OIL CROPS YEARBOOK -- SUMMARY October 30, 1998 October 1998, OCS-1998 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of OIL CROPS YEARBOOK (OCS-1998) will be available within 1-2 weeks from the date of this summary. --------------------------------------------------------------------------- October 30, 1998 Tight Carryin Stocks, Record Oilseed Harvests Led to Robust Demand in 1997/98 Following 2 years of delayed plantings, firm soils advanced U.S. soybean planting in 1997 to the fastest start since 1994. U.S. farmers planted 70.6 million acres of soybeans in 1997, 6.3 million more than in the preceding year. Very strong soybean prices (versus corn, sorghum, wheat, and cotton), the absence of acreage set aside programs, modifications of farm rotations to include more soybeans, declining costs of production, and optimum planting conditions led to the surge in soybean area. U.S. soybean production in 1997 was 2,703 million bushels, surpassing the 1994 record by 186 million bushels. The final U.S. average soybean yield settled to 38.8 bushels per acre, second only to 1994. Tight world supplies and brisk foreign demand spurred 6 months of heavy U.S. exports until the record 1997/98 South America soybean harvest appeared. U.S. soybean exports for the season, however, totaled 870 million bushels, down from 882 million a year earlier. The resurgence of soybean oil prices and the drop in the cost of soybeans enhanced crushing margins in the first half of the marketing year. Greater investment in U.S. capacity and the advent of the large South American harvest created very narrow margins in the second half, but U.S. processors continued to successfully defend their world market share. As a consequence, 1997/98 domestic crush rose to a record 1,597 million bushels. Despite the 264-million bushel increase in supplies, year ending soybean stocks increased only 68 million bushels. U.S. crushers produced a record 18.1 billion pounds of soybean oil in 1997/98 in response to a global shortfall in vegetable oil. Domestic disappearance of crude soybean oil increased from 14.3 billion pounds in 1996/97 to 15.2 billion. Soybean oil prices rose steadily since the summer 1997, with the 1997/98 average price increasing to 25.8 cents per pound. The spike in demand cut 1997/98 U.S. soybean oil ending stocks to 1,387 million pounds, down from 1,520 million a year earlier. U.S. 1997/98 soybean oil exports swelled to 3.25 billion pounds, surpassing the previous high of 2.7 billion set in 1979/80. A strengthening world oil market in 1997/98 accelerated the crush, generating ample volumes of soybean meal and cutting soybean meal prices. The central Illinois cash price for high protein soybean meal averaged $186 per short ton, considerably less than the $271 a year earlier. Total 1997/98 meal exports were 9.4 million short tons, far surpassing the 1979/80 record. With a larger U.S. livestock inventory and considerably lower soybean meal prices, domestic disappearance rose to 28.7 million short tons from 27.3 million in 1996/97. Global trade in major oilseeds reached an estimated peak of 53.4 million tons in 1997/98, surpassing the previous season's total by 3.9 million tons. Soybeans remained the undisputed leader with 40.0 million tons traded. World meal use in 1997/98 was estimated at 155.5 million tons. Global soybean meal consumption was about 99.4 million tons, up 7 percent from 1996/97. World protein meal trade also reached a high of 51.4 million metric tons in 1997/98. Global vegetable oil output rose to 76.8 million tons, the smallest increase since 1992/93. Drought throughout Southeast Asia held down production of tropical oils throughout 1998. However, growth in world vegetable oil consumption outstripped the increase in production, rising to 77.3 million tons. As a result, world vegetable oil ending inventories dropped to only 8.5 percent of use, the lowest since the early 1970s. Estimated global vegetable oil trade in 1997/98 increased to 29.3 million tons, up 430,000 from 1996/97. Lower yields in 1997 caused cottonseed production to fall 2.9 percent to 6.935 million short tons. Cottonseed crush and exports were up 15,000 short tons each from the previous year at 3.885 million and 146,000 short tons, respectively. Other use of cottonseed, primarily whole seed feeding, was 2.929 million short tons, 8 percent below the 1996/97 season. Ending stocks as of July 31, 1998, modestly tightened to 490,000 tons. The lower value of cottonseed in 1997/98 in both oil-and-meal output from crushing and in feeding was reflected in a lower average price received by farmers. U.S. farmers received $121 per short ton in 1997/98, down from $126 a year earlier. U.S. peanut producers planted 1.431 million acres of peanuts in 1997, up 2.1 percent from a year earlier. Production totaled 3,537.1 million pounds, in- shell basis, down 3.4 percent from the previous year. Average yield per harvested acre was 2,507 pounds, a 146-pound drop from the 1996 yield. Food use of peanuts rose 3.4 percent to 2,099 million pounds, in-shell basis. On an in-shell basis, peanuts crushed in 1997/98 totaled 544 million pounds, 21 percent below the previous year. Peanut exports remained strong, however, rising to 681 million pounds from 666 million the previous year. The tighter supply notwithstanding, the 1997/98 U.S. average farm price for peanuts fell to 26.1 cents per pound from 28.1 cents a year earlier. Despite lower crushing, large beginning stocks of peanut oil were adequate to support a modest increase in domestic use of peanut oil to 216 million pounds. U.S. farmers planted 2.92 million acres of sunflowers in 1997, up 14 percent from 1996. But delays in planting, a dry summer, and severe midge infestations trimmed the average yield to 1,320 pounds per acre from 1,435 pounds in 1996/97. Year to year production increased 177 million pounds to 3,763 million, on the strength of 353,000 more acres harvested. Sunflowerseed crush soared to 2,338 million pounds in 1997/98. The major reason for the surge is that exports of sunflower oil increased nearly one-fourth from 1996/97, to 805 million pounds. Season ending sunflowerseed stocks fell sharply to 202 million pounds following 2 years of large carryover. Despite ample supplies, the 1997/98 average farm price for sunflowerseed stayed firm at $11.85 per hundredweight. Printed copies of the Oil Crops Yearbook will be available in about 2 weeks. For more information, contact Mark Ash (202) 694-5289. Text of the full report will also be available electronically via the ERS Web Site at http://www.econ.ag.gov. END_OF_FILE