OIL CROPS OUTLOOK December 12, 2001 December 2001, OCS-1201 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 was supplemented by the annual OIL CROPS YEARBOOK. The yearbook summary for 2001 was released on October 24, 2001. Yearbooks are available in print from the USDA Order Desk. For the 2001 issue, call 1-800- 999-6779 (703-605-6220) and ask for stock #ERS-OCS-2001, $21. ------------------------------------------------------------------------------- Stronger Foreign Imports Accelerate U.S. Soybean Complex Exports U.S. export commitments for soybeans in 2001/02 have increased rapidly in the last month. While the pace of export shipments began the marketing year slowly, it has since accelerated and climbed slightly ahead of last year. Much of the improved export outlook stems from new soybean sales to Japan, Indonesia, and China, while sales to the European Union (EU) have stayed brisk since September. Consequently, the U.S. Department of Agriculture (USDA) raised its soybean export forecast 20 million bushels to 1,000 million. A new (although small) source of import demand this season comes from Cuba, with recent purchases from the United States for 12,000 metric tons of soybeans, 20,000 tons of soybean meal, and 5,000 tons of soybean oil. Last year, Congress enacted legislation allowing U.S. sales of food and medicine to Cuba, which have been embargoed for the last 41 years. A marginally better outlook for domestic crushing is also anticipated based on bright prospects for soybean oil demand and soybean meal exports. Processors crushed 150.4 million bushels in October, a record for the month and the third highest monthly volume ever. The 2001/02 soybean crush forecast was raised 5 million bushels to 1,670 million. While this years forecast of U.S. ending stocks is still well above the 2000/01 carryout, they were reduced this month to 330 million bushels. The 25-million-bushel decline in stocks from the November forecast would likely maintain a soybean price range of $4.00-$4.80 per bushel. Total soybean oil demand surged in October to 1,836 million pounds, the largest monthly use ever. Even with a very large output of soybean oil, October stocks fell. Strong gains in domestic disappearance of soybean oil for the month suggest a higher 2001/02 forecast of 16,700 million pounds. Marketing year exports of U.S. soybean oil were also expected up to 2,500 million pounds this month from the November forecast of 2,450 million. Soybean oil imports by China and Taiwan are expected to increase following their accession to the World Trade Organization (WTO). Although projected ending stocks of soybean oil at 2,515 million pounds would still be relatively large, greater demand would cut them from the massive 2000/01 carryover of 2,877 million. The trimming of expected carryout stocks of soybeans and soybean oil is supporting the oil price. The November average price for soybean oil in central Illinois firmed to 15.2 cents per pound from 14.4 cents in October and 13.4 cents in November 2000. The season-average price is forecast rising to 14.0- 17.0 cents per pound from the 2000/01 average of 14.2 cents. The value of other vegetable oils has also swelled. The domestic price of sunflowerseed oil has rallied to 19.2 cents per pound, versus 17.4 cents in October and 14.3 cents in November 2000. Foreign demand for sunflowerseed oil is quite strong, but supply availability for more than a moderate expansion of U.S. exports is lacking. Sunflowerseed oil exports are forecast rising from 554 million pounds last year to 650 million. And, even with a sharp increase in corn oil production this fall, its price climbed to 18.3 cents per pound in November compared with 10.4 cents a year earlier. Tight world supplies of its closest substitutes, sunflowerseed oil and olive oil, are encouraging U.S. corn oil exports, which surged in September. Sustained vigor may push 2001/02 corn oil shipments to at least 1 billion pounds. Saudi Arabia, Turkey, Italy, and Mexico encompass about half of U.S. corn oil exports. However, for U.S. soybean meal, less robust demand growth is seen than for soybean oil. Only moderate increases in domestic soybean meal consumption are expected, due primarily to improved poultry returns. Yet, brisk year-to-date foreign sales of soybean meal led USDA to increase its 2001/02 export forecast from 7.65 million to 7.75 million short tons. Meal import demand is particularly good from Indonesia and Canada. As both domestic and foreign processors pursue more oil sales, soybean meal prices will be pressured by a higher associated meal output. The range for the 2001/02 soybean meal price is unchanged this month at $150-$170 per ton, compared with last years average of $174. Larger Prospective Supplies Boost Potential for Argentine Soybean Demand In Argentina, the frequent rains abated during December, although excessively wet soils in the province of Buenos Aires still hindered planting of corn and sunflowers and the winter wheat harvest. In contrast, planting conditions in the principal soybean producing areas of northern Argentina are mostly favorable. Planting progress for soybeans is on schedule, with farmers more than half finished by early December. Consequently, USDA switched 100,000 hectares from its Argentine 2001/02 corn area forecast to soybeans, increasing the expected harvested area to 11.1 million hectares. Argentine sunflowerseed prices are about 50 percent higher than a year ago, so farmers are likely to plant beyond the dates recommended for best yields. Indications of a higher soybean yield trend also contributed to a rise in projected 2001/02 production to 28.75 million tons from the November forecast of 28.0 million. Argentina will export most of its larger output, either as unprocessed soybeans or in the form of meal and oil. Soybean exports for 2001/02 are projected rising to 9.0 million tons from 7.45 million in 2000/01. Growing crush potential would raise Argentine soybean meal exports to 15.25 million tons from 13.95 million last season. Similarly, 2001/02 exports of soybean oil would expand to 3.5 million tons from 3.2 million last year. Argentine soybean output was also revised upward for 2000/01 to 27.2 million tons, based mostly on a higher yield estimate. Likewise, Brazils old crop harvest was estimated 400,000 tons higher to 38.8 million. Although the higher Brazilian crop was either exported or crushed, the net effect of the South American revisions was to increase world beginning soybean stocks for 2001/02 by 0.3 million tons. Coupled with expected bumper crops this season, the added carryover hikes global ending soybean stocks to a record 29.1 million tons. Robust World Soybean Demand Prevails Although unlikely to expand quite as rapidly as last year, soybean demand by the EU has still been strong. An impending shortfall of vegetable oils in the EU is increasing the profitability of oilseed crushing. Without a removal of its ban on feeding meat and bone meal, steady growth in EU soybean meal consumption is anticipated. USDA raised its forecast of 2001/02 EU soybean imports by 0.8 million tons this month to 19.6 million, up from 18.8 million in 2000/01. In contrast, EU soybean meal imports this year are expected to slow to 20.9 million tons from 20.3 million in 2000/01 as domestic processors produce more supplies. In Canada, a very dry summer in the main soybean-producing region of southern Ontario slashed 2001 yields. Canadian soybean production fell 40 percent from last year to 1.6 million tons. Exports, crushing, and stocks of Canadian soybeans should decline. In response, Canadas 2001/02 imports of soybeans and soybean meal are expected to rise sharply to 0.9 million and 1.1 million tons, respectively. And, low U.S. prices for soybean meal and oil are looking irresistibly attractive to Mexican buyers. While Mexican imports of soybean meal and soybean oil are forecast rising to 355,000 and 102,000 tons, respectively, weaker crush margins could temper soybean imports to 4.5 million tons. For both countries, the United States dominates their trade in these commodities. For 2001/02, Japan is forecast to import 5.0 million tons of soybeans and 925,000 tons of soybean meal. Higher costs of importing rapeseed and a ban on feeding meat and bone meal have promoted Japans consumption of soybean meal. An improving economy has also rapidly increased Indonesias imports of soybeans and soybean meal this year. China officially entered the WTO on December 11. Chinas accession agreement stipulates that its 2002 tariff-rate quota (TRQ) on soybean oil will increase to 2.518 million tons and the within-quota tariff will fall from 13 percent to 9 percent. Tariffs on soybeans and soybean meal will be bound at their current rates. Yet, rising world prices for soybean oil have narrowed the differential to Chinas domestic prices, which will limit its current import needs. Chinas soybean oil imports are forecast up to 400,000 tons, still well below the TRQ but substantially above the 80,000 tons imported in 2000/01. Palm oil prices are cheaper, so it is more likely at first that Chinas importers will fill the increased 2002 palm oil TRQ (2.4 million tons). Palm oil imports by China are expected to rise to 2.1 million tons from 1.9 million in 2000/01. On the same date as China, Taiwan also became a WTO member. Taiwan will immediately lower import barriers on meats and soybean products that will curb future crushing and imports of soybeans. Imports of soybeans by Taiwan are forecast slipping to 2.3 million tons in 2001/02 from 2.4 million the previous year. While Taiwans import volumes of soybean meal and soybean oil in 2001/02 should remain modest in absolute terms, the percentage change from trade liberalization would increase dramatically, and more so in subsequent years. The next release of the Oil Crops Outlook is scheduled at 4:00 p.m. ET Monday, January 14, 2002. 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 Table 1--Soybeans: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ------------------------------ ------------------------------------ Year Seed, begin. Beg. Produc- Im- Total Crush Ex- feed, Total End. Sept. 1 stocks tion ports ports residual stocks ------------------------------------------------------------------------------ -------------------------- Million bushels--------------------------- 1999/00 348 2,654 4 3,006 1,578 973 165 2,716 290 2000/01 2/ 290 2,758 4 3,052 1,641 998 164 2,804 248 2001/02 2/ 248 2,923 4 3,175 1,670 1,000 175 2,845 330 2000/01 Sep-Nov 290.2 2,757.8 0.9 3,048.9 421.1 315.5 72.4 809.1 2,239.8 Dec-Feb 2,239.8 --- 0.8 2,240.6 417.9 338.4 80.3 836.7 1,403.9 Mar-May 1,403.9 --- 0.8 1,404.7 405.4 228.4 62.7 696.5 708.2 Jun-Aug 708.2 --- 1.1 709.2 397.0 116.1 -51.8 461.3 247.9 Total 2,757.8 3.6 3,051.5 1,641.5 998.4 163.7 2,803.6 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 2--Soybean meal: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance Year --------------------------------- ----------------------------------- begin. Beg. Produc- Im- Total Domestic Ex- Total End. Oct. 1 stocks tion ports ports stocks ------------------------------------------------------------------------------ ---------------------------1,000 short tons-------------------------- 1999/00 330 37,591 49 37,970 30,346 7,331 37,678 293 2000/01 2/ 293 39,389 51 39,733 31,713 7,636 39,350 386 2001/02 2/ 386 39,942 50 40,375 32,350 7,750 40,100 275 2000/01 October 292.9 3,573.9 2.5 3,869.3 2,925.8 626.1 3,551.9 317.4 November 317.4 3,432.8 2.2 3,752.3 2,805.0 603.5 3,408.5 343.8 December 343.8 3,399.4 3.0 3,746.2 2,763.6 558.9 3,322.5 423.7 January 423.7 3,524.2 6.2 3,954.1 2,799.4 820.6 3,620.0 334.0 February 334.0 3,085.2 4.5 3,423.8 2,346.0 751.9 3,097.9 325.8 March 325.8 3,412.0 4.9 3,742.7 2,502.2 931.3 3,433.5 309.2 April 309.2 3,151.5 4.5 3,465.2 2,485.8 666.0 3,151.9 313.4 May 313.4 3,180.4 5.8 3,499.6 2,638.6 574.0 3,212.6 287.0 June 287.0 3,091.1 6.6 3,384.7 2,522.0 521.3 3,043.3 341.4 July 341.4 3,256.2 2.8 3,600.4 2,780.0 482.3 3,262.3 338.1 August 338.1 3,203.1 6.1 3,547.3 2,720.6 552.7 3,273.3 274.0 September 274.0 3,079.2 2.1 3,355.3 2,424.4 547.5 2,971.9 383.4 Total 39,388.9 51.1 39,732.9 31,713.5 7,636.0 39,349.5 2001/02 October 383.4 3,538.8 NA 3,922.2 NA NA 3,616.2 306.0 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 3--Soybean oil: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance Year -------------------------------- ---------------------------------- begin. Beg. Produc- Im- Total Domestic Ex- Total End. Oct. 1 stocks tion ports ports stocks ------------------------------------------------------------------------------ -------------------------- Million pounds--------------------------- 1999/00 1,520 17,825 83 19,427 16,056 1,376 17,432 1,995 2000/01 1/ 1,995 18,433 73 20,502 16,223 1,402 17,624 2,877 2001/02 2/ 2,877 18,760 78 21,715 16,700 2,500 19,200 2,515 2000/01 October 1,995.3 1,672.7 6.7 3,674.7 1,569.0 44.9 1,613.9 2,060.8 November 2,060.8 1,590.8 5.5 3,657.1 1,374.5 115.1 1,489.6 2,167.5 December 2,167.5 1,579.0 5.8 3,752.2 1,198.0 256.2 1,454.2 2,298.0 January 2,298.0 1,642.8 6.3 3,947.1 1,437.0 130.4 1,567.4 2,379.7 February 2,379.7 1,436.0 5.4 3,821.0 1,155.5 191.6 1,347.1 2,474.0 March 2,474.0 1,602.8 9.1 4,085.8 1,439.4 142.4 1,581.9 2,504.0 April 2,504.0 1,485.5 7.3 3,996.7 1,385.2 105.8 1,490.9 2,505.8 May 2,505.8 1,489.0 9.5 4,004.3 1,297.2 51.0 1,348.1 2,656.1 June 2,656.1 1,449.2 4.7 4,110.0 1,223.4 109.9 1,333.3 2,776.7 July 2,776.7 1,526.0 4.7 4,307.5 1,322.6 89.4 1,412.0 2,895.5 August 2,895.5 1,506.5 5.0 4,407.0 1,440.8 96.3 1,537.1 2,869.9 September2,869.9 1,452.9 3.2 4,326.0 1,380.1 68.8 1,448.9 2,877.2 Total 18,433.3 72.9 20,501.6 16,222.6 1,401.8 17,624.4 2001/02 October 2,877.2 1,683.1 NA 4,560.2 NA NA 1,835.2 2,724.7 ------------------------------------------------------------------------------ 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-------------------------- 1999/00 393 308 6,354 7,055 3,079 198 3,505 6,781 274 2000/01 1/ 274 374 6,436 7,084 2,674 235 3,751 6,660 424 2001/02 2/ 424 196 7,532 8,152 3,200 250 4,110 7,560 592 ------------------------------------------------------------------------------ 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 1/ 21 0 1,291 1,312 1,119 154 1,272 40 2001/02 2/ 40 0 1,440 1,480 1,274 175 1,449 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 1/ 49 0 818 867 644 131 775 92 2001/02 2/ 92 5 1,010 1,107 878 140 1,018 89 ------------------------------------------------------------------------------ 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/ 1,233 204 3,266 4,703 2,170 548 341 519 3,588 1,116 2001/02 2/ 1,116 178 4,157 5,451 2,275 800 351 725 4,076 1,375 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 8--Oilseeds prices received by U.S. farmers ------------------------------------------------------ Marketing Soy- Cotton- Sun- Flax- year beans seed flowers Peanuts seed ------------------------------------------------------ $/bu. $/ton $/cwt Cents/lb $/bu. 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 4.54 105.00 6.89 27.40 3.30 2000/01 September 4.59 93.00 6.31 28.60 3.10 October 4.45 104.00 5.76 27.70 3.22 November 4.55 108.00 6.20 26.10 3.39 December 4.78 109.00 6.49 27.30 3.45 January 4.68 111.00 6.92 31.40 3.42 February 4.46 117.00 7.29 NA 3.43 March 4.39 NA 7.46 NA 3.90 April 4.22 NA 7.67 NA 3.68 May 4.33 NA 7.99 NA 3.91 June 4.46 NA 8.40 NA 4.10 July 4.79 NA 8.74 NA 4.28 August 4.85 NA 9.48 NA 4.09 2001/02 September 4.53 85.00 8.64 24.90 4.10 October 4.09 85.00 8.19 22.80 4.21 November 1/ 4.18 91.00 8.69 20.40 4.30 ------------------------------------------------------ 1/ Preliminary. NA = Not available. Table 9U.S. vegetable oil and fats prices --------------------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn Lard Edible year oil 2/ oil 3/ oil 4/ oil 5/ oil 6/ tallow --------------------------------------------------------------- Cents/lb. 1994/95 27.51 29.23 28.10 44.30 26.47 20.15 21.21 1995/96 24.70 26.53 25.40 40.30 25.24 21.70 21.56 1996/97 22.50 25.58 22.64 43.70 24.05 23.02 23.01 1997/98 25.80 28.85 27.00 49.00 28.94 19.46 20.69 1998/99 19.90 27.32 20.10 39.74 25.30 14.66 15.14 1999/00 15.60 21.52 16.68 35.39 17.81 13.64 13.21 2000/01 1/ 14.15 16.65 16.20 35.00 13.75 14.61 13.43 2000/01 October 13.50 18.16 14.40 34.63 10.52 13.04 11.98 November 13.37 17.83 14.25 35.50 10.37 12.06 10.88 December 13.12 17.25 14.54 36.40 10.54 12.14 13.59 January 12.53 16.24 14.44 37.25 10.25 13.57 14.61 February 12.38 15.20 14.52 37.00 11.06 11.92 11.82 March 13.90 15.53 15.76 35.90 11.91 11.07 10.97 April 13.53 14.03 15.14 34.00 13.76 12.09 12.17 May 13.53 14.53 15.25 33.00 14.84 11.84 11.48 June 14.21 13.27 16.41 33.00 15.94 13.38 13.17 July 16.49 16.78 18.50 33.00 17.28 18.05 16.99 August 17.08 17.18 19.58 33.00 18.73 24.11 18.21 September 15.46 15.78 17.82 34.00 17.30 22.00 15.33 2001/02 October 14.38 14.44 17.40 36.25 17.18 13.04 12.67 November 1/ 15.23 15.91 19.15 37.00 18.30 13.18 12.83 --------------------------------------------------------------- 1/ Preliminary 2/ Decatur 3/ PBSY Greenwood MS 4/ Minneapolis 5/ Southeast mills 6/ Chicago Table 10U.S. oilseed meal prices ------------------------------------------------------------ Soy- Cotton Sun- Marketing bean seed flower Peanut Canola Linseed year meal 2/ meal 3/ meal 4/ meal 5/ meal 6/ meal 4/ ------------------------------------------------------------ $/Short ton 1994/95 162.55 112.02 62.70 128.94 128.01 95.85 1995/96 235.90 190.74 123.75 202.70 177.22 159.00 1996/97 262.00 192.00 110.60 232.00 192.02 158.75 1997/98 185.30 144.00 84.20 209.60 131.15 117.54 1998/99 138.50 109.55 65.20 104.94 112.28 84.49 1999/00 167.62 127.43 75.00 108.15 117.07 103.42 2000/01 173.62 143.35 88.50 122.00 139.20 121.92 2000/01 October 171.52 150.00 83.00 118.00 122.58 110.00 November 179.95 141.88 85.00 118.00 132.30 113.75 December 195.65 160.83 88.75 118.00 142.34 121.25 January 183.17 184.00 106.00 142.50 140.53 140.00 February 166.08 148.75 110.00 120.00 132.90 130.00 March 156.32 138.13 98.75 118.00 132.01 121.88 April 158.48 140.00 86.25 110.75 140.25 116.25 May 165.14 137.50 78.00 112.50 144.00 116.80 June 172.60 126.88 80.00 NA 149.30 110.00 July 184.43 129.69 88.00 123.50 154.29 135.00 August 178.46 130.63 95.00 130.50 142.60 135.63 September 171.67 131.25 93.75 126.25 137.27 111.25 2001/02 October 165.45 131.25 85.00 115.00 142.85 114.00 November 1/ 166.10 128.13 85.00 111.25 142.44 122.50 ----------------------------------------------------------------------- 1/ Preliminary 2/ Hi-pro Decatur 3/ 41% Memphis 4/ Minneapolis 5/ 50% Southeast mills 6/ 36% Pacific Northwest END_OF_FILE