. Feed wheat prices were expected to weaken even further, because under the new regime feed wheat was not eligible for intervention. Following implementation of the CAP reforms, analysts agreed that the EU soybean meal consumption was destined to fall dramatically. Conversely, the quantitative effect was not so clear and the range of projections differed widely. In 1993/94, the outlook for feed consumption was for increased use of feed grains, especially feed wheat, and reducing consumption of other rich-energy, low-protein feeds such as tapioca, corn gluten, and fruit pulp. The need for protein was reduced and prices for protein meals relative to grains were expected to rise, encouraging an increase in the proportion of grains in EU rations. Counter to all forecasts, the EU has consistently increased soybean meal consumption since 1992/93. Several factors have hindered EU feed compounders and farmers from shifting soybean meal consumption to feed grains. First, has been the failure of market prices to reflect the reduction in EU support prices. Although, EU grain intervention prices have dropped 26 percent and will fall an additional 7 percent in 1995/96, grain market prices have remained relatively stable or higher than in previous years. Second, soybean meal prices have dramatically dropped in the last 2 years, and although 1995/96 prices are expected to rebound, they will continue substantially lower than in 1992/93. The combination of the first two factors have resulted in waning prices for protein meals relative to grains. Third, the weakness of the U.S. dollar compared with European currencies. The U.S. dollar is at the lowest ratio against the European Currency Unit (ECU) since 1979/80 and is off by about 12 percent from 1993/94 levels, contributing to low protein meal quotes in the EU. Fourth, tight conditions in the vegetable oil market provided for higher crush margins for EU processors, which indirectly led to steep increase in soybean meal output. Fifth, restrictions on the expansion of EU oilseed production under the Blair House Agreement, have contained the production of rapeseed and sunflower meal. Finally, production of poultry, which is the primary user of soybean meal, have grown over the past 2 years. The EU 1995/96 outlook for soybean meal consumption will remain brisk as the preceding factors continue to support soybean meal consumption and trade. Cottonseed Crop Review for 1994/95 Large Crop Contributes To Record Supply U.S. cottonseed production in the 1994/95 season (August 1, 1994 to July 31, 1995) was 7.604 million short tons, the largest cottonseed crop since 1937/38's 7.844 million, and 20 percent above production in the 1993/94 season. The large cottonseed crop was accompanied by record cotton lint production in 1994/95--19.662 million 480-pound bales. The 1994/95 cottonseed-to-lint ratio was 61.7/38.3, well below the 65/35 ratios common when the cottonseed production record of nearly 8 million tons was set in 1926. With beginning stocks of 432,000 short tons, the large cottonseed crop pushed total supply to a record 8.036 million tons. All major use categories, cottonseed crush, exports, and "other use," primarily whole seed feeding, rose sharply in the 1994/95 season--mitigating a build-up of ending stocks which, during the course of the season, had been forecast to rise to the 1-million-ton level. Cottonseed Crush And Exports Rise Sharply, Other Use a Record U.S. exports of cottonseed in 1994/95 are forecast at 225,000 short tons, up 43 percent from last season. Exports this season have been strong despite economic turmoil in Mexico and the sharp drop in its currency value. Mexico usually accounts for the vast majority of U.S. cottonseed exports, taking 79.5 percent in 1993/94, 90.2 percent in 1992/93, and 91.4 percent in the 1991/92 season. Through the first 10 months of this season, Mexico has taken 67 percent while Japan and Korea have raised their share-to-date to 19 and 8 percent, respectively, from 14 and 4 percent for the same period last season. A weak U.S. dollar, versus most foreign currencies, has aided cottonseed exports this season. U.S. cottonseed crush in 1994/95 is forecast to total 3.85 million short tons, up 11 percent from last season. After starting the season at strong monthly crushing rates, crush weakened in mid season and is ending the year at a strong pace. Contributing to the strong finish is growing demand for cottonseed oil and further strengthening of cottonseed oil prices, together with a slight rebound in cottonseed meal prices. Cottonseed oil prices are higher, reflecting growth in domestic demand and particularly strong export demand. Cottonseed meal prices which have been low and falling nearly all season, owing to an abundance of competing meals, have risen recently, improving crush margins. Monthly average cottonseed meal prices below $110 per ton and discounted to soybean meal by $60-$70 per ton, had earlier dampened crushing enthusiasm. Other use of cottonseed in 1994/95 is forecast to reach a record 3.29 million tons, up 24 percent from last season. Lower national-average corn and soybean meal prices in 1994/95 and relatively strong cottonseed prices, versus last season, do not suggest such strength in cottonseed feeding. However, expansion of cotton planting into areas without the necessary infrastructure to crush cottonseed, held down cottonseed prices in those areas and placed cottonseed in a much better competitive position versus other feeds. Cottonseed Prices High Despite Apparent Lower Crush Value The national-average price received by farmers for cottonseed in 1994/95 was $101 per short ton, down from the $113-average last season and much above initial forecasts. Season-average prices received by farmers ranged from a high of $143 per ton in California to a low of $68 in Georgia. In 1993/94, the value of cottonseed oil and cottonseed meal averaged $162 per ton of seed crushed, with cottonseed oil contributing about 55 percent of the oil-and-meal value. Through the first two-thirds of the 1994/95 season, the average value of oil and meal is near $130 per ton of seed crushed with cottonseed oil representing about 62 percent of the oil-and-meal value. Outlook for the 1995/96 Season Early indications suggest that U.S. cotton farmers could harvest a record cottonseed crop in the 1995/96 season. Cottonseed production, driven by the demand for cotton lint, has surged with rapidly rising cotton demand in recent years and tested the cottonseed industry's ability to market the growing supply. Ongoing expansion of U.S. cottonseed crushing capacity, especially in areas of recent cotton-planting resurgence, will greatly influence the level of prices observed in 1995/96 for cottonseed and products. However, in addition to the potential for larger crush in 1995/96, aggressive marketing through export and feeding uses will be needed to hold cottonseed stocks below the 1-million-ton level on July 31, 1996. Peanuts Peanut Crop Review for 1994/95 The 1994/95 peanut season (Aug. 1, 1994--July 31, 1995), ushered in with extreme flooding in the major peanut-producing region of the United States, is likely to end later this month as a 5-year low-water mark for the domestic industry. Food demand is likely to experience a third straight year of decline in the 1994/95 season. Adding to the travails of the domestic industry are large peanut program costs associated with the 1994 crop, and increasingly critical review of the U.S. peanut program in preparation for the 1995 farm bill. A Good Crop, Imports Boost Supply and Program Costs While the 1994 crop got off to an uncertain start, and marketing has been lackluster, final production data for the 1994/95 season indicate a good year. Alberto, the first tropical system of the 1994 Atlantic hurricane season, made landfall on July 3 in the Florida Panhandle. The storm weakened and drifted slowly over southeastern Alabama and central Georgia for the next several days. The storm dumped copious rainfall and caused flooding near its compact center, directly affecting the largest peanut-producing area in the United States. Rainfall topped 24 inches at Americus, Georgia, 21 inches of which fell during a 24-hour period on July 5 and 6. Record flooding was recorded at most gauging points on the Flint and Ocmulgee Rivers. While the early-season flooding was locally devastating, rainfall in the surrounding areas was beneficial and moisture continued at beneficial levels for the majority of the growing season. As a result, the 1994 crop yielded a national average 2,624 pounds (in-shell, basis) per harvested acre, the highest since the 1984 season and 616 pounds above last season's drought-reduced crop. With 1.619 million acres harvested from the 1.641 million planted, the 1994 crop totaled 4.247 billion pounds which, when combined with beginning stocks of 1.061 billion pounds and imports, resulted in a total supply of 5.416 billion pounds. NAFTA and GATT Impact Supply Included in the 1994/95 U.S. peanut supply are an estimated 108 million pounds of imports, allowed under the recently enacted North American Free Trade Agrement (NAFTA), and the General Agreement on Tariffs and Trade (GATT). Presidential Proclamation 6763, dated December 23, 1994, and effective on January 1, 1995, implemented the GATT Uruguay Round Agreement. The agreement allows the opening of a peanut quota on April 1, 1995 through March 31, 1996 and establishes that the aggregate quantity allowed to enter the United States shall not exceed 26,341 metric tons from Argentina and 4,052 metric tons from other countries or areas. The NAFTA established a quota for peanuts from Mexico imported for the period January 1, 1995 through December 31, 1995 of 3,478 metric tons. Owing to the significant price differential between U.S. peanut prices and world prices, those countries having access to the U.S. market are expected to fill their quotas. The peanuts received under these agreements are likely to displace domestic-origin peanuts designated for the food market. In mid-December 1993, USDA announced the 1994 national peanut poundage quota at 1.35 million short tons, the minimum permitted by law. Estimated needs for domestic edible use, seed, and related uses was 1.298 million tons. Thus, the 1994 peanut poundage quota was calculated to be redundant by more than 50,000 tons. A good 1994 crop, large imports, and undermarketings applied in the 1994 season added significantly to the oversupply of peanuts. About 295,000 short tons of quota peanuts from the 1994 crop were placed under CCC loan. Net realized losses associated with the 1994-crop peanuts are estimated near $120 million. Prices Weaken... In mid-February 1994, USDA announced the 1994-crop peanut support levels for quota and additional peanuts at $678.36 and $132.00 per short ton, respectively. The quota peanut support rate was up $3.43 per ton from the 1993 crop. Despite a slightly higher quota support rate, the average price received by farmers for peanuts declined in 1994/95 to 29.0 cents per pound from 30.4 cents a year earlier. With slack food demand, shellers offered lower prices for quota peanuts--shrinking the support rate of 2-to-3 cents per pound above the premium farmers typically received. ...But Fail To Raise Food Demand In 1994/95, peanut use in primary products has trailed year-earlier levels. For the season through September, use was off from the same period of 1993/94 by 9.5 percent, through October by 7.9 percent, November (-5.4 percent), December (-3.0), January (-2.5), February (-3.0), March (-3.8), April (-4.5), May (-4.2), and June (-4.2). While use in primary products has lagged all season, higher use for roasting stock peanuts in 1994/95 is expected to mitigate the overall decline in food use to 1.8 percent below the 1993/94 season. Food use in 1994/95 is expected to total 2.05 billion pounds (in-shell, basis). Nearing the end of the 1994/95 season, peanut use in primary products is down in all categories, with both volume and percentage declines sharpest in the peanut candy and snack peanut uses. Use in peanut butter, the largest individual category by far, is down about 1 percent--an improvement from declines of the last few years. Apparent disappearance of peanut butter (production plus net of trade), could actually improve in the 1994/95 season, despite a whopping 50-percent reduction in government purchases of the product. The resurgence in commercial demand gives cause for optimism in peanut butter offtake for the 1995/96 season. Additionally, recent product developments and aggressive marketing of, among others, "reduced fat" peanuts and peanut butter "spreads" could generate higher use among diet-sensitive consumers. Peanut Crush And Exports Soar Adequate supplies and weak food demand have provided ample peanuts for crushing and export in the 1994/95 season. Peanut crush is forecast to exceed the 1-billion pound level while exports total 900 million, 57 and 62 percent increases, respectively, from the 1993/94 season. Ending stocks of peanuts for 1994/95 are forecast to total 1.1 billion pounds. Sunflowerseed U.S. Sunflower Acreage To Increase in 1995/96 for Third Consecutive Year USDA's June Acreage report estimated that farmers will plant 3.61 million and harvest 3.48 million acres of sunflowers this fall, up 1.1 and 1.6 percent respectively from 1994. Of all States surveyed, only North Dakota and Minnesota are expected to seed fewer sunflowers (-40,000 acres each) in 1995/96, while every other sunflower-producing State is expected to experience increases in acreage (table B). Among the reasons for the increase in sunflower acreage in 1995, are the lateness in planting the spring wheat crop, as well as, the high prices that farmers received in 1994. On the other hand some producers may have planted fewer sunflower acres for rotation purposes. Most of the cutback was for non-oil type varieties, oil types increased 2 percent from 1994, while non-oil type sunflowerseed acreage is expected to decrease to 513,000 acres, down 13,000 from 1994. Outlook for Sunflowerseed Prices Appears Weaker in 1995/96 U.S. sunflower production forecast for 1995/96 is down to 4.44 billion pounds. The forecast is based on 3.48 million acres harvested. The projected 1995 yield for sunflowers of 1,275 pounds per acre is well below the 1994 yield of 1,410 pounds per acre. The trend yield is a weighted average of oil-type and confectionery sunflowers. The yield of each type of sunflower is the regional trend yield for 1978-1994, weighted by the prospective regional acreage. Crush in 1995/96 will likely drop 100 million pounds from this year's expected record of 2.75 billion pounds. Seed exports will show larger growth, from 500 million pounds to 550 million. As total supplies increase more than total demand, yearend sunflowerseed stocks should rise to 652 million pounds, which would be the second-largest ever. With large carryover stocks projected, sunflowerseed prices will probably not increase much in 1995/96 if new crop yields are near normal. The expected higher crush and slightly lower prices will sustain solid export demand (772 million pounds) for U.S. sunflowerseed oil, although slightly less than 1994/95 exports. Price reductions in the entire vegetable oil complex next year will depress prices for sunflowerseed oil, and ultimately sunflowerseed. The season average price for all sunflowers in 1995/96 is expected to range between $9.30 and $11.00 per hundredweight, while the average price for sunflowerseed oil is expected between 24 and 29.5 cents per pound. Finally, the expected price for sunflower meal will range from $70.0 to $90.0 per short ton in 1995/96. Record Production Highlights the 1994/95 Season U.S. farmers planted 3.57 million acres of sunflowers in 1994, compared with 2.76 million in 1993, a 29-percent increase. Every major sunflower-producing State increased sunflower plantings. Behind the increase was historically high sunflower prices in early 1994, a very tight stock situation, and high early-season contract prices for both oil-type and confection sunflowers. As a result, sunflower plantings were relatively attractive compared to wheat and barley. The 1994 sunflowerseed production was 4.84 billion pounds. This represents the third largest U.S. crop (1979=7.2 billion pounds and 1982=5.3 billion). Sunflowerseed production was up 88 percent from 1993/94, due to increased acreage and yield. The impressive year to year increase in production applied downward pressure on sunflowerseed prices for 1994/95 and the average season price for all sunflowers is estimated at $10.55 per hundredweight. U.S. sunflowerseed exports for 1994/95 will be the largest since 1987/88, reaching 500 million pounds. Much of the increase this year went to the European Union. Burgeoning oil export demand raised 1994/95 domestic crush to an all-time high of 2,755 million pounds. Yet, even with the large offtake, expected ending seed stocks may balloon to 626 million pounds. The high quality of the 1994 crop may also help raise oil production to over 1.1 billion pounds. Favorably priced sunflowerseed oil also aided its domestic disappearance, which could rise to 286 million pounds. U.S. sunflowerseed oil exports may reach a record 783 million pounds in 1994/95 as the monthly export data indicate in figure 9. Sunflowerseed oil prices, which generally trade at a premium relative to soybean oil, were generally below the soybean oil price this year. In response to bountiful supplies from the United States and Argentina, lower EU sunflower supplies, and a strong demand for vegetable oils, sunflowerseed oil exports from both countries rose sharply. Generally improved weather conditions raised projected Argentine sunflowerseed production 23 percent to 4.7 million metric tons. U.S. sunflowerseed and oil exports to Mexico are up from 1993/94. Mexico has a preference for sunflower oil, and sunflowerseed and oil prices were highly competitive in 1994/95. The marketing season average price for sunflowerseed oil is estimated at $601 per metric ton. However, after the peso devaluation, slower-than-expected oil exports to Mexico restrained 1994/95 U.S. sunflowerseed oil exports to 783 million pounds, which is still 74 percent above 1993/94. Abundant protein meal supplies from all sources cut sunflowerseed meal prices this year by more than a third from last season. The average meal price fell from $94 per short ton in 1993/94 to $60. While low prices hiked domestic use to 610,000 short tons, sunflowerseed meal exports rose modestly to 75,000 tons. Other Minor Oilseeds Highlights USDA's June Acreage report indicates that the number of planted acres for all special oilseeds has increased in 1995/96, except for inedible rapeseed acreage, which continues its downward trend by falling 38 percent from last season to 4,600 acres (fig. 8). Canola U.S. harvested acreage continued to increase for canola, reaching 340,000 acres in 1994 (table C). With yields averaging 1,316 pounds per acre, production totaled 447 million pounds. This output was 77 percent above the 1993 crop and 210 percent larger than 1992. However, imports from Canada still accounted for more than 60 percent of total supply. With elimination of Canada's transportation subsidies to port positions, more seed will be crushed internally, with the oil and meal exported to the United States. Imports of canola seed are estimated at 661 million pounds in 1994/95, a significant reduction of 14.5 percent from the previous season. Crush is estimated at a new record high of almost one billion pounds (992 million) in 1994/95, up 16.7 percent from last year. Exports of canola seed are expected to follow the same path and increase an impressive 111 percent in 1994/95 to 165 million pounds. Canola Outlook for 1995/96 The outlook for domestically produced canola continues to improve. Projected harvested acreage for 1995 is 443,000 acres, up 30 percent from the previous year. Among the reasons for the increasing U.S. acreage was the flexibility provisions of the 1990 farm legislation. The Environmental Protection Agency's permission to evaluate pesticides for use on canola should also encourage wider U.S. cultivation. The Northern Plains has also been plagued in recent years by wheat scab, so adding canola to the rotation helps break the disease cycle. Cool, wet weather, such as this spring, is ideal for canola. The expected increase in acreage coupled with trend yields is expected to boost production of seed to 584 million pounds and help keep imports of Canadian seed unchanged at 661 million pounds. Likewise crush is expected to surpass the one billion pound mark in 1995/96, while total demand of canola seed is expected to increase by 60 million pounds to 1.23 billion pounds. Flaxseed Flaxseed production declined 16 percent in 1994 to 2.92 million bushels. The drop was due to lower yields and acres harvested (down 10 percent from 1993). Consequently, imports of flaxseed increased in 1994/95 by 881,000 bushels to 5.99 million. Total supplies in 1994/95 were nearly unchanged from the 1993/94 level of 10.1 million bushels. The season average price for flaxseed in 1994/95 was $4.65 per bushel, slightly below the marketing loan for special oilseeds of $4.87 per bushel. The outlook for domestic flaxseed in 1995/96 is expected to improve. Farmers planted 213,000 acres of flaxseed in 1995, up 35,000 acres from 1994. This appears to arrest the downward slide in U.S. flaxseed output. North Dakota, the leading flaxseed producing State, accounted for all of the larger expected area. Some of the increase may be attributed to weather-related lateness in planting other grains. Imports of flaxseed are expected to decrease slightly in 1995/96 to over 5.4 million bushels. Total demand for flaxseed is expected to recover somewhat in 1995/96 to 9.13 million bushels, pushing the average season price in the $4.75 to $5.25 per bushel range. Corn Oil As with other vegetable oils, U.S. corn oil exports are forecast to climb this year based on higher production. Record exports of 815 million pounds are expected in 1994/95, up from 705 million in 1993/94 and nearly double the trade of 1989/90. Through February, corn oil exports were up nearly 12 percent versus a year ago. Much of the trade expansion has been to Greece, Spain, and Italy, which have suffered a poor olive oil turnout. Historically, Saudi Arabia and Turkey are the leading importers. A global shortage of cooking oils has run up prices and expanding corn grind for ethanol production, encouraging record production of corn oil in the United States. Outturn for 1994/95 is forecast at 2.2 billion pounds, which is 15 percent above the 1993/94 level. A high quality corn crop in 1994 also helped increase oil extraction yields well above those from the poor quality crop of 1993. Growth in domestic disappearance has been sluggish, however, as total use of oils for margarine (a major corn oil market) has dipped. Forecast 1994/95 U.S. disappearance is 1,255 million pounds, up from 1,240 million last year. With higher supplies, the lackluster U.S. market is expected to hike ending stocks of corn oil to a relatively high 195 million pounds. The corn oil price, which usually is 4-5 cents per pound higher than soybean oil, was generally at a discount this year. Prices for corn oil typically fall in the summer as supplies increase. Corn wet-milling accelerates in the summer to satisfy seasonally rising demand for corn sweetener used in soft drinks and fuels using ethanol. In April, a federal court struck down the Environmental Protection Agency's plan to require that 30 percent of fuel oxygenates in the Reformulated Gasoline Program come from renewable sources such as ethanol. The court's decision is being appealed. While this ruling will not reduce potential corn oil production, it will limit its rate of growth. Imported Oils World palm oil output for 1994/95 is projected to reach a record 14.7 million metric tons. Tight palm oil supplies lifted palm oil prices to the highest level in 5 years. Palm oil, which usually sells at a discount to soybean oil, was well above the price of soybean oil early in 1994. However, increasing supplies of palm oil late in the marketing year reduced the price differential with soybean oil. Projected U.S. imports of palm oil for 1995/96 are 335 million pounds, which is up from 291 million this year. World copra production nearly reached 5 million metric tons in 1994/95, rebounding from the previous year's drop in Philippine production. U.S. imports of coconut oil are expected to reach 1,124 million pounds in 1995/96, up from 1,014 million in 1994/95. While U.S. imports of coconut oil are increasing, concerns about its high saturated fat content (92 percent) has left edible consumption stagnant. Inedible products, such as soaps and detergents, account for more than three-fourths of current U.S. coconut oil consumption. Due to drought in major growing regions, the 1994 world olive crop was the worst since 1990, resulting in 1.7 million metric tons of olive oil. Despite poorer world yields of olives and rising prices, U.S. demand for olive oil is still rising. Only a small amount of Californian olive oil is domestically produced, making the United States the largest importer outside the EU. Spain, Italy, Turkey, and Greece are the primary suppliers to the United States. U.S. olive oil imports have increased 40 percent since 1989/90, to an expected 287 million pounds in 1994/95, and more than quadrupled since 1982. Animal Fats For the marketing year to date, cattle slaughter was up 3.7 percent in 1994/95. Production of edible tallow is expected to reach 1.61 billion pounds, up from 1.55 billion in 1993/94. Domestic disappearance increased at a faster rate, however, to 1.3 billion pounds from 1.2 billion last year. Because of larger domestic use, 1994/95 exports of edible tallow demand will decline to about 295 million pounds from 346 million in 1993/94. U.S. exports account for about half of world trade in tallow. Because of their proximity, Mexico and Canada are leading importers of U.S. edible tallow, which competes with tropical oils imports. Despite higher supplies, prices for edible tallow had swelled by the fourth quarter of 1994, from 20.5 cents per pound in August to 28 cents in December. The increase occurred because of the runup in the palm oil price since early 1994. This reduced the edible use of palm oil, resulting in animal fats used in its place. Since January, tallow prices have backed off as the Mexican currency crisis curbed Mexican imports and world palm oil supplies increased. Tallow prices should ease further this summer with a seasonal pickup in cattle slaughter. The price premium for edible tallow versus inedible tallow has narrowed in recent years as fat-conscious users have reduced edible demand while consumption of edible tallow in soap-making and livestock feeds has increased. Cumulative commercial hog slaughter (Oct.-May) increased 5.8 percent from 1993/94. This has raised expected lard production for 1994/95 to 1.1 billion pounds, the highest level since the early 1980's. Unlike tallow, a major rebound in lard exports (up by one-third in 1994/95) has exceeded the growth in domestic lard disappearance. Chicago lard prices this winter experienced a rally to over 21 cents per pound, up from 14.5-15.0 cents per pound in early 1994. Prices in the most recent months have since backed off. End Uses of Fats and Oils Total domestic use of vegetable oils is growing only around 2 percent, to 8 million tons for 1994/95. Domestic disappearance of soybean oil, the principal oil, is at 5.9 million tons and 0.8 percent more than the 1993/94 offtake. Abundant supplies of competing oils contribute to its sluggish growth. Larger percentage increases are expected for canola oil (10 percent), corn oil (3 percent), cottonseed oil (3 percent), sunflowerseed oil (55 percent), and peanut oil (18 percent). Soybean oil disappearance as a proportion of total U.S. edible fats and oils disappearance has declined in the last several years, with the 1994/95 forecast at 61.5 percent. Domestic use of competing oils, especially canola oil, has increased faster than soybean oil in recent years. Future growth in domestic canola oil consumption is very promising. To date, the principal uses of canola oil are in salad dressing or home-cooking oil. But recent development of a low alpha linolenic acid canola variety should increase canola oil use in commercial frying. Previously, untreated canola oil resulted in off-flavors in fried foods and treated canola oil was higher in saturated fat. The new, more heat-stable oil can be used to reduce saturated fat levels in snack foods usually fried in cottonseed or soybean oils. In addition, the first crop of high-lauric acid canola will be harvested this summer in Georgia. Within several years, this genetically-engineered variety could undercut imports of lauric oils from the tropics. Lauric acid, previously only available from coconut or palm kernel oil, is a key ingredient in soaps, detergents, lubricants, cosmetics, and confections. While U.S. edible use of lauric oils has fallen in recent years, the prosperous industrial market has offset those losses. Efforts to develop a rapeseed variety with a high stearic acid content is also advancing, which would compete with tallow, currently the major source of stearic acid. The catalyst for this research is the search for biodegradable alternatives to petroleum based lubricants. Due to the successes made by canola oil, researchers have developed a sunflower oil with saturated fat content of 6 percent, versus 10 percent previously. The variety has seen only limited distribution, though. Domestic use of margarine has dropped from last year while butter consumption has increased. Termination of price controls on butter has helped reduce butter prices about 15 cents per pound since 1992 and stimulated consumption. As a result, total U.S. butter stocks on June 30, 1995 were down 71 percent from a year earlier. List of Tables Text tables A. World vegetable oil production, 1991/92-1995/96 B. All type sunflowers: Area planted, and harvested by State, 1994-95 C. Minor oilseeds, 1992-95 Appendix Tables 1. Soybean stocks: On-farm, off-farm, and total, U.S., by quarter, 1979/80-1994/95 2. Soybeans: Acreage planted, harvested, yield, production, value, and loan rate, U.S., 1955/56-1995/96 3. Edible fats and oils: Supply and disappearance, U.S., 1982/83-1995/96 4. Peanuts: Acreage planted, harvested, yield, production, and value, U.S., 1965/66-1995/96 5. Peanuts: (farmers' stock basis) Supply, disappearance, and price, U.S., 1975/76-1995/96 6. Corn oil: Supply, demand, and price, U.S., 1976/77-1995/96 7. Corn oil: Supply and disappearance, by month, U.S., 1991/92-1994/95 8. Flaxseed: Acreage planted, harvested, yield, and production, and value, U.S., 1965/66-1995/96 9. Flaxseed: Supply, disappearance, and price, U.S., 1966/67-1995/96 10 .Linseed meal: Supply and disappearance, U.S., 1966/67-1995/96 11. Linseed oil: Supply, disappearance, and price, U.S., 1966/67-1995/96 12. Soybeans: Supply, disappearance, and price, U.S., 1965/66-1995/96 13. Soybean meal: Supply, disappearance, and price, U.S., 1965/66-1995/96 14. Soybean oil: Supply, disappearance, and price, U.S. 1965/66-1995/96 15. Soybeans: Supply and disappearance, by month, U.S., 1990/91-1994/95 16. Soybean meal: Supply and disappearance, by month, U.S., 1989/90-1994/95 17. Soybean oil: Supply and disappearance, by month, U.S., 1989/90-1994/95 18. Soybean product prices, by month, U.S., 1990/91-1994/95 19. Soybeans: Monthly value of products per bushel of soybeans processed, and spot price spread, U.S., 1986/87-1994/95 20. Supply and use: Soybeans, soybean meal, and soybean oil, U.S., major foreign exporters, importers, and world, 1992/93-1995/96 21. Cottonseed: Acreage planted, harvested, yield, production, and value, U.S., 1965/66-1995/96 22. Cottonseed: Supply, disappearance, and price, U.S., 1975/76-1995/96 23. Cottonseed meal: Supply, disappearance, and price, U.S., 1965/66-1995/96 24. Cottonseed oil: Supply, disappearance, and price, U.S., 1965/66-1995/96 25. Cottonseed: Supply and disappearance, by month, U.S., 1990-1995 26. Cottonseed meal: Supply and disappearance, by month, U.S., 1989/90- 1994/95 27. Cottonseed oil: Supply and disappearance, by month, U.S., 1989/90- 1994/95 28. Cottonseed: Products and prices, by month, U.S., 1989/90-1994/95 29. Sunflowerseed: Acreage planted, harvested, yield, production, and value, U.S., 1965/66-1995/96 30. Sunflowerseed: Supply, disappearance, and price, U.S., 1977/78-1995/96 31. Sunflowerseed meal: Supply, disappearance, and price, U.S., 1977/78- 1995/96 32. Sunflowerseed oil: Supply, disappearance, and price, U.S., 1977/78- 1995/96 33. Sunflowerseed: Supply and disappearance, by month, U.S., 1989/90- 1994/95 34. Sunflowerseed oil: Supply and disappearance, by month, U.S., 1989/90- 1994/95 35. Sunflowerseed meal: Supply and disappearance, by month, U.S., 1989/90- 1994/95. 36. Canola seed: Supply and disappearance, U.S., 1987/88-1995/96 37. Canola oil: Supply and disappearance, U.S., 1987/88-1995/96 38. Canola meal: Supply and disappearance, U.S., 1987/88-1995/96 39. Fats and oils used in edible products, by use, U.S., 1987/88-1994/95 40. Prices: Farm, wholesale, and index numbers of wholesale prices, by month, U.S., 1990-1995 41. Fats and oils: Domestic consumption in food products, U.S., 1975-1994 42. Fats and oils: Use in selected industrial products, U.S., 1975-1994 43. Salad and cooking oils: Supply and disappearance, U.S., 1975-1994 44. Salad and cooking oils: Fats and oils used in manufacture, U.S., 1975-94 45. Baking and frying fats: Supply and disappearance, U.S., 1975-94 46. Baking and frying fats: Fats and oils used in manufacture, U.S., 1975-94 47. Margarine (actual weights): Supply and disappearance, and price, U.S., 1975-1994 48. Margarine: Fats and oils used in manufacture, U.S., 1975-1994 49. Lard: Supply, disappearance, and price, U.S., 1975-1994 50. Butter (actual weight): Supply, disappearance, and price, U.S., 1975- 1994 51. Edible tallow: Supply, disappearance, and price, U.S., 1975-1994 52. World oilseed production, 1990/91-1995/96 END-END-END