OIL CROPS OUTLOOK September 13, 2000 September 2000, OCS-0900 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 2000 will be released on October 23, 2000. Yearbooks are available in print from ERS-NASS Order Desk. For the 2000 issue, call 1-800-999-6779 (703-605-6220) and ask for stock #ERS-OCS-2000, $21. -------------------------------------------------------------------------------- Heat Wave Shrinks a Promising Potential for Soybeans Within the boundaries of the traditional midwestern soybean-producing region, weather conditions were generally very good this year. Relatively mild summer temperatures and regular precipitation generated yields that neared or equaled records in Ohio, Michigan, Indiana, Minnesota, and Illinois. Drier conditions would be welcomed in some of these States, as currently wet soils are hindering the start of harvesting. However, on the western and southern edges of the soybean belt, soybeans have struggled through one of the hottest and driest Augusts of the last century. Soybean yield potential in Kansas, Nebraska, and the lower Mississippi River Valley deteriorated the most. Soil moisture was already considered short in most of these areas at the end of July, and rainfall ranged 25-75 percent of normal in August. Despite indications of high pod counts, stress on soybean plants at this stage can cause pods to abort or fill with undersized beans. Plants in some fields were reportedly killed prematurely by the extreme heat and did not fully mature. Next month, the National Agricultural Statistics Service will conduct a special survey to update harvested acreage estimates in these States affected by drought. Soybean crop conditions, which were rated 65 percent good to excellent as of August 13, fell to 52 percent by September 10. Thus, the national average soybean yield dropped from last month's estimate of 40.7 bushels per acre to 39.5 bushels. Although the U.S. soybean harvest is still a record and well above last year, the September estimate of 2000 production is down 89 million bushels from August to 2,900 million bushels. One benefit from the current low moisture is that fall harvest progress, which will become very active within the next 2 weeks, should be accelerated. After steadily declining for months, domestic soybean crushing accelerated in July. Firming prices and stronger exports of soybean oil and soybean meal were largely responsible for the improvement in crushing margins. The estimate of 1999/2000 crush was raised to 1,580 million bushels this month, while the 2000/01 forecast edged up 5 million bushels to 1,630 million. The strong finish for U.S. soybean exports helped 1999/2000 trade reach an estimated 980 million bushels. The top foreign destination for the year was China, with shipments of 191 million bushels. Although higher soybean prices and a stronger U.S. exchange rate should subsequently cool foreign demand, 2000/01 exports are forecast at 1,000 million bushels, which would surpass last season's record. Foreign purchases have picked up in recent weeks, as prospects of a smaller U.S. harvest have raised soybean prices. Current U.S. export sales of the new crop (about 17 percent of the forecast season total) are 25 percent ahead of the pace of a year ago. Initial sales to Mexico and Indonesia have been particularly brisk. Smaller carryin stocks, a lower soybean crop, and steady consumption growth are predicted to sharply cut 2000/01 ending stocks from the previous forecast. Ending stocks would still climb year to year from 265 million bushels to 365 million, but the increase is much less than first anticipated. The smaller soybean and corn harvests and strong wheat demand should ease the difficulty of finding adequate storage space this fall. The tightening of old crop supplies and declining overall condition of the new crop boosted central Illinois cash soybean prices from a low of $4.30 per bushel in early August. Prices rallied to nearly $4.80 per bushel in early September and are now the highest since mid-June. This month's forecast of the 2000/01 average farm price is up 40 cents to $4.35-$5.15 per bushel. U.S. soybean oil exports revived somewhat in June. The U.S. Department of Agriculture revised its estimate of 1999/2000 exports from 1,200 million pounds to 1,375 million. U.S. shipments to Peru, South Korea, Mexico, and Kenya were greatest during the month. Exports of soybean meal in 1999/2000 have also about matched the 1998/99 pace. Although the 2000/01 forecast was unchanged this month, exports for the current season are estimated at 7.1 million short tons, up from 7.0 million in August. A relatively weak crushing pace in Brazil supported U.S. soybean meal exports last summer. Domestic disappearance of soybean meal was projected to grow from 30.6 million short tons in 1999/2000 to 31.4 million, a 2.6-percent increase. Soybean meal prices are forecast at $155-$180 per short ton, little changed from the $167 in 1999/2000. Yet, livestock producer returns are expected to be slightly higher. While hog production should recover somewhat next year, most of the growth in soybean meal consumption is associated with an anticipated 4-percent expansion in poultry output. In addition, consumption of other oilseed meals (mainly sunflower meal) is projected down 4 percent for 2000/01. Domestic feeding of wheat, which can partly substitute for protein meal needs, has also been trending lower. Low corn prices will enhance the use of soybean meal in U.S. livestock rations. Drought Cuts U.S. Cottonseed and Peanut Production Soybeans were not the only oilseed to feel the effects of late summer heat and drought. Dryland cotton fields in Texas and the Delta also sharply deteriorated in August because of adverse weather. The percentage of U.S. cotton acreage rated very poor to poor increased to 34 percent last week. Cottonseed production for crop year 2000 is estimated at 6,878 million pounds, down 331 million pounds from the August forecast. A smaller cottonseed supply moderates the expected gains in demand. The growth in cottonseed feeding should slow to 3.5 million tons, which is 3 percent above 1999/2000 feed use. Lackluster cottonseed oil demand should limit the expansion in domestic crushing in 2000/01 to 3.15 million tons, which is 2 percent higher than the previous marketing year. Cottonseed exports are forecast at 180,000 tons, slightly below last year. U.S. exports of cottonseed have been mostly limited to Mexico. Prices for cottonseed may rise minimally from last year's average of $90 per ton. Like last year, Southern peanut farmers have again been impacted by dry weather. As of September 10, 32 percent of peanuts were rated in very poor to poor condition. The worsening conditions from a month ago were largely in Texas and Oklahoma, as Southeastern farms had been stressed earlier. Only Virginia and North Carolina peanuts have escaped relatively unharmed from drought. The U.S. peanut harvest is forecast down 1 percent from last month's forecast to 3,753 million pounds. The tightening of supplies is expected to shave total peanut demand from 4,161 million pounds in 1999/2000 to 4,116 million in 2000/01. Domestic food use of peanuts is forecast to increase from 2,232 million pounds to 2,295 million. Peanut farm prices this season are expected to modestly rise from the 1999/2000 average of 25.6 cents per pound. Lower Forecasts of U.S. and Indian Harvests Tighten Global Soybean Supplies World production of soybeans in 2000/01 is estimated lower to 166.6 million metric tons, although it would still be 7 percent larger than in 1999/2000. Aside from the smaller U.S. crop, Indian soybean production was also forecast down this month to 5.5 million tons from the previous 5.7 million. The reduction was based on a lower area estimate, which at 5.7 million hectares is only slightly above the 1999 area. A weak start to the monsoon delayed seeding by farmers and curtailed the area sown. The monsoon rains markedly strengthened in July and (despite less rain during August) average yields are still anticipated. The reduction in crop size is seen slightly reducing India's 2000/01 soybean crush. Therefore, growth in domestic consumption of soybean meal would moderate with no change in the forecast of Indian exports at 2.5 million tons. World sunflowerseed production is also seen lower this month, declining to 24.4 million tons compared with 26.3 million in 1999. Smaller harvests are forecast for Turkey, Romania, and Bulgaria. Each country has suffered through extremely dry conditions this year, and sunflowerseed yields are expected to drop near record lows. Turkey is anticipated to cover part of its deficit by increasing imports from Russia. Both Romania and Bulgaria are seen reducing sunflowerseed exports and limiting domestic consumption of sunflowerseed products. The summary of the Oil Crops Yearbook will be released Monday, October 23, 2000. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Monday, November 13, 2000. The report may be accessed at the ERS website at http://www.ers.usda.gov or via http://usda.mannlib.cornell.edu/. Information Contacts: Mark Ash--Soybeans, minor oilseeds, oils (202) 694-5289 mash@ers.usda.gov Robert Skinner--Cottonseed, peanuts (202) 694-5313 skinner@ers.usda.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--------------------------- 1998/99 200 3 2,741 2,944 1,590 801 205 2,596 348 1999/00 1/ 348 3 2,643 2,994 1,580 980 170 2,715 265 2000/01 2/ 265 3 2,900 3,167 1,630 1,000 172 2,800 365 ------------------------------------------------------------------------------ 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-------------------------- 1998/99 218 100 37,792 38,110 30,662 7,117 37,780 330 1999/00 1/ 330 50 37,595 37,975 30,600 7,100 37,700 275 2000/01 2/ 275 65 38,735 39,075 31,400 7,400 38,800 275 ------------------------------------------------------------------------------ 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--------------------------- 1998/99 1,382 82 18,081 19,546 15,655 2,372 18,027 1,520 1999/00 1/ 1,520 80 17,855 19,455 16,200 1,375 17,575 1,880 2000/01 2/ 1,880 90 18,500 20,470 16,650 1,800 18,450 2,020 ------------------------------------------------------------------------------ 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-------------------------- 1998/99 563 207 5,365 6,135 2,719 68 2,955 5,742 393 1999/00 1/ 393 195 6,354 6,942 3,079 190 3,399 6,668 274 2000/01 2/ 274 53 6,878 7,205 3,150 180 3,500 6,830 375 ------------------------------------------------------------------------------ 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--------------------------- 1998/99 88 0 1,232 1,320 1,175 121 1,295 24 1999/00 1/ 24 0 1,430 1,454 1,320 105 1,425 29 2000/01 2/ 29 0 1,420 1,449 1,320 100 1,420 29 ------------------------------------------------------------------------------ 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--------------------------- 1998/99 79 48.2 832 958 772 111 882 76 1999/00 1/ 76 19.0 985 1,080 875 130 1,005 75 2000/01 2/ 75 10.3 1,010 1,095 885 130 1,015 80 ------------------------------------------------------------------------------ 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--------------------------- 1998/99 848 155 3,963 4,967 2,153 460 401 562 3,575 1,392 1999/00 1/ 1,392 169 3,829 5,390 2,232 713 496 720 4,161 1,229 2000/01 2/ 1,229 169 3,753 5,151 2,295 710 391 720 4,116 1,035 ------------------------------------------------------------------------------ 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 1998/99 4.93 129.00 10.60 28.40 5.05 1999/00 1/ 4.65 90.00 7.45 25.60 3.80 1998/99 September 5.25 120.00 11.50 29.90 5.09 October 5.18 120.00 10.80 29.00 4.87 November 5.39 133.00 10.70 24.60 4.97 December 5.37 138.00 11.00 27.20 5.00 January 5.32 139.00 11.50 NA 5.05 February 4.80 136.00 12.00 NA 5.05 March 4.61 NA 10.80 NA 4.94 April 4.63 NA 9.62 NA 4.93 May 4.50 NA 9.80 NA 4.89 June 4.44 NA 9.54 NA 4.38 July 4.19 NA 9.09 NA 4.40 August 4.39 70.00 8.28 NA 3.86 1999/2000 September 4.57 72.00 8.41 27.00 4.00 October 4.47 89.00 6.77 25.40 3.76 November 4.45 94.00 6.85 23.90 3.66 December 4.44 99.00 7.08 21.60 3.61 January 4.62 101.00 7.28 14.60 3.75 February 4.79 108.00 8.77 NA 3.39 March 4.91 NA 8.52 NA 3.70 April 5.00 NA 7.98 NA 3.65 May 5.19 NA 7.79 NA 3.75 June 4.92 NA 8.17 NA 3.64 July 4.53 NA 8.08 NA 3.25 August 1/ 4.38 78.00 7.73 NA 3.18 -------------------------------------------------------- 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 1998/99 19.90 27.32 20.10 39.74 25.30 1999/00 1/ 15.70 21.75 16.70 36.00 18.00 1998/99 October 25.20 33.99 NA 45.40 29.46 November 25.20 34.16 NA 45.00 29.65 December 24.00 33.40 26.70 44.25 29.88 January 22.90 31.72 23.40 44.00 29.15 February 20.00 28.21 19.86 39.75 26.58 March 19.50 26.27 19.10 34.75 23.01 April 18.80 24.39 19.10 35.20 23.08 May 17.85 24.25 19.90 35.00 22.96 June 16.50 25.19 18.80 37.75 22.95 July 15.30 24.70 17.10 39.00 22.43 August 16.50 21.39 18.75 38.75 22.41 September 16.80 20.22 18.75 38.00 22.08 1999/2000 October 16.08 20.15 17.78 40.40 21.97 November 15.63 19.69 17.91 41.00 21.96 December 15.30 21.25 17.60 35.40 21.68 January 15.63 21.98 17.91 33.00 20.81 February 15.09 22.65 15.53 32.50 20.06 March 16.21 23.70 17.31 31.60 19.28 April 17.52 24.57 18.07 33.00 18.32 May 16.75 22.97 16.93 36.25 16.63 June 15.65 21.54 15.59 36.00 14.57 July 14.70 21.03 14.68 35.63 13.55 August 1/ 14.34 20.17 14.61 35.00 13.03 ------------------------------------------------------ 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 84.20 209.60 117.54 1998/99 138.50 109.55 65.20 104.94 84.49 1999/00 1/ 167.00 125.00 76.00 108.00 94.50 1998/99 October 135.70 106.50 50.00 161.00 83.75 November 144.50 107.90 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 133.20 108.75 70.00 93.75 80.60 June 139.10 114.50 57.00 100.00 80.00 July 132.70 115.00 62.50 100.00 75.00 August 141.70 100.65 60.00 105.00 71.25 September 150.65 111.92 61.25 102.50 80.00 1999/2000 October 153.57 111.83 63.75 98.00 89.38 November 154.70 112.00 65.00 103.00 119.50 December 154.00 124.20 68.10 103.00 105.00 January 163.41 126.88 73.75 104.00 91.75 February 170.85 130.50 70.20 104.75 92.60 March 175.50 129.38 77.50 110.00 108.75 April 177.53 125.00 78.35 115.00 111.00 May 189.34 123.25 70.20 115.00 101.00 June 177.45 130.63 87.50 119.60 106.25 July 163.38 131.25 87.50 118.00 115.15 August 1/ 157.48 131.00 78.20 118.00 102.20 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills END_OF_FILE