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QUARTERLY REVIEW
Soybeans and Products
World soybean production in 1997/98 is forecast at 150.6
million tons, 14 percent above last year's estimate, with all
major producers, except China, forecast to harvest crops near or
at record levels. In China, soybean area was up 10 percent from
last year's reduced level despite the continued lower government
procurement price for soybeans relative to grains. U.S. soybean
production is estimated at a record 74.2 million tons for 1997,
14 percent above last year's figure in response to an increase in
planted area and yields. Soybean production in India is forecast
to increase 1.25 million tons to 5.4 million tons due to
continued area expansion spurred by high world soybean prices.
High prices are also influencing the projected larger area
expansion and soybean production forecast in South America.
World soybean exports for 1997/98 are forecast to rise 7 percent
as larger supplies in the U.S. and South America are expected to
increase export availabilities. The larger U.S. harvest supports
a 9 percent increase in U.S. soybean exports in 1997/98. Growing
demand for soybeans in China continues to account for a larger
share of its domestic output, and thereby reduce exportable
supplies and further raise net imports more than 32 percent.
Brazil's 1997/98 soybean exports are projected to decline 9
percent from the previous season's record level, but remain the
second largest export level on record. Brazilian soybean exports
are enhanced by larger availabilities, favorable world prices,
elimination of export taxes on soybeans, and improvements in its
transportation system. Given higher soybean production, Argentina
is forecast to bounce back with exports projected to double the
low export performance in 1996/97 caused by drought that reduced
soybean supplies.
Forecast world soybean imports for 1997/98 are projected to rise
in response to continued strong demand in China, Mexico, Brazil
and Argentina. China's soybean needs are expected to exceed last
year's level in response to a tight supply situation coupled with
a year to year rise in demand for soybeans. China's 1997 soybean
crop is forecast 4 percent higher than last year's harvest, but
is expected to fall short of historical levels. In Mexico,
economic growth and lower inflation has boosted consumers'
purchasing power and contributed to an increase in demand for
soybeans and products. In addition, recent foreign investment in
expanded crushing capacity in Mexico is expected to boost soybean
imports. Argentina's limited soybean supplies in 1997 have raised
import demand to an all time high of 900,000 tons compared to
only 300,000 tons last year and 10,000 tons in 1995/96. During
the first quarter of the marketing year, Argentina has imported
more than 500,000 tons of soybeans from the U.S.
Brazil's strong export program coupled with its growing
domestic crush industry are expected to support larger imports
next year. Imports in 1997/98 are forecast to increase 800,000
tons from the previous year's level to 1.6 million tons. Paraguay
is expected to supply some of Brazil's import needs due to its
larger crop and close proximity to Brazilian markets. The United
States is also expected to supply a substantial quantity of
soybeans to Brazil in 1997/98. U.S. export sales for the week
ending January 1, 1998 reports accumulated exports to Brazil have
reached 776,000 tons.
World soybean ending stocks are projected to rebound in 1997/98.
Stocks are forecast to more than double in the United States
supported by a 14 percent increase in soybean production this
year. Brazil's stocks are expected to rise, but will likely be
constrained by strong exports and growth in domestic crush volume
that will continue to hold stocks below historical levels.
Argentina's stocks are projected to recover to their highest
level since 1994/95 given its increased soybean output.
Global soybean meal exports in 1997/98 are forecast at 35.8
million tons with increases in the U.S., Brazil, Argentina and
India. World soybean meal use is forecast to reach 97.3 million
tons, up 5 percent for the second year in a row. This increase is
attributed to continuous strength in soybean meal demand in Asia
despite reductions from earlier estimates in response to the
economic difficulties within the region. China's soybean meal
import and consumption growth more than offsets reductions in
Indonesia, Malaysia, Taiwan. China's higher soybean meal
consumption forecast will further reduce its soybean meal exports
to an estimated 25,000 tons. In the United States, soybean meal
usage is forecast to increase in expectation of increased hog
numbers and improved profitability of poultry production.
Projected lower world soybean meal prices are expected to boost
soybean meal imports and consumption by the EU.
World soybean oil exports in 1997/98 are forecast to reach 6.2
million tons reflecting significant increases by the major
suppliers. The United States' exports are forecast to increase 17
percent from the previous year to 1.1 million tons. The U.S.
soybean oil season average price is projected to increase from
22.5 cents to a 24.0-27.0 cent per pound range reflecting
strength in demand and reduced ending stocks. Brazilian soybean
oil exports and domestic use are projected to increase in
1997/98. Brazilian soybean oil consumption has grown in recent
years due to an improving economy and lower inflation resulting
in greater consumer buying power. On the import side, China is
expected to remain the major importer of soybean oil in response
to its growing needs.
Rapeseed and Products
A rebound in production in Canada and the EU this year is
expected to boost world rapeseed production 11 percent for
1997/98. Lower grain prices in 1996/97 coupled with strong demand
for protein meals and growing vegetable oil demand have prompted
a return to rapeseed planting. Estimated planted area grew by
nearly 2 million hectares in 1997/98 compared to a year earlier
with total world production expected to reach 33.9 million tons.
In Canada, 1997 rapeseed production is estimated at 6.2 million
tons, up 1.1 million tons from 1996. Area planted increased an
estimated 39 percent to 4.8 million hectares. The increased
plantings are in response to lower wheat prices and crop rotation
considerations. Yields in 1997 are estimated at 1.29 tons/ha,
somewhat lower than earlier projections due to hot, dry weather
in parts of Saskatchewan and late plantings due to early wet
weather in the Peace River area.
In the EU, rapeseed production rose 20 percent to 8.6 million
tons in response to expanded plantings and improved yields this
year. Production in Germany rose 42 percent from a year ago to
2.8 million tons while production in France increased 18 percent
to 3.4 million tons. EU average rapeseed yields climbed 17
percent in 1997 to 3.1 tons/ha. Rapeseed yields in Germany showed
the most improvement in 1997 rising 35 percent to 3.1 tons/ha. A
reduction in the level of winterkill compared to 1996 accounted
for much of the improvement. Better weather also helped boost
yields in France, Italy, and Austria while yields in the rest of
the EU remained near 1996 levels. Total EU rapeseed area rose 3
percent in 1997 to 2.7 million hectares with most of the increase
occurring in France, Germany, and the United Kingdom. In France,
area planted rose 12 percent to 970,000 while in Germany and the
UK, area planted rose 5 and 7 percent, respectively.
Other increases in rapeseed production include Australia and the
United States where lower wheat prices relative to rapeseed have
resulted in an increase in area planted and subsequent increase
in production. In Australia, production is expected to reach
770,000 tons on 600,000 ha, but yields are expected to be
significantly reduced from the previous year due to drier
weather. U.S. production is up 85 percent to 406,000 tons on
290,000 ha. Rapeseed production in China is up 200,000 tons this
year despite slightly reduced acreage due to better growing
conditions and resulting improvement in yields.
World rapeseed exports are forecast to reach 5.5 million tons
in 1997/98, nearly unchanged from a year earlier despite the
increase in supply. Canada's rapeseed exports are forecast to
reach 2.5 million tons this year, down 2 percent from last year
as Canada's recently expanded crushing industry grabs a greater
share of the crop. EU rapeseed exports are forecast to rise in
1997/98 compared to a year ago, but most of this increase is
expected to be intra-EU trade prompted by this season's larger
harvest. Total world crush is expected to be higher this year in
response to the increase in production. Crush is forecast at 30.5
million tons, up 2.0 million tons or 7 percent from 1996/97. Both
Canada and the EU account for nearly two-thirds of the increase
in crush this year, with smaller increase noted for China,
Poland, Australia, and the United States. World ending stocks, in
response to the increase in production, are forecast to improve
to 1.1 million tons, an increase of 146,000 tons from a year ago.
With the increase in crush, world rapeseed meal and oil
production are expected to rise to 18.5 million and 11.3 million
tons, respectively in 1997/98. However, meal exports are expected
to remain unchanged at 4.2 million tons. Both Canada and the EU
are expected to post significant gains in 1997/98, but a 300,000
ton decline in China's exports will offset all of the increase.
The decline in China is expected due to increased domestic demand
for meal. Rapeseed meal imports are expected to be higher in the
United States, with somewhat smaller increase in Japan and South
Korea. Total EU imports are also expected to rise in 1997/98 but
primarily due to increased intra-EU trade. World rapeseed oil
exports are forecast to increase 318,000 tons to 2.6 million tons
primarily on the strength of increased exports by Canada and the
EU. On the import side, China is expected to import 25 percent
more rapeseed oil in 1997/98 for a total of 500,000 tons. World
rapeseed oil consumption is forecast to rise 514,000 tons to 11.2
million tons. The largest consumption increases are forecast for
China, the United States, Poland, and the EU, with smaller
increases noted for Canada and Mexico.
Sunflowerseed and Products
Global sunflowerseed production for 1997/98 is forecast at
24.2 million metric tons, up 2 percent from last year. An 800,000
ton increase in Argentina's production forecast at 6.0 million
tons, accounts for most of the increase. The rise in Argentina's
production is primarily due to a 14 percent increase in planted
area in 1997. This increase in response to growers returning to
sunflowerseed production after diverting acreage to grains over
the past few years. In addition to the rise in area planted,
higher yields are also expected this year in response to improved
growing conditions so far this season. Elsewhere, sunflowerseed
production in Hungary, Romania and the EU are estimated to be
lower in 1997 in response to a decline in planted area. This
decline is in part a reflection of the low prices received for
sunflowerseed in 1996/97. Plantings in the FSU were also reduced
in 1997, but production remains unchanged as yields are expected
to recover from last year's drought. However, yields were still
below potential, hampered by persistent wet weather that reduced
crop quality and delayed harvest. In addition, harvest and
transportation inefficiencies and the lack of capital for
fertilizer and other crop inputs combine to keep yields below
potential. In the United States, sunflowerseed production grew an
estimated 5 percent to 1.7 million tons this year in response to
an increase in area planted.
Total world sunflowerseed exports for 1997/98 are forecast at 3.1
million tons, down 14 percent from last year. Reduced exports by
Russia and the Ukraine account for most of the decline, and more
than offsets a projected increase in Argentina's exports. In
1996/97, both Russia and the Ukraine contributed to a total FSU
sunflowerseed export figure of 2.2 million tons. Demand for hard
currency and poor condition of local crushing facilities
contributed to the export rise. Exports in 1997/98 are forecast
to decline 46 percent to 1.2 million tons as a greater share of
this year's crop will be crushed and consumed locally. In
Argentina, the increase in sunflowerseed production is expected
to lead to a 7-fold increase in Argentina's sunflowerseed exports
to 700,000 tons. The FSU and Argentina account for most of the
world's exports of sunflowerseed (approximately 75 percent
excluding EU intra-trade) while the EU (excluding intra-trade)
accounts for nearly 70 percent of imports. With the drop in FSU
sunflowerseeds entering the export market, world imports are
forecast to decline. In the EU, imports are forecast to decline
15 percent to 1.8 million tons (excluding intra-trade). Total
world consumption of sunflowerseed is forecast to increase 3
percent to 24.6 million metric tons with ending stocks declining
21 percent to 1.0 million tons.
Sunflowerseed meal production is forecast to increase 1 percent
from last year reflecting the increase in seed production coupled
with an expected draw-down in stocks through 1998. In the FSU,
meal production is forecast to increase 15 percent to 1.4 million
tons due to the increase in domestic crush. However, a 4 percent
decline in crush yields due to the lower quality of this year's
crop will help keep the increase in meal production below
potential. In Argentina, increased sunflowerseed production is
expected to push meal production up 5 percent in 1998. World
sunflowerseed meal exports are forecast to remain unchanged from
last year with about 84 percent of the world sunflowerseed meal
exports (excluding EU intra-trade) forecast to go to the EU.
Worldwide consumption of sunflowerseed meal is projected to
remain nearly unchanged at 9.9 million tons.
Total sunflowerseed oil production in 1997/98 is forecast at 8.8
million tons, up 4 percent from last year. Increased
sunflowerseed oil production in the Ukraine, Argentina, and the
U.S. account for much of the increase. In the Ukraine, an
increase in domestic crush is responsible for a 41-percent
increase in oil output. Argentina's sunflowerseed oil production
forecast was increased 8 percent to 2.1 million tons in response
to the increase in crush resulting from this year's record
harvest. In the U.S., sunflowerseed oil production is forecast to
rise 11 percent in 1997/98 as abundant seed supplies and growing
demand for sunflowerseed oil raise export prospects.
A 4-percent increase in world sunflowerseed oil exports is
forecast for 1997/98 due to growing worldwide demand for
vegetable oil. Prices for sunflowerseed oil are extremely
competitive with competing oils and is helping to propel exports.
Increases in exports are forecast for Argentina, the U.S. and
other major exporting countries. World imports are forecast to
rise 7 percent to 3.4 million tons. Total world consumption of
sunflowerseed oil is forecast to rise 2 percent to 8.8 million
tons.
Cottonseed and Products
World cottonseed production is forecast to increase slightly
to 35.1 million tons in 1997/98 as the largest producers, China,
the United States, and India, decrease production. Argentina,
Brazil, and Greece are forecast to increase production. Global
cottonseed exports are forecast to increase to 985,000 tons in
1997/98, 25 percent above last year's estimate. Australia, Benin,
Greece, and the United States are forecast to account for 72
percent of world cottonseed exports. U.S. exports of cottonseed
in 1997/98 are expected to rise to 113,000 tons. Italy, Japan,
Mexico, Spain, and Uzbekistan are projected to account for 74
percent of cottonseed imports in 1997/98. Japan is expected to
remain the world's largest importer of cottonseed in 1997/98 with
imports of 180,000 tons.
World cottonseed meal production is forecast at 12.3 million tons
in 1997/98, little changed from 1996/97. China continues to be
the largest producer of cottonseed meal. China traditionally
exported higher volumes of cottonseed meal, but in recent years,
exports have fallen from a peak of 950,000 tons in 1992/93 to
only 200,000 tons projected next year. Global exports of
cottonseed meal are expected to increase by 7 percent in 1997/98.
Argentina is projected to become the leading exporter of
cottonseed meal at 350,000 tons. Imports of cottonseed meal are
forecast to remain essentially unchanged in 1997/98. South Korea
and the United Kingdom continue to rank as the first and second
largest importers of cottonseed meal.
Production of cottonseed oil is projected to show a small gain to
3.9 million tons in 1997/98. China, the United States, India, and
Uzbekistan continue to be the world largest producers of
cottonseed oil. In 1997/98, exports are expected to increase 4
percent to 509,000 tons. The United States, Argentina, and
Uzbekistan are expected to account for 87 percent of total
cottonseed oil exports. Russia continues to be the leading
importer of cottonseed oil, followed by Egypt and India. World
consumption of cottonseed oil is projected to rise 1 percent to
3.9 million tons in 1997/98.
Peanuts and Products
World peanut production is forecast to decline 2.0 million
tons to 26.2 million tons in 1997/98. Reduced production in
China, India, and the United States are expected to outweigh
increases in Argentina, Senegal and South Africa. In China, poor
growing conditions reduced peanut yields 21 percent to 2.2
tons/ha resulting in a 2.1 million ton decline in production to
8.0 million tons. Harvested area was virtually unchanged at 3.6
million hectares. In India, a decline in area planted and
somewhat lower yields are expected to lead to a reduction in
total peanut production in 1997/98. Production is expected to
fall 200,000 tons to 8.0 million tons with yields expected to be
just under one ton per hectare. U.S. peanut production is also
expected to be lower in 1997 due to reduced yields in parts of
the southeastern U.S. in response to dry growing conditions. Area
planted was nearly unchanged in 1997 with production estimated at
1.6 million tons.
Argentina's peanut production, after climbing to 462,000 tons on
239,000 hectares in 1995/96, declined to 300,000 tons in 1996/97
on 275,000 ha. Drought in early 1997 reduced peanut yields
significantly to 1.09 tons/ha from the previous year's 1.93
tons/ha. Production in 1997/98 (1998 harvest) is forecast to
rebound strongly to a record 600,000 tons on 350,000 ha. Area
under cultivation will expand in 1998 as Argentina continues to
invest in new technology to improve quality and yield. Peanut
production in Senegal is expected to increase 120,000 tons in
1997 to 720,000 tons as government credit and fertilizer
programs, along with improved weather boost yields above the 1996
level. Peanut area is expected to decline 10 percent in Senegal
in 1997 limiting production gains. In South Africa, peanut
production is forecast to increase 21 percent to 170,000 tons as
growers expand area planted.
Peanut exports in 1997/98 are forecast to grow 9 percent to 1.6
million tons. A nearly 200 percent increase in Argentina's
exports accounts for nearly all of the increase this year, more
than offsetting a decline in China's exports. China's peanut
exports are expected to decline 75 percent to 100,000 tons due to
the smaller crop. U.S. peanut exports are forecast to remain
essentially unchanged from 1996/97 at 302,000 tons. Peanut
imports in 1997/98 are forecast at 1.6 million tons, an increase
over 1996/97 and due primarily to an increase in imports by the
EU.
World peanut meal production is forecast to decline 18 percent to
5.5 million tons in 1997/98. A smaller peanut crush, particularly
in China and India (which together account for over 80 percent of
world crush) accounts for most of the decline. Exports of peanut
meal will be nearly unchanged from the previous year at 540,000
tons. World peanut oil production is also forecast to decline in
1997/98 due to the reduced crush in China and India. Production
is forecast to reach 4.2 million tons, down 313,000 tons from the
previous year while exports rise nearly 9 percent to 214,000
tons. World peanut oil consumption is forecast to decline in
1997/98 due to reduced supplies in China and India, but increased
demand in the EU will help push exports higher.
Copra and Products
Global 1997/98 copra production is projected at 5.5 million
tons, up only 1 percent from production levels in 1996/97. The
majority of this production increase is forecast to occur in
India where copra production is expected to return to normal
levels after cyclone damage in 1995/96. The Philippines is the
leading producer (42 percent of world supply) with production
forecast at 2.3 million tons - the same level as achieved in
1996/97. Drought in Southeast Asia has caused some uncertainty in
production levels in the Philippines and Indonesia, which is the
second largest copra producer. The long-term effects of El Nino
are expected to be more pronounced in 1998. World coconut oil
production is projected slightly above the 1996/97 estimate at
3.4 million tons coinciding with the increase in copra
production. Coconut oil production in the Philippines is forecast
at 1.5 million tons. In Indonesia, the second major coconut oil
producer, output is expected to increase slightly to 886,000
tons. Estimated world demand of coconut oil in 1997/98 remains
unchanged with the U.S. remaining the world's largest market with
imports forecast at 475,000 tons.
Palm Oil
World palm oil production is forecast to increase slightly to
17.7 million tons in 1997/98, although this forecast may be
revised as the effects of El Nino and the fires in Indonesia
become more evident. Currently, it remains dry in Indonesia with
total precipitation since October 1996 below seasonal norms. This
dry weather, coupled with the effects of the recent forest fires,
has resulted in a reduction in Indonesia's palm oil production
forecast to 5.4 million tons from earlier estimates. In Malaysia,
1997/98 palm oil production is forecast to rise 10 percent above
the 1996/97 estimate reflecting continued expansion in area of
mature fruit bearing trees in East Malaysia. Palm plantations in
Malaysia are also receiving below normal precipitation. Total
world exports of palm oil are forecast above the year-earlier
estimate as exportable supplies are projected to increase in
Malaysia. Global palm oil imports remain strong as major markets
are forecast to import near or above last year's estimates.
The Government of Indonesia imposed a three month ban on palm oil
exports effective January 1, 1998, reported by the U.S.
Agricultural Counselor in Jakarta. The government took this
action in an attempt to control rapidly increasing retail prices
for cooking oil, prices increased more than 30 percent in the
month of December alone. The result of this action was a
substantial increase in the world price of palm oil. Prices for
January 1998 are 4 percent higher than January 1997 ($578/ton and
$555/ton respectively), and almost 10 percent higher than the
average price for the entire 1997 year.
According to the Agricultural Counselor, the Government of
Indonesia is expected to review the ban in February and if
supplies are adequate and prices stabilize the government most
likely will lift the ban prior to the end of March.
Fish Meal and Fish Oil
World fishmeal production is estimated to have slipped to 6.3
million tons in 1997 due to a disappointing catch for the last
quarter in Chile and Peru. In Peru, the world's largest fishmeal
producer and exporter, production in 1997 is estimated at 1.7
MMT, down 10 percent from the 1996 level. In 1997, trade in
fishmeal was not overly constrained by shortfalls in production
due to the existence of large carry-in stocks in producing
countries. Stocks are currently at very low levels however, and
prices have appreciated accordingly. Fishmeal prices quoted in
Hamburg are currently $705 per ton (Jan 8), an appreciation of 7
percent since October, and 20 percent compared to the average
price in 1996. World fishmeal production in 1998 is expected to
rebound to 6.4 million tons despite the anticipated negative
effects of the El Nino weather phenomenon during the first
quarter of 1998.
In 1997 world fish oil production slipped to just under 1.2
million tons, down 16 percent from 1996. The warm waters off the
coast of Peru and to a lesser extent Chile, have significantly
reduced the oil content of the catch and reducing availabilities
while causing prices to climb significantly. European fish oil
prices have appreciated 15 percent since October and 57 percent
compared to the average price in 1996. In 1998 world fish oil
production is expected to rebound to 1.3 million tons, again
dependent on the impact and duration of El Nino.
Olive Oil
Global olive oil production is forecast to decline 11 percent
in 1997/98 to 2.0 million tons. Reduced production in Turkey and
Tunisia account for most of the decline as dry weather impacted
yields. Production in the EU is expected to remain close to
1996/97 levels at 1.6 million tons with increased output in Italy
offsetting reduced production in Spain due to dry weather. Spain
continues to be the worlds largest producer of olive oil at a
projected 800,000 tons in 1997/98. Tunisia, the forth largest
producer of olive oil is projected to produce only 100,000 tons
in 1997/98, a 50 percent decline from last year. The decline in
Turkey was even greater, down two-thirds from 1996/97 to 60,000
tons.
World olive oil exports for 1997/98 are forecast at 953,000 tons.
The EU's olive oil exports for 1997/98 are 646,000. Italy is
currently a net olive oil importer with requirements of 350,000
tons annually. Olive oil is an essential ingredient in the
Italian's diets. U.S. olive oil imports are expected to rise 11
percent in 1997/98 to 150,000 tons in response to increasing
consumer demand. U.S. exports are forecast to reach 10,000 tons
in the coming year, unchanged from the previous year.
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