OIL CROPS OUTLOOK June 14, 1999 June 1999, OCS-0699 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- OIL CROPS OUTLOOK is issued 11 times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. Electronic release only; no published copies are available. OIL CROPS OUTLOOK is supplemented by an annual OIL CROPS YEARBOOK. The yearbook summary for 1999 will be released on October 22, 1999. Yearbooks are available in print from ERS-NASS Order Desk. For the 1999 issue, call 1-800-999-6779 (703-605-6220) and ask for stock #ERS-OCS-1999, $21. --------------------------------------------------------------------------- U.S. Soybean Planting Advances Despite a Wet Spring Weather in the eastern Corn Belt was generally dry in May, aiding planting progress and crop emergence. By the first week of June, U.S. producers had planted 84 percent of soybeans, compared to the 5-year average of 71 percent. Conversely, in the western Corn Belt, farmers struggled more to get crops planted in between rain events in May, but had mostly caught up by month's end. Except in the Southeast, current soil conditions indicate ample moisture for establishing good stands of soybeans. The same weather patterns have affected other oilseeds as well, with excess moisture in North Dakota slowing sunflower and canola planting. Difficulties in planting spring wheat may further expand acreage planted to minor oilseeds. Dryness in Georgia is deteriorating the early condition of peanuts. Within the next 3 months, 9-month loans for about 200 million bushels of soybeans will mature. In the absence of significant weather problems this summer, the lapse of these loans will exert even greater pressure on near term cash prices as farmers market these remaining supplies. The 1998/99 average farm price for soybeans is expected to slide to $5.00 per bushel. Subsequent weather will determine whether soybean prices have yet found a bottom. If normal weather prevails, 1999/2000 prices are projected at $3.95-$4.75 per bushel. Low U.S. prices, the smaller South American harvests and accelerated export pace compared to a year ago, and an improving world economy set the stage for a dynamic U.S. export performance next fall. American soybean exports are forecast to improve from 770 million bushels this year to 930 million in 1999/2000. Domestic soybean crushing has defied low margins lately by remaining at a relatively steady pace. Concessional sales of soybean meal to Russia helped sustain the U.S. market in May. But with Brazilian and Argentine crush reaching record highs, and Southeast Asian palm oil output soaring again, domestic processors may find their respite from intense competition temporary. EU imports of soybean meal have been very strong, but these are almost an exclusive market for South American processors right now. U.S. 1998/99 exports of soybean meal were forecast lower this month to 6.7 million short tons, but should rebound next year to around 8.2 million tons. Historically low prices have stabilized growth in domestic soybean meal disappearance, which is expected to total 30.1 million tons this year and slow to 30.7 million in 1999/2000. Export potential for U.S. soybean oil was downgraded for the current season because of increasing global competition from palm oil. Current export commitments are down one-third from the level of a year ago. Projected U.S. 1998/99 soybean oil exports were scaled back 150 million pounds to 2,300 million. The competition will carry over into the 1999/2000 marketing year, so U.S. exports were projected down from 2,300 million pounds to 2,000 million. Domestic disappearance should climb to 15,400 million pounds this season, and rise modestly to 15,750 million in 1999/2000. Total soybean oil demand would be just 50 million pounds higher in 1999/2000, swelling carryout stocks to nearly 2 billion pounds from 1.3 billion this year. The excess of soybean and soybean oil supplies will drive U.S. oil prices even lower, to 16.5-19.5 cents per pound, compared to the anticipated 1998/99 average of 20.25 cents. The central Illinois soybean oil price fell to an average 17.9 cents per pound in May, the lowest since 1987. Brisk South American Export Pace Develops Drier weather in the last 2-3 weeks has helped the Argentine soybean harvest to stagger toward completion. Despite a promising start, adverse late season weather lowered the estimate of Argentina's 1998/99 soybean production to 18.3 million metric tons from 18.5 million last month. This change would also trim Argentina's end of September soybean stocks to 6.2 million tons. The ill-timed rains have also been detrimental to cottonseed and peanut yields. Similar weather problems curtailed Paraguay's soybean harvest to 3.1 million tons, reducing the country's expected crush 100,000 tons to 0.5 million. Brazil's 1997/98 soybean crop was revised up 1 million tons this month to 32.5 million. The robust crushing rate this year suggested that there were more available supplies, either from the domestic harvest or from imports. To compensate for the change, Brazil's imports for 1997/98 and 1998/99 were cut back to a more typical level. The 1998/99 harvest forecast stayed unchanged at 31.0 million tons. But prospects for Brazilian soybean exports and crushing were diminished by expectations for larger Indian soybean meal trade. Projected Brazilian soybean and soybean meal exports for 1998/99 were cut to 9.5 million and 10.8 million tons, respectively. September 30 soybean stocks would creep higher to 5.5 million tons. India's soybean crop this year was adjusted up to 6.0 million tons from the previous forecast of 5.5 million. Consequently, larger Indian soybean meal exports of 3.1 million tons were expected and domestic consumption was raised even with last year's 1.2 million tons. Sluggish soybean meal imports continue to characterize China's market. A fundamental change in policy and a slowing in consumption by livestock have precipitated a sharp falloff in meal imports, from 4.2 million tons in 1997/98 to the current 1998/99 forecast of 2.5 million. Rebound in World Palm Oil Production Stimulates Surge in Demand While above last year, global 1998/99 soybean oil exports are forecast lower this month to 7.3 million tons based on a vigorous recovery in palm oil production. Projected 1998/99 Malaysian palm oil output was increased 0.4 million tons to 9.3 million, adding 0.3 million tons to exports (for a total of 7.8 million). The plunge in Malaysian palm oil prices since last December has snowballed with fears of importers defaulting or deferring new shipments. Likewise, Indonesian production gains and another reduction in the export tax on crude palm oil from 40 to 30 percent adds to the price pressures. A large portion of the gains in palm oil trade is seen going to India, where even small price shifts can cause a substantial change in consumption. Lower world prices, smaller estimates of domestic rapeseed oil and peanut oil supplies, and last August's reduction in oil import tariffs have favored Indian palm oil consumption. Indian palm oil imports were forecast up to a record 1.9 million tons. While domestic output of soybean oil has been robust, Indian imports are also doing well, with October-April trade at 248,000 tons, compared to zero last year. Indian consumption of all vegetable oils this year is expected up 17 percent from 1997/98. A pickup in U.S. palm oil buying also contributed to a higher 1998/99 import forecast to 130,000 metric tons, slightly above the 1997/98 total. Other major importers, including China, Pakistan, and Bangladesh, are expected to take advantage of lower palm oil prices and increase consumption and imports. China has been absent from this rally to date. The government is attempting to promote domestic oilseed crushing, and has delayed deciding import quotas for vegetable oils this year. The newly harvested rapeseed crop could extend this import lull for a bit longer. But when oil imports are eventually licensed, it is likely that relatively more palm oil will be bought. Pakistan reacted to falling vegetable oil prices by raising import duties by two-thirds on soybean oil and palm oil. This action is intended to raise government revenue and protect domestic oilseed producers and processors. As a result, Pakistan's 1998/99 soybean oil imports were expected to slow somewhat, reducing this month's forecast to 255,000 tons from 275,000 tons. The competition with palm oil trimmed the Bangladesh soybean oil import forecast to 300,000 tons, although this would still top last year's 260,000-ton import volume. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Tuesday, July 13, 1999. The report may be accessed at http://usda.mannlib.cornell.edu/ or via the ERS website at http://www.econ.ag.gov. Information Contacts: Mark Ash--Soybeans, minor oilseeds, oils (202) 694-5289 mash@econ.ag.gov Robert Skinner--Cottonseed, peanuts (202) 694-5313 skinner@econ.ag.gov 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 --------------------------- 1997/98 132 5 2,689 2,826 1,597 870 158 2,626 200 1998/99 2/ 200 6 2,757 2,963 1,560 770 203 2,533 430 1999/00 2/ 430 5 2,880 3,315 1,635 930 155 2,720 595 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 2--Soybean meal: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance -------------------------------- ------------------------------------ Year begin. Beg. Im- Produc- Total Domestic Ex- Total End.Oct. 1 stocks ports tion ports stocks --------------------------------------------------------------------------- ---------------------------1,000 short tons-------------------------- 1997/98 210 56 38,171 38,437 28,889 9,330 38,219 218 1998/992/ 218 50 36,807 37,075 30,100 6,700 36,800 275 1999/00 2/ 275 50 38,825 39,150 30,700 8,200 38,900 250 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 3--Soybean oil: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance ----------------------------- -------------------------------- Year begin. Beg. Im- Produc- Total Domestic Ex- Total EndOct. 1 stocks ports tion ports stocks --------------------------------------------------------------------------- -------------------------- Million pounds--------------------------- 1997/98 1,520 60 18,143 19,724 15,264 3,077 18,341 1,382 1998/99 2/1,382 63 17,550 18,995 15,400 2,300 17,700 1,295 1999/00 2/1,295 55 18,395 19,745 15,750 2,000 17,750 1,995 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 4--Cottonseed: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance -------------------------------- ------------------------------------ Year begin. Beg. Im- Produc- Total Crush Ex- Other Total End.Aug.1 stocks ports tion ports stocks -------------------------------------------------------------------------- -------------------------- 1,000 Short tons-------------------------- 1997/98 523 96 6,935 7,553 3,885 149 2,957 6,990 563 1998/99 2/563 155 5,497 6,215 2,800 65 3,100 5,965 250 1999/00 2/250 15 6,955 7,220 3,350 130 3,165 6,645 575 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 5--Cottonseed meal: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance -------------------------------- ----------------------------------- Year begin. Beg. Im- Produc- Total Domestic Ex- Total End. Oct. 1 stocks ports tion ports stocks --------------------------------------------------------------------------- -------------------------1,000 Short tons--------------------------- 1997/98 26 0 1,767 1,793 1,596 109 1,705 88 1998/99 2/ 88 0 1,260 1,348 1,280 45 1,325 23 1999/00 2/ 23 0 1,510 1,533 1,425 70 1,495 38 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 6--Cottonseed oil: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance ----------------------------- -------------------------------- Year begin. Beg. Im- Produc- Total Domestic Ex- Total End.Oct. 1 stocks ports tion ports stocks --------------------------------------------------------------------------- -------------------------- Million pounds--------------------------- 1997/98 66 0.1 1,223 1,289 1,003 208 1,211 79 1998/99 2/ 79 66.4 895 1,040 865 110 975 65 1999/00 2/ 65 10.3 1,070 1,145 950 125 1,075 70 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 7--Peanuts: U.S. supply and disappearance --------------------------------------------------------------------------- Supply Disappearance ------------------------- ---------------------------------------- Year begin. Beg. Im- Produc- Total Dom. Crush Seed& Ex- Total End.Oct. 1 stocks ports tion Food resid. ports stocks --------------------------------------------------------------------------- ----------------------- Million pounds--------------------------- 1997/98 795 141 3,539 4,475 2,099 544 303 681 3,627 848 1998/99 2/ 848 152 3,963 4,964 2,150 630 334 600 3,714 1,250 1999/00 2/1,250 165 3,770 5,185 2,180 830 326 750 4,085 1,100 --------------------------------------------------------------------------- 1/ Estimated. 2/ Forecast. Table 8--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 1995/96 6.72 106.00 11.50 29.30 5.19 1996/97 7.35 126.00 11.70 28.10 6.37 1997/98 6.47 121.00 11.60 28.30 5.81 1997/98 September 6.72 115.00 11.20 29.70 5.73 October 6.49 119.00 10.60 27.90 5.78 November 6.86 124.00 11.10 25.00 5.71 December 6.72 122.00 11.10 26.90 5.72 January 6.69 121.00 11.10 30.70 5.82 February 6.57 107.00 11.80 NA 6.27 March 6.40 NA 12.10 NA 6.26 April 6.26 NA 12.70 NA 6.23 May 6.26 NA 13.80 NA 6.33 June 6.16 NA 14.40 NA 6.17 July 6.14 NA 15.80 NA 6.17 August 5.43 113.00 14.40 NA 5.45 1998/99 September 5.25 113.00 11.40 26.80 5.09 October 5.18 120.00 10.70 26.30 4.86 November 5.40 133.00 10.50 21.50 4.97 December 5.37 138.00 10.80 24.00 5.01 January 5.32 139.00 11.40 25.50 5.06 February 4.80 141.00 12.20 NA 5.05 March 4.61 NA 10.70 NA 4.95 April 4.63 NA 9.44 NA 4.94 May 1/ 4.46 NA 9.51 NA 4.74 -------------------------------------------------------- 1/ Preliminary. NA = Not available. Table 9--Vegetable oil prices --------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn year oil 2/ oil 3/ oil 4/ oil 5/ oil 6/ --------------------------------------------------- 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 25.24 1996/97 22.50 25.58 22.64 43.70 24.05 1997/98 25.80 28.85 27.00 49.00 28.94 1997/98 October 24.31 28.47 24.51 49.63 25.20 November 25.73 29.11 26.41 51.00 26.25 December 25.08 26.78 26.36 51.25 26.28 January 25.09 27.69 25.75 51.60 26.04 February 26.51 29.37 25.91 51.00 27.31 March 27.09 30.46 26.51 51.00 28.50 April 28.10 32.47 28.50 50.00 30.93 May 28.28 33.13 31.06 47.20 33.20 June 25.83 30.22 28.40 45.50 32.82 July 24.88 29.40 NA 44.00 31.52 August 23.99 30.11 NA 43.75 29.93 September 25.13 33.26 NA 43.88 29.25 1998/99 October 25.21 33.99 NA 45.40 29.46 November 25.20 34.16 NA 45.00 29.65 December 23.99 33.40 26.70 44.25 29.88 January 22.88 31.72 23.41 44.00 29.15 February 19.96 28.21 19.86 39.75 26.58 March 18.54 26.27 19.11 34.75 23.01 April 18.78 24.39 19.60 35.20 23.08 May 1/ 17.85 24.25 19.90 35.00 22.96 ------------------------------------------------------ 1/ Preliminary 2/ Decatur 3/ PBSY Greenwood MS 4/ Minneapolis 5/ Southeast mills 6/ Chicago Table 10--Oilseed meal prices --------------------------------------------------- Soy- Cotton Sun- Marketing bean seed flower Peanut Linseed year meal 2/ meal 3/ meal 4/ meal 5/ meal 4/ --------------------------------------------------- $/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 1995/96 235.90 190.74 123.75 202.70 159.00 1996/97 262.00 192.00 110.60 232.00 158.75 1997/98 185.30 144.05 84.20 209.60 110.00 1997/98 October 229.30 189.10 96.90 210.00 140.60 November 245.30 189.10 88.10 210.00 161.25 December 222.50 190.50 100.00 210.00 150.50 January 202.85 153.10 90.00 210.00 130.00 February 192.75 139.10 75.87 210.00 121.25 March 174.20 128.70 72.60 210.00 116.25 April 162.50 116.25 64.90 210.00 102.50 May 160.00 105.00 66.90 210.00 96.25 June 168.55 126.00 88.35 210.00 100.00 July 183.40 145.65 97.50 210.00 117.50 August 146.25 130.30 85.00 207.50 101.00 September 135.80 115.60 NA 205.00 90.00 1998/99 October 135.70 106.50 50.00 161.00 83.75 November 144.45 107.90 50.00 100.00 92.50 December 146.40 119.75 80.90 103.75 102.50 January 138.80 110.60 77.50 105.00 95.00 February 132.30 101.25 73.75 102.50 87.25 March 133.00 106.90 70.00 91.25 83.00 April 134.50 110.90 70.00 94.50 82.50 May 1/ 133.20 108.75 67.50 93.75 80.60 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills END_OF_FILE