OIL CROPS OUTLOOK June 13, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- OIL CROPS OUTLOOK is published monthly (except January) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. OCS-0695. ----------------------------------------------------------------------------- PERSISTENT RAINS DELAY 1995 SOYBEAN PLANTING; MORE ACREAGE EXPECTED Planting of soybeans is considerably late with only 59 percent planted by June 11, compared with the 1990-94 average of 78 percent. This is poles apart from the rapid start of 1994/95 when a relatively dry May allowed 91 percent to be planted. In fact, this year's planting progress trails even the notoriously late crop of 1993, when heavy rains and flooding similarly kept farmers out of their fields. The suspension of corn planting likely means more soybean acreage will be planted in 1995 than indicated by March farmer intentions. This month USDA projected 1995/96 planted acreage at 62.7 million acres and harvested acreage at 61.5 million. Both are 1.2 million acres above March intentions. This year, the problem areas are in States neighboring the Missouri, Illinois, and the Ohio rivers. Precipitation was more than double the usual amount in May for much of the Midwestern production area, and followed an already wet April. Planting progress in the next 2 weeks in Illinois, which would have been 1995's top-ranked soybean State had farmers been able to plant the record 9.6 million acres they had intended, could be critical in determining whether this year has another huge U.S. crop or a poor one. Missouri had only 44 percent of corn and 17 percent of soybeans planted by June 11, a date on which planting for both crops is usually quite advanced. Flooding along the lower Mississippi River has affected some prime soybean acres in Arkansas. However, unlike 1993 when the upper Mississippi River basin flooded, most Minnesota and Iowa farmers have been able to plant on schedule. But even with normal frost dates this fall, the late start jeopardizes a high yield potential for soybeans in these States. After June 21, the hours of daylight shorten, resulting in flowering of plants that have not reached full vegetative growth. Immaturity in early August, when warm temperatures normally enhance pod development, means that pod growth likely will occur later during cooler days and nights, to the detriment of yield and oil content. This was the case in 1993, but may be less pronounced this year because the delayed areas are farther south. USDA dropped its forecast of 1995/96 yield to 36.0 bushels per acre, down from 36.5 bushels last month. The new forecast is based on a historical relationship between U.S. trend yield and the departure from normal planting progress. The combination of acreage and yield changes results in a 1995/96 production forecast of 2,210 million bushels, 10 million more than last month's forecast but 348 million below last year. With an expected soybean carryover from the 1994/95 season of 410 million bushels, supplies in 1995/96 will likely be adequate to maintain domestic crush and exports near this year's levels. U.S. soybean export prospects for 1995/96 were raised 15 million bushels in June to 775 million based on a weaker outlook for feed grain trade. Higher feed grain prices will also induce Southern Hemisphere farmers to plant more grain acreage at the expense of oilseeds in the fall of 1995. Projected ending stocks for 1995/96 fell to 355 million bushels this month. The stronger use forecast lifted the expected season average price range for soybeans 15 cents to $5.25-$6.25 per bushel. Large beginning world stocks of soybeans, coupled with expected ample production of oilseeds, will keep world oilseed supplies at 279 million metric tons in 1995/96. Foreign oilseed production is expected up 1 percent, as relatively large increases in cottonseed and rapeseed production offset relatively small declines in foreign soybean output. The increase in foreign oilseed production will compensate for a large decline in U.S. soybean output. 1995 CORN CROP DETERMINES PROBABLE COURSE OF SOYBEAN MEAL The much smaller corn crop this year would help raise soybean meal exports. U.S. corn exports for 1995/96 are expected down 200 million bushels from a year earlier. This would be particularly relevant for EU feed compounders, who would substitute relatively inexpensive soybean meal imports for feed grain imports. Although down from this year, 1995/96 U.S. exports of soybean meal are up from the May forecast, to 5.7 million short tons. But an even larger carryover of Brazilian and Argentine soybeans should restrain U.S. meal exports for 1995/96. The firmer trade picture for next year raised the range for soybean meal prices $5 per ton to $160-$185 per ton. The higher protein meal prices are likely to shave domestic disappearance, however, which is down 150,000 tons from the May forecast. On the other hand, the prospect of rising corn prices in 1995/96 ($2.45-$2.85 per bushel versus $2.20-$2.30 in 1994/95) could touch off a contraction of U.S. livestock herds, which already face low livestock-feed price ratios. Such a contraction would potentially curb domestic soybean meal consumption, without regard to whether soybean supplies are large or small next year. 1994/95 U.S. SOYBEAN AND PRODUCT EXPORTS TO RISE AGAIN THIS MONTH U.S. soybean and soybean meal exports were raised from last month to 810 million bushels and 6 million short tons, respectively, while U.S. soybean oil exports are slightly higher at 2,500 million pounds. The sharp increase in U.S. exports for 1994/95 is primarily due to larger than expected demand and reduced exports from competitors. This year's exports of soybeans and meal (in soybean meal-equivalent) will be the largest since 1987/88. Exports of soybeans through March have already equaled the total for all of 1993/94. One indicator that partly explains the export surge is the index of real trade-weighted dollar exchange rates, which measures the percentage change in currency units per dollar, weighted by the proportion of commodity exports from the United States. The index for soybeans is the lowest in 20 years, and the lowest since 1981 when compared to competing soybean exporters. Coupled with record soybean production, the lower valued dollar has made U.S. exports very competitive in 1994/95. EU imports for 1994/95 (in soybean equivalent) were increased by 100,000 metric tons from last month, due to excellent crush margins and relatively low soybean meal prices. Japan's imports were also increased 100,000 metric tons, showing no evidence of slowing due to January's earthquake. Projected soybean exports from Brazil were reduced 500,000 metric tons, because of slow export sales. Europe and Japan, Brazil's primary soybean buyers, have shown less interest in Brazilian exports. Uncertainties over Brazilian soybean deliveries due to port strikes and the refusal by farmers to sell at extremely low prices have shifted European crushers to U.S. soybeans. Projected soybean meal exports from India were again reduced this month to 1.5 million tons, partially offsetting increases in China's soybean meal exports. Strong demand from the Middle East, North Africa, Latin America, and Europe has stimulated additional exports from the United States. U.S. soybean oil exports in 1994/95, which were raised 50 million pounds to 2.5 billion, are the second largest on record. Cumulative U.S. soybean oil exports from October 1994 through March 1995 were 1,913 million pounds. SOYBEAN PRODUCT EXPORTS SUSTAIN 1994/95 DOMESTIC CRUSH The U.S. soybean crush forecast for 1994/95 was raised 5 million bushels this month to 1,385 million bushels. Cumulative crush for 1994/95 (September- April) was 967.5 million bushels. This implies an average monthly crush of 104 million bushels to reach the forecast total. May-August crush in 1993/94 averaged 100 million bushels per month. The April crush declined from the March total, but ran 13 percent above the year-earlier volume. The larger use figures lowered the 1994/95 ending stocks projection 15 million bushels to 410 million. A slightly stronger price outlook for the remainder of the season increased the average 1994/95 price 5 cents from last month's forecast to $5.45 per bushel. Total meal disappearance slumped in April to the lowest monthly volume of 1994/95 as both exports and domestic disappearance declined. Nonetheless, USDA estimated a higher average price of high-protein soybean meal for the year at $157.50 per ton, as weather concerns in late May lifted feed prices. Domestic soybean oil production for 1994/95 was forecast 55 million pounds higher to 15,372 million pounds, based on a larger expected crush. The production increase will be needed to keep up with export demand. Yearend stocks were projected higher (to 1,085 million pounds) as domestic disappearance is now expected to fall 41 million pounds short of the 1993/94 use. While still healthy, total offtake of soybean oil fell in May from April's monthly record. MOUNTING PRODUCTS DEMAND SPURS ROBUST U.S. SUNFLOWERSEED CRUSH This month, USDA forecast sunflowerseed crush 68,000 tons higher, to 1.2 million metric tons. And although U.S. exports of sunflowerseed for 1994/95 have not met previous expectations, the revised forecast is 238,000 metric tons, which is still more than double last season. The large 1994 crop has permitted a great expansion in both export and domestic demand. This year's remarkable increase in crush is due to a strong offtake of sunflower oil and meal. U.S. exports of sunflowerseed oil are well on the way to a new record of 350,000 metric tons. And total domestic disappearance for 1994/95 would rank second to the 179,000-ton record of 1991/92. This year's anticipated domestic disappearance of sunflowerseed oil is 125,000 metric tons, up 27,000 tons from last month. This year, domestic disappearance of sunflower meal is estimated to be 544,000 metric tons, up 13,000 from the May forecast. This is 21 percent larger than the previous record of 1991/92. Sunflower meal exports are also on target to set a new high of 68,000 metric tons. While sunflowerseed meal prices have been very low this season (and the reason behind the record disappearance), the projected season average price slightly increased to $60 per short ton this month from $57.50. This price compares to the $94-per-ton average of 1993/94. ****************************************************************************** Information Contacts: Mark Ash Soybeans, Minor Oilseeds, Fats and Oils (202) 219-0838 Scott Sanford Peanuts, Cottonseed (202) 219-0835 Jaime Casteneda World Oilseeds (202) 219-0826 ****************************************************************************** The next release of the OIL CROPS OUTLOOK is scheduled for 4:00 p.m. ET Thursday, July 13. 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 & resid. stocks ------------------------------------------------------------------------------ -------------------------- Million bushels--------------------------- 1993/94 292 6 1,871 2,170 1,276 589 96 1,961 209 1994/95 1/ 209 8 2,558 2,775 1,385 810 170 2,365 410 1995/96 2/ 410 5 2,210 2,625 1,375 775 120 2,270 355 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 2--Soybean meal: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ---------------------------- ------------------------------------ Year begin. Beg. Produc- Total Domestic Ex- Total End. Oct. 1 stocks tion ports stocks ------------------------------------------------------------------------------ ------------------------------1,000 tons----------------------------- 1993/94 204 30,417 30,691 25,185 5,356 30,541 150 1994/95 1/ 150 32,765 32,975 26,725 6,000 32,725 250 1995/96 2/ 250 32,685 33,000 27,050 5,700 32,750 250 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 3--Soybean oil: U.S. supply and disappearance ------------------------------------------------------------------------------ Supply Disappearance ---------------------------- ------------------------------------ Year begin. Beg. Produc- Total Domestic Ex- Total End. Oct. 1 stocks tion ports stocks ------------------------------------------------------------------------------ -------------------------- Million pounds--------------------------- 1993/94 1,555 13,951 15,574 12,941 1,529 14,471 1,103 1994/95 1/ 1,103 15,372 16,485 12,900 2,500 15,400 1,085 1995/96 2/ 1,085 15,400 16,495 13,100 1,900 15,000 1,495 ------------------------------------------------------------------------------ 1/ Estimated. 2/ Forecast. Table 4--Oilseeds prices received by farmers, U.S. -------------------------------------------------------- Marketing Soy- Cotton- Sun- year beans seed flowers Peanuts Flaxseed -------------------------------------------------------- $/bu. $/ton $/cwt Cents/lb $/bu. 1990/91 5.74 121.00 10.80 34.70 5.27 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 1993/94: September 6.21 104.00 14.20 32.00 4.24 October 6.01 112.00 11.20 30.00 4.09 November 6.32 122.00 11.60 29.50 4.05 December 6.64 123.00 13.00 29.70 4.18 January 6.72 126.00 13.60 36.10 4.38 February 6.71 97.00 15.10 NA 4.61 March 6.73 NA 15.00 NA 4.64 April 6.57 NA 15.00 NA 4.60 May 6.77 NA 15.60 NA 4.43 June 6.72 NA 14.20 NA 4.25 July 5.92 NA 12.40 NA 4.28 August 5.58 89.00 12.60 NA 4.52 1994/95 September 5.47 101.00 10.70 30.30 4.54 October 5.30 96.00 10.80 28.80 4.49 November 5.36 107.00 10.60 25.60 4.51 December 5.41 104.00 10.30 25.40 4.71 January 5.47 101.00 10.60 25.70 4.75 February 5.40 97.00 10.80 NA 4.94 March 5.51 NA 10.40 NA 5.15 April 5.55 NA 10.70 NA 5.10 May1 5.44 NA 10.30 NA 4.85 -------------------------------------------------------- 1 Preliminary. Table 5--Vegetable oil prices --------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn year oil2 oil3 oil4 oil5 oil6 --------------------------------------------------- Cents/lb. 1990/91 21.00 22.30 23.60 45.50 27.50 1991/92 19.10 20.10 21.60 27.30 25.82 1992/93 21.40 25.00 25.30 27.40 20.90 1993/94 27.09 27.78 31.00 43.20 26.38 1993/94: October 22.96 24.79 26.33 40.20 22.25 November 25.43 26.69 28.20 43.33 23.06 December 28.27 30.39 32.11 43.17 26.93 January 29.91 33.16 35.08 46.10 28.00 February 28.85 29.96 33.68 46.12 29.89 March 29.03 29.60 33.48 44.50 30.30 April 27.90 29.06 33.00 43.40 29.63 May 29.10 29.66 33.50 44.25 29.48 June 27.60 27.55 31.34 43.75 29.43 July 24.53 24.20 28.89 44.00 27.20 August 25.38 23.71 28.13 45.00 25.02 September 26.12 24.51 29.28 43.10 24.87 1994/95 October 27.06 23.64 28.90 46.00 24.73 November 29.84 24.85 29.40 50.88 24.75 December 30.61 25.50 30.63 53.80 24.75 January 29.04 26.41 29.25 50.25 28.01 February 28.15 25.63 27.66 41.83 27.26 March 28.33 26.41 27.97 41.00 28.17 April 27.16 24.00 26.89 41.25 27.30 May1 25.46 24.24 26.20 40.25 26.42 ------------------------------------------------------------------------- 1 Preliminary 2 Decatur 3 Valley points 4 Minneapolis 5 Southeast mills 6 Chicago Table 6--Oilseed meal prices --------------------------------------------------- Soy- Cotton Sun- Marketing bean seed flower Peanut Linseed year meal2 meal3 meal4 meal5 meal4 --------------------------------------------------- $/Short ton 1990/91 181.40 130.75 88.00 193.00 130.10 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 1993/94: October 194.50 173.10 90.00 196.00 147.50 November 209.40 181.00 90.00 197.00 161.80 December 206.00 180.00 89.40 200.00 155.25 January 198.30 170.30 97.00 209.00 140.25 February 198.40 173.10 98.75 207.50 136.25 March 195.40 174.00 N/Q 198.75 127.20 April 188.90 166.25 N/Q 191.00 125.50 May 193.75 157.75 105.00 187.50 125.00 June 195.50 154.10 102.50 163.75 111.90 July 181.10 152.50 97.50 164.00 114.90 August 178.60 144.50 90.75 153.75 111.60 September 174.50 145.00 85.00 114.80 NA 1994/95 October 168.50 134.40 75.00 151.25 122.50 November 161.00 120.50 69.50 147.50 110.00 December 156.90 114.20 52.50 127.00 95.60 January 156.40 106.75 50.00 105.00 82.40 February 151.30 97.50 46.88 107.50 85.25 March 156.90 100.30 52.50 119.00 90.00 April 161.90 98.10 62.50 125.00 94.40 May1 159.39 89.58 60.60 123.75 85.00 ---------------------------------------------------------------------------- 1 Preliminary 2 Hi-pro Decatur 3 41% Memphis 4 Minneapolis 5 50% SE mills END-END-END