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Situation and Outlook
SUMMARY
U.S. oilseed supply and use balances for 1997/98 are a little tighter this month, with a drop in forecast soybean and soybean oil carryover stocks. The drop in soybean stocks to 6.4 million tons (235 million bushels) reflects mainly an increase in residual use based on a lower-than-anticipated March 1 soybean stocks estimate. A 5-million-bushel increase in forecast soybean crush, to a record 1,525 million bushels (41.5 million tons), is offset by a drop in soybean exports to 25.7 million tons (945 million bushels). Soybean crush continued seasonally strong through March, helped by a strong export pace for both soybean oil and soybean meal while the soybean export paced slowed. U.S. soybean oil exports are raised by 136,000 tons (300 million pounds) this month to a record 1.3 million tons (2.9 billion pounds). Soybean oil exports are helped by a drop in foreign sunflowerseed and oil production and upward revisions to South Asia's import prospects, particularly for Pakistan. Soybean meal exports also are increased, based on reduced foreign competitive meals and more competitive U.S. soybean meal prices.
Lower soybean meal prices this month reflect the above factors as well as large 1998 U.S. acreage prospects. U.S. producers indicated they intend to plant a record 72 million acres of soybeans, which would be the largest area planted since 1979/80. For 1997/98, weighted season-average soybean prices are forecast at $6.35 to $6.65, reflecting only a narrowing of the price range. Soybean meal prices are reduced to $185 to $195 per short ton. Soybean oil prices are raised to 26.5 to 27.5 cents per pound, reflecting a reduction in ending soybean oil stocks to only 531,000 tons (1,170 million pounds).
Global oilseed production for 1997/98 is forecast at a record 282.8 million tons, off 0.8 million tons from last month but up 21.3 million tons from last year. A 300,000-ton reduction in Argentina's sunflowerseed crop due to harvest losses and a drop in India's cottonseed production are only partially offset by an increase of 150,000 tons in Argentina's peanut crop.
QUARTERLY REVIEW
Soybeans and Products
World soybean production in 1997/98 is forecast at 152.2 million tons, 16 percent above last year's estimate, with all major producers forecast to harvest crops near or at record levels. U.S. soybean production reached a record 74.2 million tons for 1997, 14 percent above last year 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 also influenced the projected area expansion and larger 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 and strong export pace during the first seven months of the marketing year support a 7 percent increase in U.S. soybean exports in 1997/98. This estimate was reduced 2 percent this month due to a weak export pace in recent weeks and good harvest progress in South America. Growing demand for soybeans in China has raised forecast net imports more than 32 percent for 1997/98. According to U.S. export sales for the week ending April 4, China has taken 61 percent of its total requirements from the U.S., roughly 1.8 million tons of soybeans.
Brazil's 1997/98 soybean exports are projected to decline 11 percent from the previous season's record level, but remains 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. Reportedly, Brazil's soybean export registrations totaled 2.5 million tons for the week ending March 30, 1998. 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 production.
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 1.0 million 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 crushing 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 April 2, 1998, reports accumulated exports to Brazil have reached 808,000 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 35.7 million tons with increases in the U.S., Argentina and India. World soybean meal use is forecast to reach 97.7 million tons, up 5 percent following a 6 percent rise last year. 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, and 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 6.4 million tons reflecting significant increases by the major suppliers. The United States' exports are forecast to increase 42 percent from the previous year to a record 1.3 million tons. The U.S. soybean oil season average price is projected to increase from 22.50 cents to range 26.50-27.50 cents per pound 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. In response to tight vegetable oil supplies in India, soybean oil imports are raised this year 47 percent to 125,000 tons. Pakistan's soybean oil import forecast was increased 75,000 tons to 225,000 tons. 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 7 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 harvested area grew by nearly 5 percent in 1997/98 compared to a year earlier with total world production expected to reach 33.7 million tons. In Canada, 1997 rapeseed production is estimated at 6.2 million tons, up 1.1 million tons from 1996. Area harvested increased an estimated 39 percent to 4.8 million hectares. The increased plantings were 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 wet spring conditions in the Peace River area.
In the EU, rapeseed production rose 20 percent to 8.5 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 3.2 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 winter-kill 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 harvested 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 810,000 tons on 685,000 ha, but yields are expected to be significantly reduced from the previous year at 1.2 tons/ha due to drier weather. U.S. production was up 90 percent to 416,000 tons on 283,000 ha. Rapeseed production in China was up 170,000 tons this year despite a 6 percent reduction in acreage due to better growing conditions and improved yields.
World rapeseed exports are forecast to reach 5.8 million tons in 1997/98, up 290,000 tons from a year earlier. Strong oil demand and a larger rapeseed crop in 1997/98 are behind the increase in exports. Canada's rapeseed exports are forecast to reach 2.8 million tons this year, up 11 percent from last year with increased exports to China and the U.S. 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 and demand for vegetable oil. Crush is forecast at 30.8 million tons, up 1.8 million tons or 6 percent above 1996/97. The EU, China, and Canada account for much of the increased crush this year. For the EU, much of the increase is due to the larger production in 1997 while in China, the increase in crush is being driven by larger production for 1997 coupled with an increase in imports. Canada's expanding crushing industry continues to take a larger share of domestic production with crush in 1997/98 up 10 percent to 3.0 million tons. World ending stocks, in response to the strong demand for vegetable oil, is forecast to decline 18 percent to 1.1 million tons.
With the increase in crush, world rapeseed meal and oil production are expected to rise to 18.7 million and 11.4 million tons, respectively in 1997/98. However, meal exports are expected to show only a small increase to 4.3 million tons compared to 1996/97. Both India and Canada are expected to post significant increases in exports, offsetting a large decline in China in 1997/98. 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, up 29 percent to 1.1 million tons, 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 258,000 tons to 2.7 million tons primarily on the strength of increased exports by Canada and the EU. On the import side, China is expected to import 78 percent more rapeseed oil in 1997/98 for a total of 500,000 tons. World rapeseed oil consumption is forecast to rise 587,000 tons to 11.3 million tons. The largest consumption increases are forecast for China and the EU, with smaller increases noted for the U.S. and Mexico.
Sunflowerseed and Products
Global sunflowerseed production for 1997/98 is projected at 23.7 million tons, down 1 percent from 23.9 million tons in 1996/97. A 272,000 ton decrease in Argentina's production forecast to 5.2 million tons due to wet weather during harvest accounts for most of the decline. Lower production estimates from China, Romania, Spain and Hungary also contributed to the decline in the 1997/98 production forecast. In the United States, 1997/98 sunflowerseed production is forecast at 1.7 million tons, up 5 percent from the 1996/97 crop year due to larger sunflowerseed acreage.
Total world sunflowerseed exports for 1997/98 are forecast to decline 3 percent from last year to 2.7 million tons. France, Ukraine and the Russian Federation account for most of the decline in exports. Total world ending stocks for sunflower seeds are projected to decrease by 28 percent with United States forecast to experience the largest decline in 1997/98.
Global sunflowerseed meal production is forecast to decrease by 1.5 percent in 1997/98 as a result of smaller sunflowerseed production and crush. The decline expected primarily to be in the EU is partially offset by a 17 percent projected increase in Ukrainian sunflowerseed meal production in 1997/98. Exports of sunflowerseed meal are projected to decline by 7 percent due to lower availabilities. The EU, the world's largest importer of sunflowerseed meal, is forecast to import 6 percent less in 1997/98 due smaller world supplies.
The global 1997/98 sunflowerseed oil production forecast is 2 percent higher at 8.5 million tons with increases expected in the FSU, United States and Argentina. These increases offset the projected decline in sunflowerseed oil production in the EU. Production in the U.S. is expected to increase 2 percent in 1997/98. Global sunflowerseed oil exports are forecast to decline to 3 million tons, down 2 percent from 1996/97 due to lower production and export availabilities in the EU. A projected increase in Argentina's exports in 1997/98 is offset by decreases in other sunflowerseed oil producing countries. In response to strong worldwide demand for vegetable oil, U.S. sunflowerseed oil exports for 1997/98 are forecast to increase 3 percent from 1996/97 to reach 408,000 tons.
Cottonseed and Products
World cottonseed production is forecast to increase slightly to 35.0 million tons in 1997/98 as the largest producers, China, the United States, Brazil, Argentina, and Greece, increase production. Production in Turkey and India is forecast to decline production in 1997/98. Wet weather conditions caused India's cottonseed production to decline 10 percent from last year's estimate. Global cottonseed exports for 1997/98 are forecast to increase to 1.1 million tons, 24 percent above last year's estimate. Australia, Benin, Greece, and the United States are forecast to account for 82 percent of world cottonseed exports. Australia is projected to export 230,000 tons of cottonseed for 1997/98, up 17 percent last year. U.S. exports of cottonseed in 1997/98 are expected to rise to 181,000 tons. Italy, Japan, Mexico, and Spain are projected to account for 81 percent of cottonseed imports in 1997/98. Mexico is the world's largest importer of cottonseed in 1997/98 with imports of 190,000 tons.
World cottonseed meal production in 1997/98 remains unchanged from last year at 12.3 million tons. China continues to be the largest producer of cottonseed meal. China traditionally exported higher volumes of cottonseed meal, but in recent years, exports have continued to decline and are currently forecast at 120,000 tons. Global exports of cottonseed meal are expected to decline by 14 percent in 1997/98. Argentina is the leading exporter of cottonseed meal at 350,000 tons. Global imports of cottonseed meal have increased slightly from 825,000 tons to 831,000 tons in 1997/98. South Korea and United Kingdom are the largest importers of cottonseed meal and account for 48 percent of cottonseed meal imports.
World production of cottonseed oil is projected to increase 1 percent 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. The United States is expected to produce 567,000 tons of cottonseed oil. In 1997/98, global exports of cottonseed oil are expected to reach 246,000 tons, up 11 percent from last year . The United States, Uzbekistan, and Argentina are expected to account for 92 percent of total cottonseed oil exports. Russia is the leading importer of cottonseed oil, followed by Egypt and India. World consumption of cottonseed oil is expected to 3.9 million tons in 1997/98.
Peanuts and Products
World peanut production is forecast to decline 1.2 million tons to 27.7 million tons in 1997/98. Reduced production in China, India, Senegal, and South Africa are expected to exceed increases in Argentina. In China, poor growing conditions reduced peanut yields 16 percent to 2.4 tons/ha resulting in a 1.3 million ton decline in production to 8.8 million tons. Harvested area was increased 3 percent to 3.7 million hectares. In India, a decline in area harvested 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. Senegal's peanut production estimate for 1997/98 was reduced 15 percent from the previous year to 550,000 tons due to tight supplies of high quality seed which reduced plantings and yields. Yields were further reduced due to inconsistent rainfall during the growing season. Peanut production in South Africa was reduced to 80,000 tons in 1997/98 as plantings declined. Compared to 1996/97, both area and production were down 43 percent as growers switched to alternative crops.
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 750,000 tons on 410,000 ha. Area under cultivation is expected to grow as Argentina continues to invest in new technology to improve quality and yield.
Peanut exports in 1997/98 are forecast to grow 16 percent to 1.8 million tons. A more than three-fold 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 66 percent to 145,000 tons due to the smaller crop. India's peanut exports are also forecast to show a healthy increase to 220,000 tons this year as they capitalize on the reduced exports from China to nearby Asian markets. Peanut imports in 1997/98 are forecast at 1.7 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 8 percent to 5.6 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. Peanut meal exports will be up slightly 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 4.3 million tons, down 218,000 tons from the previous year while exports rise 6 percent to 203,000 tons. World peanut oil consumption is forecast to decline in 1997/98 due to reduced supplies in China and India.
Copra and Products
Global 1997/98 copra production is projected at 5.7 million tons, down three percent from the previous year's level due to drought inflicted reductions in Indonesia. The Philippines is the leading producer (41 percent of world supply) with production forecast at 2.3 million tons - the same level as achieved in 1996/97. Drought in Southeast Asia, particularly in the Philippines, remains a concern as the long-term effects are expected to be more pronounced in 1998. World coconut oil production is projected slightly below the 1996/97 estimate at 3.5 million tons as a result. Coconut oil production in the Philippines is forecast at 1.4 million tons. In Indonesia, the second major coconut oil producer, output is expected to level at the 1 million ton mark, down 140,000 tons from 1996/97. Despite drought related production concerns, coconut oil prices have been tempered by large stocks in Rotterdam and the U.S. Estimated world demand of coconut oil in 1997/98 is unchanged at 3.4 million tons with the U.S. remaining the world's largest market.
Palm Oil
World palm oil production, forecast at 17.6 million metric tons in 1997/98, is expected to show little growth over 1996/97 levels (17.5 MMT). Currently, it remains dry in Indonesia as total precipitation since October 1996 remains below seasonal norms. Fires also continue to be a problem in eastern Kalimantan, Indonesia, although damage to palm plantations is not clear. Palm plantations in Malaysia are also receiving below normal precipitation, and the lagged effect on production can be seen in lower yields in both countries. Total world exports of palm oil are forecast to decline 400,000 tons year-to-year to 10.8 million tons as exportable supplies are projected to decrease in Malaysia and Indonesia. Palm oil prices are expected to remain firm as a result.
There are indications that Indonesia will lift its export ban on palm oil and products as early as April 22nd. In order to ensure sufficient supplies for the domestic market, the Indonesian government will likely increase the level of its palm oil export tax from 20 to no more than 40 percent. This is required due to the large difference between the domestic and world price of palm oil resulting from the Rupiah's depreciation. Due to larger than expected exports in November and December of 1997, and the possibility of illegal shipments during the export ban, stocks in Indonesia may be lower than originally anticipated. Partly as a result of these concerns, the export tax will serve to check the flow of exports once they are allowed.
Fish Meal and Fish Oil
While it is difficult to forecast world fishmeal production through 1998, it is evident that El Nino continues to plague the fishing industry in Chile and Peru. Currently, 1998 world fishmeal production is forecast to remain at the 6.2 million ton level of 1997 (compared to a five-year average of 6.5 million tons). There are indications, however, that production in 1998 could be even lower. In both Chile and Peru, fishing restrictions have been implemented to minimize over-fishing of limited resources. For certain, there will be a steeper decline in world fishmeal trade in 1998 due to a reduction in stocks in the exporting countries. In 1997, fishmeal exports actually increased over 1996 levels due to exportable stocks held in Peru. Due to minimal stocks, 1998 world fishmeal trade is expected to fall to 3.7 million tons, the lowest level in over five years. End-users will substitute high-protein soybean meal for fishmeal due to record high fishmeal to soymeal price ratios.
In 1998 world fish oil production is forecast at just under 1.2 million tons, approximately the same level of 1997 which is 200,000 tons lower than the average level of the previous three years. This output forecast largely depends on the catch and its oil content during the next three quarters. The warm waters off the coast of Peru and Chile continue to negatively affect the oil content of the catch, reducing availabilities and causing prices to climb. Fish oil prices in Europe are currently $730/MT, an increase of nearly 50 percent over the average price in April of 1997.
Olive Oil
Global olive oil production for 1997/98 is forecast at 2.0 million tons, down 10 percent from 1996/97. Production in the European Union, the world's largest olive oil producer, is forecast at 1.6 million tons, Tunisia's production estimate 1997/98 remains unchanged at 100,000 tons. Drought in the previous two years has depressed production in Spain, Tunisia, Morocco, and Turkey.
World olive oil exports for 1997/98 are forecast at 813,000 tons. The EU's olive oil exports for 1997/98 are forecast at 487,000 tons off 25 percent from expectations earlier this year. Italy is the leading of olive oil importer with imports forecast to remain at 350,000 tons. Olive oil is an essential ingredient in the Italian's diets. Prospects for U.S. olive oil import in 1997/98 have increased 17 percent since January in response to strong consumer demand. Imports are forecast at 180,000 tons.
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