HDR1011800201400913951600 OIL CROPS OUTLOOK September 13, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- OIL CROPS OUTLOOK is published monthly (except January) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. OCS-0995. ----------------------------------------------------------------------------- SOYBEAN YIELD FORECASTS DEFY EXPECTATIONS In its September Crop Production report, USDA surprised many observers by raising its U.S. average soybean yield forecast from 36.4 to 37.0 bushels per acre. This yield would be almost as high as in 1992, which had excellent growing conditions. Forecast 1995/96 soybean production is increased to 2,285 million bushels, which would make it the second-largest U.S. crop ever. The improvements were forecast in the northern tier of States. With good yields and considerable harvested area, 1995 production in Illinois, Indiana, Iowa, Minnesota, Ohio, Nebraska, and South Dakota would each rank among the top three on record. Except in Missouri (where many plants had not yet reached the pod setting stage when the objective yield surveys were taken at the start of the month), most of the major producing States had very healthy pod counts this year, and in some cases were second only to years that set the State record soybean yield. The high pod counts illustrate the effectiveness of higher seeding rates in recent years, even under suboptimal weather conditions. However, a lack of rainfall during the hot spell has erased the soil moisture surplus that existed early this season. This has led to deteriorating crop condition ratings and probably hurt soybean pod fill throughout the Midwest and Delta regions. For the week ended September 10, 51 percent of the U.S. soybean crop was in good to excellent condition, compared with 74 percent for last year's bumper crop. Stress on the soybean plant during the reproductive stage limits potential yields by decreasing the number of pods per plant, the number of beans per pod, or seed size. How much the latter two components deviate from average values will not be known for sure until harvest begins and will be reflected in future production reports. While still behind normal, crop progress was accelerated by this summer's heat so that reaching maturity by a normal frost date is now not a major concern for most areas. As in 1993, this year's shortened growing season will likely not permit seed sizes to develop as fully as in an extended season, such as 1992 and 1994. Shorter plants also could result in higher than normal harvesting losses. On the other hand, high temperatures tend to improve oil extraction rates. This resulted in a higher projected oil extraction rate for 1995/96 to 11.25 pounds per bushel. PROSPECTS FOR 1995/96 SOYBEAN EXPORTS UNCHANGED, MEAL MOVES UP Despite the improved U.S. crop outlook, the U.S. soybean export forecast remains unchanged at 800 million bushels (21.8 million metric tons). Continued stock accumulation in South America and strong export availabilities of soybeans and products will likely constrain U.S. soybean exports in the September-February. The estimated year-to-year increase in South American stocks (as of the end of August) is 2.1 million metric tons, with Brazil reported to be holding record-large stocks. Despite prospects for increased competition in both soybeans and meal from South America, outstanding U.S. soybean sales for the 1995/96 marketing year, as of August 31, are reported at a relatively robust 4.6 million tons. While aggregate sales as of this date are down from the previous year, sales to both Japan and Taiwan are more than double last year's level as carryover sales from 1994/95 were shifted over to 1995/96. Stronger U.S. crush projections and slightly higher global meal consumption underlie the increase in U.S. meal exports, now forecast at 6 million short tons (5.44 million metric tons), down 7 percent from last year. Stronger expected prices for the soybean complex in 1995/96 don't appear to be enough to ration global soybean meal consumption, projected in September at 87.4 million metric tons, up slightly from last month's estimate. Continued high grain and non-grain feed ingredient prices in the EU are supporting increases in forecast 1995/96 soybean meal imports and consumption. In Asia, meanwhile, policy changes in Thailand, allowing increased market access for soybeans and meal, prompted an increase in the import forecast for both in 1994/95 and 1995/96. Of the 14-million-bushel rise in U.S. 1995/96 supply from last month, crush was hiked 10 million bushels to 1,395 million. The balance increased U.S. 1995/96 carryout stocks 5 million bushels to 330 million. The same average price range as last month, $5.50-$6.50 per bushel, is still expected. 1994/95 SOYBEAN USE ENDS WITH A FLURRY U.S. soybean crushings were 108.6 million bushels in July, setting a July record. The strong crush performance so late in the crop year boosted USDA's estimate of 1994/95 crush 5 million bushels from last month to 1,400 million. USDA raised its estimate of 1994/95 soybean exports to 845 million bushels. The 20-million-bushel increase from the previous estimate is supported by August shipments, as reported by U.S. Export Sales, of 1.4 million metric tons, the highest August figure since 1986/87. Although soybean export inspections through the end of August (860 million bushels) have already exceeded USDA's export forecast, inspections have been generally higher than the official Census trade figures. Through June, soybean export inspections were running about 10 million bushels ahead of the Census data (760.5 million bushels versus 750.2 million). In 1993/94, total inspections for the year finished 9.6 million bushels higher than the Census export data. Carryout soybean stocks for 1994/95 have now dropped to 355 million bushels, for a stocks-to-use ratio of nearly 15 percent. Despite record production, total use also set an all-time high, leaving stocks at a moderately comfortable level going into 1995/96. Estimated U.S. soybean meal production for 1994/95 went up 200,000 short tons this month to 33.2 million. The additional output was needed to satisfy stronger than expected export demand from the EU. Estimated exports of soybean meal for 1994/95 went up 200,000 short tons this month to 6.45 million tons. U.S. soybean and soybean meal trade in 1994/95 benefited from lower soybean and meal prices in 1994/95, as well as stronger economic growth in many regions of the world, which boosted overall global oilseed consumption and trade. U.S. exports have also gained from a significant counter-seasonal slowdown in South American exports of both soybeans and meal. Brazilian exports, in particular, have slowed with soybean exports over the June-August quarter reportedly down nearly 40 percent from the previous year. Argentine soybean marketings have been slower, too, as Argentina needed to move a record sunflowerseed crop first. A larger crush lifted this month's 1994/95 soybean oil production estimate by 90 million pounds to 15,577 million pounds. Exports of soybean oil increased 100 million pounds from last month to 2,725 million. Recent sales of U.S. soybean oil to both China and South Korea for shipment in 1994/95 underpin the higher oil export outlook. Up 4 percent from the August estimate, this estimate is more than 75 percent higher than last year's exports of 1,529 million pounds. Domestic disappearance of soybean oil was also raised to 13,000 million pounds. The increase in total use caused expected year-ending soybean oil stocks to dip to 965 million pounds, the lowest since September 1986. ****************************************************************************** Information Contacts: Mark Ash Soybeans, Minor Oilseeds, Fats and Oils (202) 219-0712 Scott Sanford Peanuts, Cottonseed (202) 219-0835 Jaime Casteneda World Oilseeds (202) 219-0826 ****************************************************************************** The next release of the Oil Crops Outlook is scheduled for 4:00 p.m. ET Thursday, October 12. Table 1--Soybeans: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance -------------------------------- ------------------------------------ Year Seed, begin. Beg. Im- Produc- Total Crush Ex- feed, Total End. Sept. 1 stocks ports tion ports & resid. stocks ------------------------------------------------------------------------------ -------------------------- Million bushels--------------------------- 1993/94 292 6 1,871 2,170 1,276 589 96 1,961 209 1994/95 1/ 209 6 2,558 2,773 1,400 845 173 2,418 355 1995/96 2/ 355 5 2,285 2,645 1,395 800 119 2,314 330 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 2--Soybean meal: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ---------------------------- ------------------------------------ Year begin. Beg. Produc- Total Domestic Ex- Total End. Oct. 1 stocks tion ports stocks ------------------------------------------------------------------------------ ------------------------------1,000 tons----------------------------- 1993/94 204 30,514 30,788 25,283 5,356 30,638 150 1994/95 1/ 150 33,215 33,425 26,725 6,450 33,175 250 1995/96 2/ 250 33,040 33,350 27,100 6,000 33,100 250 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 3--Soybean oil: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ---------------------------- ------------------------------------ Year begin. Beg. Produc- Total Domestic Ex- Total End. Oct. 1 stocks tion ports stocks ------------------------------------------------------------------------------ -------------------------- Million pounds--------------------------- 1993/94 1,555 13,951 15,574 12,941 1,529 14,471 1,103 1994/95 1/ 1,103 15,577 16,690 13,000 2,725 15,725 965 1995/96 2/ 965 15,695 16,670 13,050 2,205 15,255 1,415 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 4--Oilseeds prices received by farmers, U.S. -------------------------------------------------------- Marketing Soy- Cotton- Sun- year beans seed flowers Peanuts Flaxseed -------------------------------------------------------- $/bu. $/ton $/cwt Cents/lb $/bu. 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 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 10.80 28.60 4.49 November 5.36 107.00 10.60 25.90 4.51 December 5.41 104.00 10.30 25.80 4.71 January 5.47 101.00 10.60 25.70 4.75 February 5.40 97.00 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 August1 5.68 100.00 11.70 NA 5.14 -------------------------------------------------------- 1 Preliminary. Table 5--Vegetable oil prices --------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn year oil2 oil3 oil4 oil5 oil6 --------------------------------------------------- Cents/lb. 1990/91 21.00 22.30 23.60 45.50 27.50 1991/92 19.10 20.10 21.60 27.30 25.82 1992/93 21.40 25.00 25.30 27.40 20.90 1993/94 27.09 27.78 31.00 43.20 26.38 1993/94: October 22.96 24.79 26.33 40.20 22.25 November 25.43 26.69 28.20 43.33 23.06 December 28.27 30.39 32.11 43.17 26.93 January 29.91 33.16 35.08 46.10 28.00 February 28.85 29.96 33.68 46.12 29.89 March 29.03 29.60 33.48 44.50 30.30 April 27.90 29.06 33.00 43.40 29.63 May 29.10 29.66 33.50 44.25 29.48 June 27.60 27.55 31.34 43.75 29.43 July 24.53 24.20 28.89 44.00 27.20 August 25.38 23.71 28.13 45.00 25.02 September 26.12 24.51 29.28 43.10 24.87 1994/95 October 27.06 23.64 28.90 46.00 24.73 November 29.84 24.85 29.40 50.88 24.75 December 30.61 25.50 30.63 53.80 24.75 January 29.04 26.41 29.25 50.25 28.01 February 28.15 25.63 27.66 41.83 27.26 March 28.33 26.41 27.97 41.00 28.17 April 27.16 24.00 26.89 41.25 27.30 May 26.00 24.24 26.34 40.25 26.42 June 26.78 26.72 27.30 39.00 26.61 July 27.60 28.25 28.69 39.13 27.38 August1 26.56 27.09 27.50 41.50 26.35 ------------------------------------------------------------------------- 1 Preliminary 2 Decatur 3 Valley points 4 Minneapolis 5 Southeast mills 6 Chicago Table 6--Oilseed meal prices --------------------------------------------------- Soy- Cotton Sun- Marketing bean seed flower Peanut Linseed year meal2 meal3 meal4 meal5 meal4 --------------------------------------------------- $/Short ton 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 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 August1 167.50 114.58 83.75 136.25 96.88 ---------------------------------------------------------------------------- 1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills END-END-END