OIL CROPS OUTLOOK September 13, 2001 September 2001, OCS-0901 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 ERS-NASS Order Desk. For the 2001 issue, call 1-800-999-6779 (703-605-6220) and ask for stock #ERS-OCS-2001, $21. -------------------------------------------------------------------------------- Highlights --Dry Weather Curtails U.S. Soybean Yields --Huge U.S. Soybean Oil Stocks Loom Over Market Despite Likely Demand Surge --Rising Soybean Prices, Fragile Economies Likely To Curb Global Import Demand --Deterioration of Sunflowerseed Crops Will Tighten World Oilseed Supplies Dry Weather Curtails U.S. Soybean Yields The September survey of soybean conditions by the U.S. Department of Agriculture (USDA) indicates a 2001 national average yield of 38.2 bushels per acre, just above last years 38.1 bushels. Compared with a year ago, severe drought in the United States is more concentrated. Although soybean yields are still below average in some places, they are generally expected to exceed last years yields in the Western Plains and the South. And, even record soybean yields are anticipated in Indiana and Kentucky. But these are the exceptions in the Midwest, as earlier episodes of hot and dry weather this year have created many pockets of quite poor soybean development. The worst areas include the western parts of Minnesota and Iowa, the southern parts of Michigan and Missouri, and the eastern parts of South Dakota and Arkansas. The majority of soybean fields are now yellowing and the earliest should be ready for harvest by the end of September. On a national harvested soybean area of 74.1 million acres, total production would then equal 2,834 million bushels. A U.S. crop this size would surpass the record 2000 soybean crop by 64 million bushels. Based on slightly higher crush and export demand for the previous year, beginning stocks for 2001/02 dipped to 240 million bushels. These factors combined to reduce this months estimate of 2001/02 soybean supplies by 43 million bushels. A forecast of stronger domestic soybean meal consumption pulls the 2001/02 soybean crush up 5 million bushels from last months forecast to 1,660 million. U.S. soybean meal consumption is projected up to 32.15 million short tons from a revised 2000/01 estimate of 31.6 million. Yet, with a negligible increase in U.S. soybean supplies, the growth in foreign supplies is anticipated to exceed the increase in global soybean imports. Higher U.S. prices and the heightened foreign competition will hinder the U.S. export potential, which is forecast slipping to 990 million bushels from 1,000 million in 2000/01. A smaller supply tightens the 2001/02 ending stock forecast to 255 million bushels from last months 300 million. The summer rally in soybean prices peaked last month as rains in late August and early September stabilized soybean conditions, particularly for late-planted fields. Milder August temperatures also helped preserve yield potential, and no early killing frosts have yet appeared. Even so, slower growth of oilseeds and vegetable oil supplies in the United States and abroad should bring about a higher price level. USDA forecasts a 2001/02 average soybean farm price of $4.40-$5.40 per bushel, compared with $4.55 in 2000/01. But the increase in market prices is unlikely to exceed the national loan rate at $5.26 per bushel. In crop year 2001, U.S. gross farm income from soybeans will probably change little, as smaller marketing loan gains trade off between higher cash prices. Huge U.S. Soybean Oil Stocks Loom Over Market Despite Likely Demand Surge Based on the Census Bureaus large upward revision of soybean oil stocks for June and July, USDA cut its forecast of 2000/01 domestic disappearance to 16,350 million pounds. In addition, an acceleration of the sluggish summer pace of export shipments is unlikely. Total soybean oil exports for 2000/01 are forecast down to 1,400 million pounds, only slightly above last seasons 1,376 million. Thus, season ending stocks of soybean oil were forecast up to a record 2,695 million pounds. The 2001/02 outlook for soybean oil use should brighten considerably, however. A projected recovery in U.S. oil exports to 2,550 million pounds will help shrink 2001/02 ending stocks. Yet, larger expected beginning stocks and a smaller rate of domestic consumption raises ending stocks 355 million pounds from last months forecast to 2,260 million. The season- average price for soybean oil slips 1.0 cent per pound from the August forecast to 15.5-18.5 cents per pound, yet still above the 14.15-cent average of 2000/01. Rising Soybean Prices, Fragile Economies Likely To Curb Global Import Demand World soybean output for 2001 was scaled back 1.4 million metric tons this month to 175.4 million tons. Aside from the reduction in U.S. soybean output, the forecast of 2001 Canadian soybean production was similarly reduced to 2.3 million tons because of dryness in southern Ontario. Projected world soybean imports for 2001/02 are shaved this month to 55.8 million tons, although still above expected 2000/01 imports of 53.4 million. The forecast of Chinas 2001/02 soybean imports is scaled back 0.5 million tons to 14.0 million. Amid weak crush margins, large stocks, and an imminent domestic harvest, higher import prices should soon temper the import pace by China. Another obstacle to new crop purchases has been uncertainty over how Chinas Government will administer new regulations on imports of biotech crops. In contrast, Mexicos economy has been less vulnerable to the forces buffeting other countries. Mexican soybean imports are expected to grow from 4.4 million tons to 4.5 million in 2001/02 following an 11-percent gain in 2000/01. European Union (EU) soybean imports, as well, may grow to 17.7 million tons from 17.0 million in 2000/01 because of nominal growth in domestic oilseed production and the EUs continuing ban on feeding meat and bone meal. Robust increases in Thailands imports of soybeans and soybean meal also continue as its own exports of poultry have accelerated. The growth rate of world trade in soybean oil should benefit even more than soybeans. The projected decline in combined world production of sunflowerseed oil and rapeseed oil would total nearly 1 million tons in 2001/02. In response, global soybean oil exports are projected expanding to 8.2 million tons from 7.6 million in 2000/01. Deterioration of Sunflowerseed Crops Will Tighten World Oilseed Supplies Projected ending stocks of world oilseeds are trimmed from 32.2 million tons to 29.8 million, mostly because of lower soybean and sunflowerseed supplies. Last month, modestly higher USDA estimates of sunflower area raised the projection of 2001 global sunflowerseed output. However, USDAs September forecast of sunflowerseed production is cut back to 21.9 million tons because of the likely impacts of adverse weather. In Eastern Europe, very little rain fell in July and August during the main flowering period. Rains returned in late August, but too late to prevent a sharp cut in sunflowerseed yields. Forecast sunflowerseed harvests are seen declining to 2.3 million tons in Ukraine and 2.7 million in Russia. Seed exports from both countries would fall sharply, with trade by Ukraine declining from 925,000 tons in 2000/01 to 375,000 and Russia from 800,000 to 350,000 tons. Similarly, the Romanian sunflowerseed crop is anticipated lower at 950,000 tons, although still better than last years drought-damaged crop of 700,000 tons. Romanias Government may ban sunflowerseed exports this year to conserve supplies and moderate prices for domestic use. Consequently, Western European countries (which account for about three- fourths of world sunflowerseed imports) are expected to substantially reduce 2001/02 imports and crushing. In Argentina, frequent rains in the southeastern part of Buenos Aires province have stalled wheat planting. The crop troubles in Eastern Europe are also improving price prospects for sunflowerseed, so Argentine farmers are likely to plant part of the unsown wheat area to sunflowers. Sunflower area for 2001/02 is now projected up to 2.0 million hectares, which would increase expected seed production to 3.5 million tons compared with 3.2 million in 2000/01. Argentine crushing and exports of sunflowerseed oil and meal would not decline by quite as much. The western prairies in Canada have also had no relief from drought, trimming the estimate of Canadian canola production this month to 5.1 million tons from the previous forecast of 5.3 million. Canadian stocks of canola have tightened considerably from a year ago, and 2001/02 exports are likely to fall sharply to 2.6 million tons from a record 4.8 million last season. In contrast, global cottonseed output is expected to rise 8 percent in 2001/02 to 36.1 million tons. China is forecast to produce 9.0 million tons of cottonseed, compared with 8.0 million in 2000/01. A recovery of cotton area and yield in India, Africa, and the United States also contribute to the growth in world supplies. These gains are partially offset by smaller expected area in Australia and Brazil. The resurgence allows an expansion of crushing, boosting world cottonseed oil output by 0.3 million tons to 3.8 million. We mourn and remember the innocent victims of terrorism. The summary of the Oil Crops Yearbook will be released Wednesday, October 24, 2001. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Tuesday, November 13, 2001. The report may be accessed from ERS Soybean Briefing Room at http://www.ers.usda.gov/briefing/soybeansoilcrops/ or via http://usda.mannlib.cornell.edu/. Information Contacts: Mark Ash--Soybeans, minor oilseeds, oils (202) 694-5289 mash@ers.usda.gov Erik Dohlman--Peanuts (202) 694-5308 edohlman@ers.usda.gov New Electronic Outlook Report from the Economic Research Service For several months, a wide range of ideas has emerged in the farm bill debate on how best to address the needs of farmers and other constituencies. A recently released ERS report, Soybeans: Background and Issues for Farm Legislation, provides information on topics important to the debate, including market conditions, policy proposals, WTO considerations, and the interactions between policy and markets. This online-only report http://www.ers.usda.gov/publications/OSC-0701-01/ is the first of the occasional Oil Crops Outlook supplements that will provide timely analysis on specific topics. Readers will no longer have to wait for the Oil Crops Situation and Outlook Yearbook for all of the in-depth reports and special articles on the oilseeds sector. 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--------------------------- 1999/00 348 4 2,654 3,006 1,578 973 165 2,716 290 2000/01 2/ 290 3 2,770 3,063 1,635 1,000 188 2,823 240 2001/02 2/ 240 4 2,834 3,078 1,660 990 173 2,823 255 ------------------------------------------------------------------------------ 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-------------------------- 1999/00 330 49 37,591 37,970 30,346 7,331 37,678 293 2000/01 2/ 293 45 39,287 39,625 31,600 7,750 39,350 275 2001/02 2/ 275 50 39,700 40,025 32,150 7,600 39,750 275 ------------------------------------------------------------------------------ 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 1,520 83 17,825 19,427 16,056 1,376 17,432 1,995 2000/01 2/ 1,995 80 18,370 20,445 16,350 1,400 17,750 2,695 2001/02 2/ 2,695 85 18,730 21,510 16,700 2,550 19,250 2,260 ------------------------------------------------------------------------------ 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-------------------------- 1999/00 393 309 6,354 7,055 3,079 198 3,505 6,781 274 2000/01 2/ 274 298 6,436 7,007 2,674 245 3,664 6,583 424 2001/02 2/ 424 17 7,514 7,955 3,200 250 3,950 7,400 555 ------------------------------------------------------------------------------ 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 24 0 1,390 1,414 1,289 104 1,393 21 2000/01 2/ 21 0 1,285 1,306 1,140 140 1,280 26 2001/02 2/ 26 0 1,440 1,466 1,260 175 1,435 31 ------------------------------------------------------------------------------ 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 76 8 939 1,023 833 141 974 49 2000/01 2/ 49 0 815 864 669 125 794 70 2001/02 2/ 70 5 1,025 1,100 853 150 1,003 97 ------------------------------------------------------------------------------ 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/ 1,233 211 3,266 4,709 2,170 548 373 520 3,594 1,116 2001/02 2/ 1,116 178 3,726 5,019 2,230 670 368 700 3,969 1,050 ------------------------------------------------------------------------------ 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. 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 2000/01 4.55 102.00 6.75 25.70 3.30 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 4.32 NA 7.59 NA 3.91 June 4.46 NA 8.75 NA 4.02 July 4.79 NA 8.79 NA 4.28 August 1/ 4.87 NA 9.55 NA 4.19 -------------------------------------------------------- 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. 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 2000/01 1/ 14.15 16.65 16.20 35.00 13.75 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 13.53 14.53 15.25 33.00 14.84 June 14.21 13.27 16.41 33.00 15.94 July 16.49 16.78 18.50 33.00 17.28 August 1/ 17.08 17.18 19.58 34.00 18.73 ------------------------------------------------------ 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 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 2000/01 1/ 173.50 145.00 88.50 122.00 125.00 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 165.14 137.50 78.00 112.50 116.80 June 172.60 126.88 80.00 NA 110.00 July 184.43 129.69 88.00 123.50 135.00 August 1/ 178.46 130.63 95.00 130.50 135.63 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% SE mills END_OF_FILE