OIL CROPS OUTLOOK November 13, 2000 November 2000, OCS-1100 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. -------------------------------------------------------------------------------- Smaller Soybean Crop, Stronger Foreign Competition Trims U.S. Export Potential USDA reduced its November estimate of the 2000 soybean crop to 2,777 million bushels, down 46 million from the October estimate. In spite of less than ideal weather, the harvest is still the largest ever, exceeding the 1998/99 record by 36 million bushels. However, the expansion of acreage harvested was mainly responsible, as drought west of the Mississippi River curtailed the national average yield to 38.0 bushels per acre. Except for Michigan, progress of the 2000 soybean harvest was ahead of the usual pace in most areas. As of November 5, 95 percent of soybeans had been harvested. U.S. soybean exports this fall have not been quite as heavy as they were a year ago. Although Chinas soybean imports are forecast higher than last month, less demand by the European Union (EU) is also likely. Low EU grain prices and continuing weakness of the euro relative to the dollar should curtail soybean imports. Current U.S. export sales are running ahead of last years, but a repeat of the harvest delays that slowed South American exports (and boosted U.S. shipments) earlier this year is not anticipated. U.S. 2000/01 soybean exports are forecast down to 950 million bushels, compared with 973 million in 1999/2000. Much of the outlook for domestic soybean crushing depends on the demand for soybean meal. U.S. crushing margins have increased compared with a year ago. This is largely because several crushing mills were recently closed, which caused a 6-percent reduction in operating capacity. Thus, crushing volumes have eased and soybean meal prices have remained steady. However, the average price for soybean oil in October fell to 13.5 cents per pound, the lowest since early 1973. The continuing slide in soybean oil prices reduced its share of soybean crush value to 28 percent in September. The value share of soybean oil was as low as this 3 years ago, but reflected more on the very high price for soybean meal at the time. USDA lowered its forecast of 2000/01 domestic soybean crush from 1,615 million bushels last month to 1,600 million. So, in spite of a smaller soybean harvest, softer prospective demand only trims the 2000/01 ending stocks forecast to 350 million bushels from 365 million last month. Farm marketing has been relatively light so far, and the cash basis has strengthened somewhat versus soybean futures. One factor in the relatively slow sales is the brisk receipt of loan deficiency payments (LDPs). As of November 8, USDA had disbursed $945 million of LDPs on 1,018 million bushels from the 2000 soybean crop. Farmers have also placed 179 million bushels to date under the marketing assistance loan program. These receipts have provided farmers with enough cash flow so they may store soybeans that could benefit from any future price rally. A price increase could happen if adverse weather threatens the condition of the coming South American soybean crop. Corn prices have risen this fall, which would normally have a supportive effect on soybean prices. Despite these factors, the average soybean farm price slumped to $4.36 per bushel in October, which is typically the month when marketing is greatest. Whenever prices are below the loan rate (as they are now), the historically positive price correlation between soybeans and corn has been diminished by the availability of soybean LDPs and marketing loans. Larger world soybean supplies are seen moderating the 2000/01 U.S. farm price to $4.40-$5.00 per bushel, which would be little changed from last seasons average of $4.65. Prospects for weaker soybean meal demand by the EU and expanded supplies from Argentina and Brazil are expected to limit U.S. meal exports. The 2000/01 season is still very young, but current export commitments are down 27 percent from a year ago. USDA forecasts U.S. soybean meal exports to slip to 7.1 million short tons in 2000/01 versus 7.26 million in 1999/2000. Slow growth in domestic disappearance of soybean meal is forecast, rising from 30.5 million tons in 1999/2000 to 31.0 million this season. The November forecast of U.S. soybean oil exports for 2000/01 is also reduced from last month to 1,650 million pounds. Although the forecast represents a recovery from the estimated 1,375 million pounds exported in 1999/2000, larger expected crushing by Brazil, Argentina, and China should limit U.S. trade. Domestic soybean oil disappearance should continue to see steady growth, although at a slightly lower volume (16,450 million pounds) than forecast in October. Thus, it is likely that season ending stocks of soybean oil could exceed the very large beginning stocks of 2,001 million pounds. USDA forecasts the 2000/01 average soybean oil price at 14.0-17.0 cents per pound, implying only a minor deviation from the 1999/2000 average of 15.6 cents. Higher Soybean Area and Yield Boost South American Crop Potential USDA slightly raised its 2000/01 forecast of world soybean production this month to 166.4 million metric tons, which is a 5.5-percent increase over last year. World trade is still seen declining modestly, with export shares of Argentina and Brazil expanding at the expense of the United States. In Brazil, a shortage of corn supplies has strengthened prices relative to soybeans, encouraging substantial interest this season in domestic corn production. The main locations where growing corn is feasible, including Rio Grande do Sul and Parana, are in south Brazil. Cotton area is also likely to increase in Parana and Mato Grosso. But a continuing expansion of soybean area in the western and northern states will offset the contraction in the south. Soybean harvested area in 2000/01 is forecast at 13.4 million hectares, virtually the same as 1999/2000. Approximately 35 percent of Brazils intended soybean area had been sown by November 10, and a majority should be completed by the end of the month. The dry weather that cut southern Brazil soybean yields earlier this year is expected to return to a more normal pattern. Recent rains have created very favorable soil moisture conditions for planting in most areas. A shift of soybean area toward the higher-yielding states in the west and north is likely to enhance the national average yield. In addition, the rally in soybean prices from January through May considerably improved the financing of Brazilian farms from a year ago. Consequently, application of production inputs is reported much greater this year. Based on higher yields, the forecast of Brazils 2000/01 soybean harvest was raised this month to a record 34.5 million tons. Yields for Brazils 1999/2000 soybean crop were also indicated higher than previously thought, lifting output to 32.5 million tons. Despite a reduction in Brazils southern soybean area, the anticipated recovery in yields will aid the crushing industry, as nearly 60 percent of processing capacity is concentrated in the three southernmost states. Brazils 2000/01 soybean crush is forecast at 21.8 million tons, up from 21.0 million in 1999/2000. As a result, Brazils soybean exports are not anticipated to exceed the 1999/2000 volume of 11.4 million tons, but are seen up 0.6 million from last months forecast to 10.5 million. Gains in domestic consumption of soybean meal should hold Brazilian exports to around 10.0 million tons. In Argentina, price incentives for the crops competing with soybeans are not nearly as attractive as they are in Brazil. Abundant rains in October soaked soils and significantly delayed grain and sunflower planting. As of October 27, Argentine farmers had planted 19 percent of sunflowers, compared with 45 percent a year earlier. With very weak prices, farmers are likely to give up area intended for sunflowers and increase soybean planting even more. Argentine soybean area is forecast up 9 percent in 2000/01 to 9.5 million hectares. At trend yields, this area is expected to increase soybean production to 23.0 million tons from 20.7 million in 1999/2000. The additional supplies are seen boosting the 2000/01 Argentine soybean crush to 18.0 million tons from 17.3 million last season. Consequently, Argentine soybean meal exports are projected higher to 14.15 million tons. Falling EU Demand Offsets Strong Soybean Use by China While USDA forecasts 2000/01 world soybean imports slightly higher this month to 45.2 million tons, this would be down from 47.8 million in 1999/2000. This months increase in soybean trade is more than offset by lower world imports of soybean meal and soybean oil, however. Chinas soybean imports surged in 1999/2000 to 10.1 million tons. Although a larger domestic crop this year will still curb imports by China, strong demand for soybean meal and soybean oil will carry over into 2000/01. The forecast of Chinas 2000/01 soybean imports was raised 250,000 tons in November to 7.5 million. On the other hand, greater soybean imports will dampen Chinas imports of soybean oil and soybean meal. In contrast to China, EU soybean crushing is likely to stagnate. The outlook for EU consumption of soybean meal is weakening as prices for grains and grain byproducts (in local currency terms) decline relative to soybean meal. A slight reduction in feed demand for soybean meal (to 26.6 million tons) is forecast. Therefore, EU soybean imports are forecast to change negligibly from the 1999/2000 volume of 15.7 million tons, while 2000/01 soybean meal imports are seen slipping to 19.5 million tons. Despite Good Yields, Reduced Area Cuts World 2000/01 Sunflowerseed Harvest Global sunflowerseed production is projected at 23.8 million tons this season, down from 26.4 million in 1999/2000. Lower area in the EU and Argentina and drought in Eastern Europe are largely responsible. Larger sunflowerseed oil exports by Ukrainian and Russian processors in the last year have eroded traditional Argentine markets. Argentine sunflower area was projected down to 2.6 million hectares this month. A lower area sown would reduce expected crop size to 4.6 million tons, down sharply from 6.1 million in 1999/2000. In addition, drought slashed sunflower yields in Romania, Turkey, Hungary, Bulgaria, and Yugoslavia. The Romanian 2000 harvest was estimated down to 0.7 million tons from 1.1 million in 1999. However, good sunflowerseed crops in Spain and the former Soviet Union are offsetting reductions elsewhere. Spanish output has recovered from last years severe drought. And despite a 20-percent reduction in Russian sunflowerseed area, yields for the nearly completed harvest have been very good. This years Russian harvest is estimated at 3.8 million tons, compared with 4.15 million in 1999. Similarly, good yields have also pushed forecast Ukraine sunflowerseed output up to 3.2 million tons from last years harvest of 2.7 million. Both countries are expected to expand exports to Eastern Europe, but weak demand in Western Europe and brisk domestic crushing should moderate foreign trade prospects. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Wednesday, December 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--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 1,590 805 201 2,595 348 1999/00 348 4 2,654 3,006 1,579 973 166 2,719 288 2000/01 2/ 288 3 2,777 3,068 1,600 950 167 2,717 350 ------------------------------------------------------------------------------ 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 99 37,792 38,109 30,657 7,122 37,779 330 1999/00 1/ 330 50 37,632 38,012 30,459 7,260 37,719 293 2000/01 2/ 293 65 38,017 38,375 31,000 7,100 38,100 275 ------------------------------------------------------------------------------ 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 2,371 18,027 1,520 1999/00 1/ 1,520 85 17,826 19,431 16,054 1,375 17,429 2,001 2000/01 2/ 2,001 84 18,160 20,245 16,450 1,650 18,100 2,145 ------------------------------------------------------------------------------ 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/ 393 309 6,354 7,056 3,079 198 3,505 6,782 274 2000/01 2/ 274 208 6,558 7,040 3,100 140 3,550 6,790 250 ------------------------------------------------------------------------------ 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 1,174 121 1,295 24 1999/00 1/ 24 0 1,396 1,420 1,296 103 1,399 21 2000/01 2/ 21 0 1,395 1,416 1,277 110 1,387 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 10.0 943 1,029 845 135 980 49 2000/01 2/ 49 8.3 990 1,047 852 130 982 65 ------------------------------------------------------------------------------ 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/ 1,392 178 3,829 5,400 2,233 713 493 727 4,166 1,233 2000/01 2/ 1,233 179 3,513 4,925 2,270 650 415 590 3,925 1,000 ------------------------------------------------------------------------------ 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 89.00 7.45 25.60 3.80 1999/2000 September 4.57 73.00 8.41 27.00 4.00 October 4.47 79.00 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 4.62 100.00 7.28 14.60 3.75 February 4.79 115.00 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 4.45 78.00 8.01 NA 3.05 1999/2000 September 4.57 93.00 6.34 27.70 3.10 October 1/ 4.36 104.00 6.80 26.50 3.09 -------------------------------------------------------- 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/ 15.60 21.52 16.68 35.39 17.81 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 16.85 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 14.34 20.17 14.64 35.00 13.03 September 1/ 14.24 18.52 14.93 34.90 11.85 2000/01 October 1/ 13.51 18.16 14.40 34.63 10.52 ------------------------------------------------------ 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/ 167.62 127.43 75.00 108.15 103.42 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 170.49 130.50 70.20 104.75 92.60 March 175.50 129.38 77.50 110.00 108.75 April 177.45 125.00 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 163.38 131.88 87.50 118.00 115.13 August 157.48 130.50 79.00 118.00 106.50 September 174.60 153.12 80.00 118.00 95.67 2000/01 October 1/ 171.52 149.00 83.00 118.00 110.00 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills ERS on the World Wide Web Coming soon: A newly designed, newly structured ERS website. ERS' newly redesigned and restructured website will provide you with accurate, timely, comprehensive, easy-to-find economic analysis on issues related to agriculture, food, the environment, and rural development. Its going to be greatly expanded: including 19 commodity briefing rooms, 12 country Briefing Rooms, and a host of issue-oriented rooms covering issues ranging from analysis of the World Trade Oranization to topics such as risk management, farm structure, and conservation and environmental policies. Powerful new interface design Packed with information, products, and services--yet clean, crisp, and easy to navigate. User-friendly site structure Navigate by topic, research-area emphasis, Briefing Rooms, publications, or data. Or, browse our features and services. Enhanced search feature Users may search by key topic or by using an advanced search feature. Synthesis of the extensive research Briefing Rooms will provide a synthesis of the issues and analysis, along with a full collection of resources specific to a subject, including: Latest publications Latest data products Recommended readings and data products Recent research developments Questions and answers Newsletters Related links Maps and charts gallery Economic models A host of new services Users will be able to contact ERS experts, see upcoming events/publications, find ERS research related to whats in the news, and subscribe to E-mail updates. And more! Come visit us after the new year and see for yourself! Bookmark www.ers.usda.gov END_OF_FILE