OIL CROPS OUTLOOK August 13, 1997 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- OIL CROPS OUTLOOK is a monthly report issued electronically by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. No printed copies available. OCS-0897. ----------------------------------------------------------------------------- Bumper 1997 Soybean Harvest To Replenish Supplies Although soybean conditions had declined throughout July, 55 percent of soybeans nationally are currently rated in good to excellent condition. The first objective yield forecast for 1997/98 came in at 39.3 bushels per acre, up from 37.6 bushels in 1996/97. Good moisture levels are producing potentially record high yields in Minnesota, Michigan, and Wisconsin. In Indiana and Ohio, this year's earlier start for planting is aiding a rebound in yields from a much shortened 1996 season. A period of hot weather in July drew down soil moisture levels throughout the Midwest. The driest regions included Missouri, Arkansas, Tennessee, Kentucky, and western Illinois. As of August 10, 89 percent of U.S. soybeans had reached the blooming stage, somewhat ahead of the average pace. The setting of pods follows soon after, so that availability of moisture during this period will be very important for determining yields. In the last few days, a widespread and very timely system of showers interrupted the dry spell and brought relief to many areas. While this rain may be too late to raise corn yields much, the benefit to soybeans could be substantial. Given the large harvested area estimate, even a soybean yield as low as 36 bushels per acre would still have produce a crop equal to the previous 1994 record. But the August Crop Production estimate of 2,744 million bushels exceeds that mark by 228 million bushels. Excellent yields and record acreage in Iowa, Indiana, Illinois, Ohio, Nebraska, Minnesota, and South Dakota are leading to record output in each of these key producing States. A very tight carryin stock level of 125 million bushels will soon ease as the new harvest swells total soybean supplies to new heights. Projected year ending stocks of soybeans will climb to 305 million bushels, up from last month's forecast of 285 million. Prospects for 1997/98 U.S. soybean exports were raised this month to 945 million bushels. Enlarged supplies and expanding foreign import needs, particularly in China, Taiwan, Brazil, and Mexico, will allow a record volume of U.S. exports. Despite higher production, these strong gains in domestic and foreign soybean demand reinforce the season average price forecast of $5.40-$6.60 per bushel. A smaller than expected corn harvest will also buttress 1997/98 soybean prices. A dimmer outlook for China's oilseed production will account for a large share of growth in U.S. exports of soybean meal and oil. This will kick up 1997/98 U.S. soybean crush to 1,485 million bushels, which far exceeds this season's record offtake. In a reprise of the 1994/95 season, when robust Chinese demand drove U.S. soybean oil exports to a record 2,680 million pounds, 1997/98 exports (2,150 million pounds) will again benefit from substantial Chinese imports. With domestic consumption and exports turning in another solid year of growth, the average soybean oil price will firm to 21.75-24.75 cents per pound. This year's U.S. soybean meal exports are expected to total 7.3 million short tons, which would tie the 1986/87 record. However, comparatively larger world supplies of protein meals will drop the 1997/98 average soybean meal price to $185-$215 per short ton. For 1996/97, U.S. soybean exports were forecast down this month to 880 million bushels. Export shipments have slowed to a trickle in the last 2 months. The ending stocks forecast remained unchanged at 125 million bushels, as an offsetting reduction in U.S. soybean imports was forecast, to 10 million bushels. Year-to-date imports from Canada have been just 36 percent of their year earlier volume, while shipments from Brazil appear to be smaller than first anticipated. Domestic disappearance (14,050 million pounds) and exports (1,850 million) of soybean oil are both expected higher from the July forecast. Stronger oil demand would contract carryout stocks to 1,625 million pounds. The 1996/97 average soybean meal price forecast is raised to $265 per short ton. World Oilseed Stocks To Rebound in 1997/98 World production of oilseeds is expected to climb more than 6 percent in 1997/98 to 275.03 million metric tons. Foreign production is expected to reach 190.42 million tons, while global trade is expected to increase by 6 percent to 49.76 million tons. World oilseed stocks are expected to rebound in 1997/98, reaching 22.71 million tons. Global stocks would be up 35 percent from 1996/97, but still below the 1994/95 peak of 27.2 million tons. World soybean production in 1997/98 is expected to increase by 11 percent (147.1 million tons), rapeseed production more than 9 percent (33.5 million tons), and sunflowerseed production more than 2 percent (24.2 million). The only significant reduction in global output for any oilseed in 1997/98 is for peanuts, which are expected down 4 percent to 25.6 million tons. In South America, record soybean crops are forecast for all the countries in the region. Brazilian soybean production for 1997/98 is projected to increase to 28 million tons, up by more than 5 percent from 1996/97, largely due to a strong expansion in area planted. Strong producer income from the previous harvest and greater access to credit markets will fuel the expansion. In Argentina, soybean production is expected to increase to a record 13.9 million tons as yields recover from this season's prolonged drought. Exports are forecast to rebound to only 1.5 million tons as the recently increased crushing capacity absorbs most of the production. China's 1997/98 soybean production is expected to remain unchanged from this year, at 13.5 million tons. Soybean area did not expand as much as expected and drought in the north China plain will prevent any year-to-year growth in yields. This level of production, however, is not expected to be enough to cover the booming demand for soybean meal and vegetable oil, increasing soybean imports to a record 2.7 million tons. China traditionally has been an exporter of soybeans, supplying nearby Asian markets, but in just a few years has become a net importer of soybeans and soybean meal. Global rapeseed production for 1997/98 is expected to reach 33.4 million tons, up more than 9 percent from 1996/97 as crops in Canada and the European Union show a strong recovery. Poland's rapeseed crop was hurt again this year by substantial winterkill, but recent flooding is not expected to have much impact. Global peanut production for 1997/98 is expected at 25.45 million tons, down from 26.6 million in 1996/97. The main reason for the reduction is that China, the world's largest producer, is expected to harvest only 9 million tons, down from 10.1 million in 1996/97. The growing areas of northern and central China are experiencing the worst drought in the last 40 years. In Shangdong province, the crop damage is quite extensive. India, the second largest producing country, is expected to maintain year-earlier production levels in 1997/98 at around 8.0 million tons. Minor increases in peanut production are expected in Argentina due to a rebound in yields from the drought-reduced levels of 1996/97. World Consumption of Oilmeals and Vegetable Oils Rises in 1997/98 World use of oilmeals in 1997/98 is forecast at 152 million tons, up 2.8 percent from this year. Global soybean meal consumption is forecast to reach 95.5 million tons, up more than 4 percent from 1996/97, and the second consecutive annual increase. Rising global use is attributed to sustained growth in the demand for soybean meal in Asia (particularly in China), Mexico, and the United States. China's soybean meal demand for 1997/98 is expected to reach 10.9 million tons, more than 9 percent above 1996/97. This level would increase soybean meal imports to a record 3.4 million tons, more than 15 percent higher than 1996/97. In the United States, domestic demand for soybean meal is expected to rise to 25.5 million metric tons in 1997/98, due to forecast higher hog numbers, as well as improved profits in the poultry industry. The continuous global growth in the use of oilmeals for 1997/98 is expected to boost U.S. soybean meal exports to a record 6.6 million metric tons, up 8 percent from 1996/97. Brazil is expected to maintain its position as the single largest exporter of soybean meal with 11.0 million tons, while Argentina is expected to export 8.9 million tons. World use of vegetable oils is expected to increase in 1997/98 to 75.4 million tons, up more than 3 percent from this year. Global trade is also expected to increase to 27.4 million tons, up 450,000 from 1996/97. Chinese soybean oil imports are forecast up this month to 1.7 million tons. U.S. soybean oil exports are expected to reach 975,000 tons. The next Oil Crops Outlook is scheduled for 4:00 pm ET Monday, September 15. 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 residual stocks ------------------------------------------------------------------------------ -------------------------- Million bushels--------------------------- 1995/96 335 4 2,177 2,516 1,370 851 112 2,333 183 1996/97 1/ 183 10 2,382 2,576 1,425 880 136 2,451 125 1997/98 2/ 125 5 2,744 2,874 1,485 945 139 2,569 305 ------------------------------------------------------------------------------ 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 1/ ports stocks ------------------------------------------------------------------------------ ---------------------------1,000 short tons-------------------------- 1995/96 223 32,527 32,825 26,611 6,002 32,613 212 1996/97 2/ 212 33,688 34,000 27,100 6,700 33,800 200 1997/98 3/ 200 35,325 35,650 28,100 7,300 35,400 250 ------------------------------------------------------------------------------ 1/ Includes imports. 2/ Estimated. 3/ Forecast. Table 3--Soybean oil: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ---------------------------- ------------------------------------ Year begin. Beg. Produc- Total Domestic Ex- Total End. Oct. 1 stocks tion 1/ ports stocks ------------------------------------------------------------------------------ -------------------------- Million pounds--------------------------- 1995/96 1,137 15,240 16,472 13,465 992 14,457 2,015 1996/97 2/ 2,015 15,460 17,525 14,050 1,850 15,900 1,625 1997/98 3/ 1,625 16,560 18,245 14,300 2,150 16,450 1,795 ------------------------------------------------------------------------------ 1/ Includes imports. 2/ Estimated. 3/ Forecast. Table 4--Oilseeds prices received by farmers, U.S. -------------------------------------------------------- Marketing Soy- Cotton- Sun- year beans seed flowers Peanuts Flaxseed -------------------------------------------------------- $/bu. $/ton $/cwt Cents/lb $/bu. 1991/92 5.58 71.00 8.69 28.30 3.52 1992/93 5.56 97.50 9.74 30.00 4.12 1993/94 6.40 113.00 12.90 30.40 4.25 1994/95 5.48 101.00 10.70 28.90 4.63 1995/961 6.77 106.00 11.50 29.30 5.25 1996/971 7.38 125.00 11.85 28.50 6.25 1995/96 September 5.98 101.00 11.00 29.70 5.11 October 6.16 99.00 11.00 28.60 5.11 November 6.40 114.00 10.80 29.50 5.17 December 6.76 116.00 10.70 28.60 5.03 January 6.78 106.00 11.10 29.80 5.27 February 7.00 117.00 11.50 NA 5.18 March 7.00 NA 12.10 NA 5.28 April 7.43 NA 12.70 NA 5.31 May 7.69 NA 13.50 NA 6.03 June 7.41 NA 14.30 NA 5.88 July 7.62 NA 13.70 NA 6.19 August 7.82 118.00 12.70 NA 6.15 1996/97 September 7.79 129.00 12.00 27.70 5.89 October 6.95 123.00 11.70 25.80 6.49 November 6.90 117.00 11.90 25.00 6.50 December 6.91 136.00 11.60 25.60 6.79 January 7.13 132.00 11.80 24.30 6.42 February 7.38 128.00 12.20 NA 6.30 March 7.97 NA 12.20 NA 6.66 April 8.23 NA 12.40 NA 6.49 May 8.40 NA 12.10 NA 6.50 June 8.16 NA 11.90 NA 6.03 July1 7.72 NA 11.50 NA 5.48 -------------------------------------------------------- 1 Preliminary. Table 5--Vegetable oil prices --------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn year oil2 oil3 oil4 oil5 oil6 --------------------------------------------------- Cents/lb. 1991/92 19.10 22.83 21.63 27.30 25.82 1992/93 21.40 30.07 25.37 27.40 20.90 1993/94 27.00 30.30 31.08 43.20 26.38 1994/95 27.51 29.23 28.10 44.30 26.47 1995/96 24.70 26.53 25.40 40.30 25.55 1996/971 22.60 25.25 22.60 40.60 24.00 1995/96 October 26.57 27.61 27.49 42.50 26.05 November 25.42 26.27 26.25 41.63 25.54 December 24.76 26.10 25.98 39.20 24.99 January 23.52 24.45 24.65 37.25 24.52 February 23.49 24.35 24.23 36.00 24.30 March 23.60 24.25 24.28 36.60 24.34 April 25.70 26.77 25.63 39.25 26.60 May 26.50 28.46 26.38 42.80 27.98 June 24.95 27.94 25.72 43.00 25.66 July 24.10 28.25 24.58 43.00 25.46 August 23.99 27.81 24.90 42.60 24.33 September 23.92 26.13 24.90 40.80 24.14 1996/97 October 21.95 24.55 22.80 41.50 22.67 November 21.80 24.28 22.50 39.20 22.96 December 21.60 24.29 22.30 40.75 22.27 January 22.45 25.21 22.65 43.50 23.39 February 22.41 25.44 23.07 43.88 23.97 March 23.29 26.18 22.70 44.75 24.38 April 23.17 25.10 23.50 45.00 24.60 May 23.68 25.19 23.20 46.20 24.66 June 22.97 25.01 22.33 47.88 24.82 July1 21.89 26.53 21.73 48.06 25.34 --------------------------------------------------- 1 Preliminary 2 Decatur 3 PBSY Greenwood MS 4 Minneapolis 5 Southeast mills 6 Chicago Table 6--Oilseed meal prices --------------------------------------------------- Soy- Cotton Sun- Marketing bean seed flower Peanut Linseed year meal2 meal3 meal4 meal5 meal4 --------------------------------------------------- $/Short ton 1991/92 189.20 140.50 76.80 154.50 125.25 1992/93 193.75 161.78 89.00 172.90 133.60 1993/94 192.86 164.30 94.00 194.91 139.55 1994/95 162.55 112.02 62.70 128.94 95.85 1995/96 235.90 190.74 123.75 190.92 159.05 1996/971 265.00 193.00 117.50 235.00 170.00 1995/96 October 193.90 153.25 82.88 132.50 131.00 November 204.10 165.00 99.00 175.00 151.67 December 223.60 185.80 122.50 204.00 143.75 January 232.00 208.80 135.00 220.00 142.00 February 228.30 202.80 130.00 215.00 143.75 March 226.57 195.60 123.50 210.00 155.00 April 249.30 220.00 133.00 210.00 174.00 May 244.30 191.25 137.00 212.00 177.00 June 238.80 192.20 135.00 210.00 178.75 July 252.50 201.56 135.00 224.25 174.00 August 261.20 193.10 126.25 227.00 170.00 September 276.40 193.10 125.60 192.80 167.50 1996/97 October 248.50 183.25 116.00 170.00 175.00 November 251.50 196.60 105.00 146.13 166.25 December 250.60 224.50 113.35 172.67 171.65 January 249.20 207.20 125.00 221.00 165.00 February 262.40 183.75 137.50 228.13 156.25 March 280.50 189.10 121.70 225.00 163.30 April 288.60 197.25 124.00 233.75 168.00 May 306.40 193.75 120.00 222.00 188.30 June 287.90 188.44 106.25 235.00 171.25 July1 273.60 172.19 84.00 220.00 124.00 --------------------------------------------------- 1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills END_OF-FILE