OIL CROPS OUTLOOK April 12, 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-0495. ----------------------------------------------------------------------------- U.S. SOYBEAN EXPORTS BENEFIT FROM BRAZILIAN DELAYS USDA's forecast for 1994/95 U.S. soybean exports went to 800 million bushels, up from 785 million last month and 589 million last season. Export shipments from September through January were 414 million bushels, which is ahead of the pace set in 1992/93 when total exports reached 770 million. U.S. exports should maintain the brisk pace longer because of slower shipments in the next 2 months from South America. This should cover a significant portion of world demand, thus reducing the potential for South American exports to expand market share. The U.S. share of world soybean exports is expected to rebound from a historic low (57 percent) in 1993/94 to 66 percent this season. The South American export forecast did not change from last month despite projected larger soybean and soybean product availability. Brazil's prospective soybean production was raised to another record of 25.5 million metric tons. Beneficial weather in most soybean producing areas is likely to push yields to a record level for the fourth consecutive year. While the South American harvest is progressing ahead of average, depressed prices for soybeans will slow the pace of farm sales and exports. Confusion due to discrepancies in farm policy between Brazil's central government and its Congress could affect minimum prices paid to farmers, thus influencing the pace of sales and exports. Another devaluation of the Real is expected to occur in May, also supporting a reduced pace in Brazil's early exports. And delays at already overburdened Brazilian ports could worsen due to heavy imports of other goods, competition for transportation with other export commodities, and potential work stoppages by dockworker unions. The European Union (EU) accounts for most of the slight net increase this month in projected global soybean and soybean meal imports. Total 1994/95 EU soybean imports are projected to be 405 million bushels. U.S. exports to the EU (September through January) totaled 195 million bushels, compared with 151 million a year earlier. EU crushing margins have recently plunged, but are still above previous years. This implies that while EU crushing will still be robust, a more favorable environment for EU soybean meal imports versus soybean imports is developing. March 1 U.S. soybean stocks were 1,370 million bushels, the largest March 1 stocks since 1986 and 34 percent higher than a year ago (see ERS Autofax document #2316). However, the inventory was smaller than expected, so that year-ending stocks were forecast down to 435 million bushels from 510 million last month. The higher than normal residual suggests that the current 1994 production estimate may be overstated. Lower soybean meal prices in February reduced gross crushing margins, although U.S. margins are still well above last year. This year, soybean meal is expected to contribute 55 percent of the crushing value of soybeans, the lowest in over a decade. Oil prices also fell in February. The soybean price at the Gulf weakened while domestic prices held firm. U.S. crush dropped in February to 116.5 million bushels from January's 127.3 million. However, a resurgent soybean meal market sparked a soybean price rally in March. In April, USDA increased its crush forecast 5 million bushels for 1994/95 to 1,370 million. The cumulative crush through February established a record of 718 million bushels. With expected record domestic and foreign demand and smaller projected carryout, this year's average expected price range was raised to $5.35-$5.45 per bushel. CHINESE SOYBEAN OIL IMPORTS EXPECTED TO BOOST U.S. EXPORTS Expected U.S. soybean oil exports for 1994/95 total 2,250 million pounds (1 million metric tons), the highest since 1979. U.S. soybean oil exports to China are expected to account for about 45 percent of total U.S. exports, compared to 11 percent and 0.5 percent in 1993/94 and 1992/93, respectively. Cumulative U.S. oil exports from October 1994 through January 1995 are 981 million pounds, with China directly importing 344 million pounds. February- September 1995 exports are expected to exceed last year by 40 percent. Tight palm oil supplies and a sharp increase in Chinese soybean oil imports, are pushing projected global soybean oil exports to a record 5.2 million metric tons. Year-to-date domestic use of soybean oil, at 4,461 million pounds, is only slightly above a year earlier. The 1994/95 forecast of 13 billion pounds is 104 million pounds (0.8 percent) more than the 1993/94 offtake. Soybean oil disappearance as a proportion of total U.S. edible fats and oils disappearance has declined in the last several years, with the 1994/95 forecast at 61.5 percent. Domestic use of competing oils, especially canola oil, has increased faster than soybean oil in recent years. Based on a higher crush, the forecast for 1994/95 U.S. soybean oil production rose 50 million pounds in April to 15.2 billion pounds. Total U.S. mill and warehouse stocks of soybean oil rose in February from January to 1,136 million pounds as total use declined. Year-ending stocks are forecast down to 1,075 million, though, as upcoming export demand could be active, especially from China. Ending stocks for 1994/95 would be less than last season's tight situation and the lowest since 1985/86. Despite the tight U.S. stocks forecast, soybean oil prices, at 28.3 cents per pound in March, were below where they were a year ago. Prospects for global edible oil stocks are improving in 1995 with a huge outturn of South American soybean and sunflower oil and Malaysian and Indonesian palm oil imminent. U.S. 1994/95 MEAL DISAPPEARANCE PROJECTED TO NEW HIGH Cumulative domestic disappearance (Oct.-Jan.) has been strong, at almost 9 percent above a year earlier. USDA revised up its domestic meal use projection to 26.6 million tons, which is 1.4 million tons above the 1993/94 level. However, this pace likely will slow over the next 6 months. While the December 1994-February 1995 pig crop was record large, the March 1 breeding herd and this year's farrowing intentions for March-May and June-August were down from last year. Further depreciation of the dollar has helped U.S. soybean meal exports, especially to the EU. Although the crush forecast increased, 1994/95 expected soybean meal production increased just 50,000 tons from last month's forecast to 32.4 million tons. The year-to-date meal extraction rate of 47.3 pounds per bushel is below the range of recent years (47.5-47.6 pounds). USDA narrowed its forecast price range to $150-$160 per ton this month. Meal prices will likely slip further in coming months with normal seasonal weakening. The October-March high-protein soybean meal price averaged $160.75 per ton. RECORD U.S. SUNFLOWERSEED OIL EXPORTS SEEN U.S. sunflowerseed oil exports were raised 17 percent to a record 375,000 metric tons. Substitution of sunflower oil for soybean oil in Mexico and the Middle East accounts for most of the increase. Sunflowerseed oil prices are now lower than those of the major competing oils. In Argentina (another major sunflowerseed oil exporter), generally improved weather conditions raised projected sunflowerseed production 18 percent to 4.5 million tons. U.S. ACREAGE INTENTIONS FOR 1995 IMPLY CONTINUED AMPLE OILSEED SUPPLIES U.S. farmers say they intend to plant 61.5 million acres of soybeans in 1995, down 490,000 from 1994 (see ERS Autofax document #2309). Acreage declines were most visible in the South as cotton intentions boomed. Plantings are set to decline from 1994 in Arkansas (-200,000), Georgia (-170,000), Louisiana (-150,000), Missouri (-100,000), and most other southern States. Prospective acreage held steady or even slightly increased in the eastern and western Corn Belt regions. The moderate decline reported in Prospective Plantings is surprising considering the softening soybean-to-corn price ratio. Corn Belt farmers apparently are responding to higher fertilizer costs this spring with less corn acreage and more soybeans. Farmers in the Delta and Southeast are reacting to soaring cotton prices and a lower ARP with intentions to plant more cotton than in the last 20 years. Depending on weather and relative prices this spring, recent history indicates that soybean planted acreage could rise or fall by up to 0.5-1 million acres from intentions. Sunflower acreage intentions are 3.5 million acres, which would be down 54,000 from 1994 plantings. Intended area in North Dakota and Minnesota declined 90,000 and 40,000 acres, respectively. Most of the cutback was for oil-type varieties as non-oil types increased 11 percent from 1994. Increases in Kansas, South Dakota, and Nebraska offset some of the acreage reduction. Sunflower acreage will dip as expected returns for both spring wheat and barley look comparatively favorable and neither have a set-aside requirement this year. Some producers also may have planted fewer sunflower acres for rotation purposes. With large carryover stocks projected, sunflowerseed prices will probably not increase much in 1995/96 if new crop yields are near normal. Farmers intend to plant 193,000 acres of flaxseed, up 15,000 from 1994 but down 13,000 from 1993. North Dakota, the leading flaxseed producing State, accounted for all of the larger expected area this year. CANADIAN OILSEED PLANTINGS TO DECLINE MODESTLY IN 1995 Canadian farmers' acreage intentions this spring suggest that canola plantings will drop 647,000 acres from last year's record 14.3 million, but would still be the second largest ever. Canadian canola production set a record last year of 7.2 million metric tons. Major reasons for the decline in canola plantings are the need to maintain crop rotations and relatively good grains prices. Sowing of soybeans and flaxseed are anticipated to increase. On the other hand, very wet soils in the Canadian prairie provinces this spring may hamper planting progress, which could curb canola yields. The Canadian government's recent decision to eliminate subsidies on freight rates could soon mean more acreage of higher valued canola seed instead of grains. This action also favors domestic processing of canola against seed exports, which have been primarily to Japan, the EU, and Mexico. The impact could be moderated, however, by farmers' desires to avoid planting canola in successive years to maintain their crop rotations. Farmers are advised to plant canola on the same land only once in 4 years. Yet, Canadian canola production has already doubled since 1992. New canola crushing plants are either underway or planned in Saskatchewan and southern Ontario that will take advantage of larger supplies. The United States continues to be an excellent market for Canadian canola oil and meal exports. ****************************************************************************** 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 ****************************************************************************** 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--------------------------- 1992/93 278 2 2,190 2,471 1,279 770 130 2,179 292 1993/94 1/ 292 6 1,871 2,170 1,272 589 100 1,961 209 1994/95 2/ 209 8 2,558 2,775 1,370 800 170 2,340 435 ------------------------------------------------------------------------------ 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----------------------------- 1992/93 230 30,364 30,687 24,251 6,232 30,483 204 1993/94 1/ 204 30,417 30,691 25,185 5,356 30,541 150 1994/95 2/ 150 32,390 32,600 26,600 5,800 32,400 200 ------------------------------------------------------------------------------ 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--------------------------- 1992/93 2,239 13,778 16,027 13,054 1,419 14,473 1,555 1993/94 1/ 1,555 13,906 15,528 12,896 1,529 14,425 1,103 1994/95 2/ 1,103 15,212 16,325 13,000 2,250 15,250 1,075 ------------------------------------------------------------------------------ 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 4.20 1992/93: October 5.26 94.00 9.12 29.80 4.09 November 5.36 105.00 8.73 28.10 4.08 December 5.46 105.00 9.37 27.20 4.24 January 5.58 111.00 10.00 29.50 4.11 February 5.56 115.00 10.50 NA 4.46 March 5.65 NA 11.00 NA 4.52 April 5.73 NA 10.80 NA 4.40 May 5.81 NA 11.10 NA 4.42 June 5.90 NA 10.80 NA 4.45 July 6.56 NA 12.00 NA 4.29 August 6.56 111.00 13.30 NA 3.79 September 6.21 104.00 14.20 32.00 4.24 1993/94: 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 86.00 12.60 NA 4.52 September 5.47 101.00 10.70 30.30 4.54 1994/95 October 5.30 96.00 10.80 28.80 4.49 November 5.36 106.00 10.60 25.60 4.51 December 5.41 119.00 10.30 25.40 4.71 January 5.47 120.00 10.60 25.70 4.75 February 5.40 103.00 10.80 NA 4.94 March 1/ 5.53 NA 10.30 NA 4.96 -------------------------------------------------------- 1/ Preliminary. Table 5--Vegetable oil prices --------------------------------------------------- Cotton- Sun- Marketing Soybean seed flower Peanut Corn year oil oil oil oil oil --------------------------------------------------- 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 1992/93: October 18.36 22.17 22.03 23.63 20.43 November 20.10 22.96 23.47 25.58 20.60 December 20.52 23.91 24.33 30.30 20.75 January 21.23 24.09 24.58 31.00 20.75 February 20.72 22.03 24.47 27.17 20.87 March 21.00 22.24 24.69 26.00 20.79 April 21.24 22.55 24.94 27.40 20.80 May 21.15 22.70 24.84 30.00 20.75 June 21.30 26.76 25.50 30.13 20.60 July 24.13 30.74 28.72 31.70 20.67 August 23.46 30.45 28.83 39.50 21.50 September 23.61 28.98 28.00 39.63 22.23 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 1/ 28.33 26.41 28.19 41.00 28.17 --------------------------------------------------- 1/ Preliminary. Table 6--Oilseed meal prices --------------------------------------------------- Soy- Cotton Sun- Marketing bean seed flower Peanut Linseed year meal meal meal meal meal --------------------------------------------------- $/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 1992/93: October 180.60 154.40 86.25 163.33 141.25 November 181.90 157.50 95.00 170.00 152.50 December 187.60 174.50 86.25 173.13 137.40 January 188.75 164.40 87.50 180.00 136.70 February 179.90 149.40 90.00 175.83 142.50 March 183.60 153.50 89.00 165.00 135.40 April 187.40 149.00 82.50 161.50 126.25 May 193.25 143.10 83.50 165.63 126.25 June 193.10 153.00 91.00 171.25 123.20 July 229.90 170.30 97.50 200.00 133.75 August 219.10 178.50 97.00 213.75 150.00 September 199.90 193.75 95.00 210.63 148.75 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 1/ 156.20 100.00 51.25 119.00 86.25 --------------------------------------------------- 1/ Preliminary. The next release of the OIL CROPS OUTLOOK is scheduled for 4:00 p.m. ET Friday, May 12. END-END-END