OIL CROPS OUTLOOK September 13, 1999 September 1999, OCS-0999 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 the USDA Order Desk. For the 1999 issue, call 1-800-999-6779 (703-605-6220) and ask for stock #ERS-OCS-1999, $21. ------------------------------------------------------------------------------ Hot, Dry Summer Clips U.S. Soybean Yields Like last year, weeks of record-setting summer heat and widening drought have steadily worsened U.S. soybean crop conditions. Since mid-July, the Mid-Atlantic, Delta, and the Southeast regions have suffered from little rain. The difference in 1999 is the inclusion of the Ohio River Valley among the most affected areas. Late in August, a tropical storm alleviated dryness in eastern and southeastern parts of the country. This moisture may have helped pod filling, but poor pod counts and the advanced soybean development limited yield improvement. Soybean harvesting will soon begin in most locations. As of September 5, just 46 percent of soybeans were rated in good to excellent condition, compared with 63 percent a year earlier. On the other hand, conditions in the northern and western growing regions have been good. High yields and large acreage will yield record or near record harvests for Iowa, Nebraska, Minnesota, Wisconsin, Michigan, North Dakota, and South Dakota. In September, USDA reduced its 1999 U.S. average soybean yield forecast from 39.2 bushels to 37.9 bushels per acre. A harvested area of 73.3 million acres would generate a crop of 2,778 million bushels, down 91 million from last month's estimate, but still above last year's record. Domestic crush for 1999/2000 was revised down 10 million bushels from the August forecast to 1,635 million bushels. This was mainly because of a weaker outlook for soybean meal exports, which declined to 7.75 million short tons. While a higher price forecast also cut 20 million bushels from this month's U.S. 1999/2000 soybean export forecast, lower prices than last year and a strengthening of Asian currencies relative to the U.S. dollar should still support a relatively high trade volume near 895 million bushels. The 1998/99 soybean export forecast was increased 15 million bushels to 805 million this month. The rapid early pace of Brazil's exports this year and recent brisk buying by China and Mexico allowed U.S. export shipments to pick up sooner and finish the season strongly. August soybean inspections rebounded to 64 million bushels from 37 million in July. USDA's export inspections data show 1998/99 U.S. soybean exports of 832 million bushels. But it is not unusual for soybean export inspections to exceed exports reported by the Census Bureau (which are the official data forecast by USDA) by 15-20 million bushels at the end of the crop year. Through June, USDA export inspections of soybeans were 731 million bushels, compared to Census exports of 709.5 million. Differences between the USDA inspections and Census export data can arise because of time lags in processing shippers' export declarations or because of misclassifications. With the 1998/99 domestic crush raised 5 million bushels to 1,590 million, ending stocks of soybeans are estimated at 365 million bushels. The smaller estimates of carryin and 1999 production drop prospective 1999/2000 ending stocks to 460 million bushels. Gradual tightening of supplies has pushed the central Illinois soybean price to its highest level in 7 months, although it remains below $5.00 per bushel. The 1999/2000 national average soybean price was forecast up from $4.10-$4.90 per bushel last month to $4.40-$5.20. However, a price rally has no material benefit on U.S. farm income from soybeans until market prices rise above the $5.26 loan rate. Within the current range, farmers exchange higher market returns for a smaller loan deficiency payment, which covers the deficit between market prices and the loan rate. Expected 1998/99 U.S. soybean meal imports were raised to 100,000 tons this month based on a first shipment from Brazil in June. Logistical problems of southeastern railroads have raised the freight costs of North Carolina feed producers, moving them to favor meal imports over supplies from Midwestern processors at this time. These circumstances are expected to be temporary, and 1999/2000 soybean meal imports are forecast to return to a more typical 50,000 tons. Large global supplies of vegetable oils will continue to constrain U.S. soybean oil exports to around 2,000 million pounds. Even with attractive prices, domestic soybean oil use is expected to grow only slightly to 15,800 million pounds. U.S. soybean oil prices are projected to rise slightly from the August forecast to 16.0-19.0 cents per pound. The reduction in U.S. supplies is expected to moderate the accumulation of soybean oil stocks to 2,365 million pounds, down from last month's forecast of 2,525 million. Bumper Rapeseed Harvests Saturate Global Market For 1999/2000, global rapeseed production is forecast at a record 41.8 million metric tons, 5 percent above last month's forecast and 14 percent above the 1998/99 peak. While an 8-percent expansion in harvested area accounts for much of the trend, excellent growing conditions worldwide have also swelled yields. Rapeseed production in Germany and France was estimated higher to 4.45 million and 4.0 million tons, respectively. The two countries alone typically account for three-fourths of EU rapeseed output. A wet spring considerably delayed Canadian rapeseed planting, which was compensated by a large acreage seeded with better short season varieties and ample moisture. Warm summer temperatures rapidly matured the crop and diminished the threat from killing frosts. Many producers are now cutting the crop into swaths for harvest. Although some late planted fields in eastern Saskatchewan and Manitoba need another 2 weeks of frost-free weather, a frost would now affect the crop's quality more than its size. These developments are now expected to yield a record Canadian rapeseed harvest of 8.3 million tons. But stronger competition from European and Australian producers is expected to slow Canadian exports to about 2.8 million tons in 1999/2000. Even assuming very good domestic crush and rapeseed exports to China and Japan, Canadian ending stocks are likely to soar from 0.6 million in 1998/99 to a record 1.5 million tons. The Canadian soybean crop is also in good shape, so the production estimate was revised up near last year's 2.7 million tons. Record Australian rapeseed production was also forecast for 1999/2000, to 2.1 million tons from 1.7 million in 1998/99. Harvested area has risen to 1.7 million hectares, which is more than double the amount just 2 years ago. All four major producing states have expanded plantings, with the fastest growth in Western Australia. Crop conditions were generally quite good following planting, with soil moisture levels setting the stage for high yields. As in the current year, China is again likely to import massive amounts of rapeseed for crushing. Despite a much better domestic harvest, rapeseed imports for 1999/2000 are projected at 2.0 million tons, versus 2.1 million in 1998/99. Firmer global soybean prices and greater rapeseed oil consumption will moderate Chinese import requirements for soybean meal and soybean oil. Thus, China's 1999/2000 imports of soybean meal and soybean oil are forecast lower to 1.7 million and 1.2 million tons, respectively. For 1998/99, Chinese soybean imports were forecast up to 3.7 million tons this month based on strong summer purchases. However, this strength was largely at the expense of weak soybean meal imports, which were reduced to 1.5 million tons. Likewise, weak Japanese crush margins for soybeans are favoring proportionately greater imports of rapeseed and soybean meal. Japan's 1999/2000 soybean imports were forecast lower to 4.6 million tons, slowing from 4.65 million in 1998/99. In India, reports indicate that low prices and dry planting conditions discouraged farmers from planting as many soybeans this year. Although the monsoon season started off well in June, the early rains faltered before planting was complete. Irrigation is seldom used for soybeans in India. USDA reduced its forecast of India's 1999 soybean area to 6.0 million hectares, dropping expected production to 5.7 million tons. Smaller supplies available for crush cut projected Indian soybean meal exports to 2.7 million tons, compared to 3.1 million in 1998/99. Since the bulk of India's peanut and cottonseed production is crushed, smaller expected harvests of these oilseeds accentuate the loss of Indian soybean meal and oil supplies. Based on dry weather in the major producing regions of western and southern India, the 1999 peanut harvest was forecast at 6.9 million tons, down 14 percent from the previous forecast and 1998's 7.45 million. Similarly, inopportune dryness cut the predicted 1999 cottonseed output 250,000 tons to 5.15 million. With the resulting decline in domestic vegetable oil production and abundant foreign supplies of oil, forecasts for Indian imports of palm, soybean, sunflowerseed, and rapeseed oils were raised to 2.45 million, 0.6 million, 0.3 million, and 0.2 million tons, respectively for 1999/2000. National elections are imminent, and government officials have so far deferred to consumer interests by denying appeals from farm and processor groups to limit vegetable oil imports with a higher tariff. Smaller U.S. and Indian crops strengthen the earlier price outlook, so Argentine soybean area next year is not expected to change much from this year's 7.5 million hectares. Therefore, this month's projection of Argentine soybean production increased 0.5 million tons to 17.5 million. Average soybean yields should decline next year because a likely expansion of winter wheat area, which would increase the proportion of double-cropped soybeans. Argentina's 1998/99 soybean harvest was also estimated higher this month, from 18.3 million tons to 19.0 million. Argentina's 1999/2000 exports of soybeans and soybean meal were projected higher to 2.5 million and 13.7 million tons, respectively. However, large global supplies of competing vegetable oils keep pressure on the market, so Argentine soybean oil exports are anticipated to stabilize near the 1998/99's 2.85 million tons. The summary of the Oil Crops Yearbook will be released October 22. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Friday, November 12, 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 4 2,757 2,961 1,590 805 201 2,596 365 1999/00 2/ 365 4 2,778 3,147 1,635 895 157 2,687 460 ------------------------------------------------------------------------------ 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 1998/99 2/ 218 100 37,677 37,950 30,745 6,950 37,650 300 1999/00 2/ 300 50 38,775 39,125 31,100 7,750 38,850 275 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 3--Soybean 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 1,520 60 18,143 19,724 15,264 3,077 18,341 1,382 1998/99 2/ 1,382 73 18,000 19,455 15,400 2,350 17,750 1,705 1999/00 2/ 1,705 65 18,395 20,165 15,800 2,000 17,800 2,365 ------------------------------------------------------------------------------ 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/ 563 200 5,365 6,128 2,719 60 2,951 5,735 393 1999/00 2/ 393 10 6,613 7,016 3,500 110 3,056 6,666 350 ------------------------------------------------------------------------------ 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 1,235 1,323 1,195 105 1,300 23 1999/00 2/ 23 0 1,575 1,598 1,460 95 1,555 43 ------------------------------------------------------------------------------ 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 38.0 880 997 830 102 932 65 1999/00 2/ 65 10.3 1,120 1,195 995 115 1,110 85 ------------------------------------------------------------------------------ 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/ 848 156 3,963 4,968 2,118 460 458 650 3,686 1,282 1999/00 2/ 1,282 165 3,850 5,297 2,170 700 327 800 3,997 1,300 ------------------------------------------------------------------------------ 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 4.51 NA 9.85 NA 4.87 June 4.44 NA 9.52 NA 4.37 July 4.20 NA 9.16 NA 4.40 August 1/ 4.25 70.00 8.88 NA 4.10 -------------------------------------------------------- 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 17.85 24.25 19.90 35.00 22.96 June 16.50 25.19 18.78 37.75 22.95 July 15.29 24.70 17.08 39.00 22.43 August 1/ 16.50 21.39 18.79 38.75 22.41 ------------------------------------------------------ 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 1997/98 185.30 144.00 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 83.00 May 133.20 108.75 70.00 93.75 80.60 June 139.10 114.50 57.00 100.00 80.00 July 132.73 115.85 62.50 100.00 75.00 August 1/ 141.70 100.65 60.00 105.00 71.00 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills. 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