OIL CROPS OUTLOOK June 13, 2001 June 2001, OCS-0601 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 2001 will be released on October 24, 2001. Yearbooks are available in print from USDA Order Desk. For the 2001 issue, call 1- 800-999-6779 (703-605-6220) and ask for stock #ERS-OCS-2001, $21. ------------------------------------------------------------------------------ Highlights --Tapering U.S. Soybean Area Expectations, Tighter Stock Carryover Buoy Prices --Robust Chinese Soybean Demand Awaits New South American Output Tapering U.S. Soybean Area Expectations, Tighter Stock Carryover Buoy Prices As of June 10, 86 percent of this years U.S. soybean crop had been planted, which lags last years progress but is slightly ahead of the 5- year average. Wet soils have delayed planting mainly in Minnesota, Iowa, Wisconsin, and the Dakotas, although some drying in late May allowed progress to catch up. Yet, it is now too late to feasibly seed corn there, and the wetness may also prevent farmers from continuing to plant soybeans. Subsequently, the market has factored in smaller expected gains in 2001 acreage. This reassessment has boosted the November soybean futures price about 20 cents per bushel compared with a month ago, when there were concerns that unseeded corn acreage would be entirely shifted into soybeans. On June 29, the U.S. Department of Agricultures (USDA) Acreage report should clarify how many acres have been planted to all crops this year. Soil moisture is mostly favorable for the crops already planted, although cool temperatures this spring have slowed crop emergence in the north-central States. While the 2001 U.S. soybean production forecast was unchanged this month, total projected supplies dropped 25 million bushels based on a smaller carryover from 2000/01. Although the seasonal decline in domestic crushing is underway, the April-May pace held up better than previously anticipated. Given an improved outlook for product demand, the 2000/01 crush forecast was raised 20 million bushels to 1,615 million. Expected domestic processing for 2001/02 was similarly increased to 1,645 million bushels as competing exporters of meal and oil scale back output. The torrid pace of Chinas soybean imports has continued to support foreign demand for U.S. exports. Soybean export forecasts were increased slightly to 995 million bushels for 2000/01 and 995 million for 2001/02. Consequently, ending stock estimates fell to 270 million for this crop year and 440 million bushels for next year. While lower U.S. stocks have buoyed old crop soybean prices, the 2001/02 average price forecast was increased only modestly from last month to $3.90-$4.70 per bushel. With normal yields, new crop supplies should stay at a record level and large foreign stocks (particularly in China and Brazil) are expected to maintain price pressure throughout the world. A stronger U.S. export outlook for soybean meal and soybean oil is largely responsible for the higher expected crush volume. Led by robust sales to Indonesia, 2000/01 soybean meal exports were forecast up 400,000 short tons this month to 7.3 million. Meal exports are projected to slip to 7.15 million tons in 2001/02, but higher than last months projection of 6.75 million. A steady gain in domestic soybean meal consumption is also seen, as livestock-price-to-feed-cost relationships have gradually improved this year. Hog slaughter rates have slowed and import restrictions on European Union (EU) pork exports have favored U.S. exports this year. Thus, hog prices have rallied by about one-third since last fall. Higher feeding rates are forecast to expand U.S. soybean meal disappearance to 31.4 million tons this year, although 2001/02 use will likely slow to 32.1 million with more normal world pork trade. Solid demand and the seasonal crush decline prompted a recovery in central Illinois soybean meal prices by $7 per ton in May to $165. An expansion of soybean meal supplies is anticipated to trim the average price from $169 per ton in 2000/01 to $145-$175 next season. After its seasonal peak next September, growth in palm oil production is expected to slow next year. Combined with a sharp decline in world rapeseed and sunflowerseed output, these factors are beginning to halt the 3-year slide in vegetable oil prices. Foreign demand for soybean oil is strengthening as a result. U.S. soybean oil exports were forecast higher to 1,500 million pounds this year and to 1,800 million for 2001/02. Similarly, domestic disappearance of soybean oil has been steady. U.S. consumption forecasts for 2000/01 and 2001/02 were raised to 16,450 million and 16,800 million pounds, respectively. Even so, abundant ending stocks of soybeans and soybean oil should limit the price increase to 13.5-16.5 cents in 2001/02 from this seasons average of 13.75 cents per pound. Robust Chinese Soybean Demand Awaits New South American Output Recent soybean purchases by China have been very large. Consequently, USDA has raised its 2000/01 forecast of soybean imports by China from 10.5 million metric tons to 11.5 million. This means that China alone will account for 42 percent of the expansion in world soybean trade this season. Chinas soybean crush is forecast up 21 percent in 2000/01 to 18.1 million tons, although it was increased only 200,000 tons this month. Most of the higher imports add to Chinas ending stocks, with the 2000/01 carryout forecast raised to 4.4 million tons. Current prices and interest rates are low, and Chinese storage capacity is abundant. Larger Chinese stocks may also be desired because a smaller planted soybean area and an emerging drought in northern China may threaten the potential of the new domestic crop. Conditions are generally better in the major soybean province of Heilongjiang, and soybeans in other regions could recover if rainfall improves over the next 2 months. This springs bumper rapeseed harvest was relatively unscathed by poor weather. China has been able to afford such massive soybean imports because the huge crops produced in the United States and South America this season have depressed prices. Based on slightly higher area and yield estimates, Brazils 2001 soybean harvest was increased 1.0 million tons this month to 37.5 million. With a slightly larger soybean carryover from last season, part of the supply gain is seen boosting Brazilian exports to a record 13.3 million tons. Despite ample soybean supplies, limited foreign demand for soybean meal may expand Brazils crush only modestly this season to 22.25 million tons. World soybean meal imports are estimated up only 0.4 percent in 2000/01, as lower meal imports by Asian countries are offsetting stronger European imports. Therefore, Brazilian soybean meal exports are forecast up just 1 percent in 2000/01 to 13.9 million tons. In addition, on June 1 the government began a program to ration Brazilian electrical power use by up to 20 percent. Hydroelectric utilities produce nearly all of Brazils electricity, and drought has critically depleted the main reservoir levels. Operations by domestic soybean processors in the affected areas could be disrupted. So, it is likely that Brazils soybean stocks ending September 2001 could swell to nearly 8.0 million tons, which would exceed the U.S. stock carryover. In Argentina, October 2000-April 2001 soybean processing was down about 440,000 tons from a year earlier. Even with an anticipated quickening of the crush pace in May-September following the newly harvested bumper crop, the 2000/01 forecast was reduced 0.5 million tons to 17.75 million. Exclusion from sales to Indonesia (because of its ban on purchases from countries where foot and mouth disease is present) will hurt Argentine processors. A lower crush reduces Argentine soybean meal production, with meal exports expected to rise only moderately in 2000/01 to 13.9 million tons. Growth in Argentine soybean oil exports is trimmed to 3.12 million tons. Conversely, with much of current world demand being propelled by Chinas soybean imports, USDA made an offsetting 0.5-million-ton increase in the forecast of Argentine soybean exports to 6.0 million tons. Indias oilseed production for 2000/01 is estimated down 5 percent from last year and 16 percent from 2 years ago. Estimated domestic output was cut to 21.1 million tons this month mostly based on a smaller peanut harvest of 5.7 million tons, which was again damaged by drought. Insufficient domestic vegetable oil production has created a vast market for imports. Indian soybean oil imports have been steady this year, and May-September imports are expected to accelerate. USDA adjusted its 2000/01 Indian import forecast from 1.15 million to 1.25 million tons. U.S. soybean oil exporters will get a negligible share of this trade, but will benefit competitively in other foreign markets as India draws in more sales from Argentina and Brazil. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Thursday, July 12, 2001. 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--------------------------- 1999/00 1/ 348 4 2,654 3,006 1,579 973 164 2,716 290 2000/01 2/ 290 3 2,770 3,063 1,615 995 183 2,793 270 2001/02 2/ 270 3 2,985 3,258 1,645 995 178 2,818 440 ------------------------------------------------------------------------------ 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-------------------------- 1999/00 1/ 330 49 37,623 38,003 30,378 7,331 37,710 293 2000/01 2/ 293 50 38,632 38,975 31,400 7,300 38,700 275 2001/02 2/ 275 65 39,185 39,525 32,100 7,150 39,250 275 ------------------------------------------------------------------------------ 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--------------------------- 1999/00 1/ 1,520 83 17,824 19,427 16,055 1,376 17,431 1,995 2000/01 2/ 1,995 75 18,080 20,150 16,450 1,500 17,950 2,200 2001/02 2/ 2,200 75 18,505 20,780 16,800 1,800 18,600 2,180 ------------------------------------------------------------------------------ 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-------------------------- 1999/00 1/ 393 309 6,354 7,055 3,079 198 3,505 6,781 274 2000/01 2/ 274 298 6,436 7,007 2,700 200 3,797 6,697 310 2001/02 2/ 310 75 7,120 7,505 3,000 175 3,800 6,975 530 ------------------------------------------------------------------------------ 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--------------------------- 1999/00 1/ 24 0 1,396 1,420 1,295 104 1,399 21 2000/01 2/ 21 0 1,235 1,256 1,115 120 1,235 21 2001/02 2/ 21 0 1,350 1,371 1,180 165 1,345 26 ------------------------------------------------------------------------------ 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--------------------------- 1999/00 1/ 76 8 943 1,027 837 141 978 49 2000/01 2/ 49 8 835 892 685 130 815 77 2001/02 2/ 77 5 960 1,042 825 140 965 77 ------------------------------------------------------------------------------ 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--------------------------- 1999/00 1,392 178 3,829 5,400 2,233 713 493 727 4,166 1,233 2000/01 2/ 1,233 179 3,266 4,678 2,160 550 377 565 3,653 1,025 2001/02 2/ 1,025 179 3,805 5,009 2,230 733 371 650 3,984 1,025 ------------------------------------------------------------------------------ 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 4.63 89.00 7.53 25.40 3.79 1999/2000 September 4.57 73.00 8.76 27.00 4.00 October 4.48 79.00 6.99 25.50 3.75 November 4.45 94.00 6.87 24.10 3.66 December 4.43 99.00 7.52 21.80 3.61 January 4.62 100.00 7.34 14.90 3.75 February 4.79 115.00 8.72 NA 3.43 March 4.91 NA 8.53 NA 3.70 April 5.00 NA 7.93 NA 3.66 May 5.19 NA 9.63 NA 3.77 June 4.93 NA 8.09 NA 3.64 July 4.53 NA 8.16 NA 3.25 August 4.45 78.00 7.82 NA 3.05 2000/01 September 4.57 93.00 6.34 27.70 3.10 October 4.45 104.00 5.84 26.50 3.17 November 4.55 108.00 6.09 23.10 3.42 December 4.78 110.00 6.44 25.30 3.47 January 4.68 109.00 6.94 29.60 3.47 February 4.46 114.00 7.38 NA 3.40 March 4.39 NA 7.47 NA 3.90 April 4.22 NA 7.65 NA 3.67 May 1/ 4.33 NA 7.46 NA 3.84 -------------------------------------------------------- 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 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 14.24 18.52 14.93 34.90 11.85 2000/01 October 13.50 18.16 14.40 34.63 10.52 November 13.37 17.83 14.25 35.50 10.37 December 13.12 17.25 14.54 36.40 10.54 January 12.53 16.24 14.44 37.25 10.25 February 12.38 15.20 14.52 37.00 11.06 March 13.90 15.53 15.76 35.90 11.91 April 13.53 14.03 15.14 34.00 13.76 May 1/ 13.53 14.53 15.25 33.00 14.84 ------------------------------------------------------ 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 1999/00 167.62 127.43 75.00 108.15 103.42 1999/2000 October 153.57 111.80 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 171.52 150.00 83.00 118.00 110.00 November 179.95 141.88 85.00 118.00 113.75 December 195.65 160.83 88.75 118.00 121.25 January 183.17 184.00 106.00 142.50 140.00 February 166.08 148.75 110.00 120.00 130.00 March 156.32 138.13 98.75 118.00 121.88 April 158.48 140.00 86.25 110.75 116.25 May 1/ 165.14 137.50 78.00 112.50 116.80 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills ERS on the World Wide Web ERS' newly redesigned and restructured website provides you with accurate, timely, comprehensive, easy-to-find economic analysis on issues related to agriculture, food, the environment, and rural development. 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