July 1998 Circular Summary
U.S. oilseed production is forecast to reach a record 86.6 million tons in 1998 due to record plantings and continued prospects for good yields this season. This figure is up slightly from the June forecast and 2.3 million tons higher than 1997 production. Soybean production is raised 816,000 tons (30 million bushels) to 77.0 million tons (2.8 billion bushels), based on larger area. Strong gains are expected for other oilseeds, with U.S. rapeseed production forecast to reach a record 650,000 tons. Growing conditions are generally good in most U.S. oilseed areas except the South, where early-season hot, dry weather has reduced yield prospects. U.S. cottonseed production is projected to drop by 1.2 million tons to 5.1 million tons, the lowest since 1989. Despite some loss of yield potential for soybeans in the South, projected U.S. yields of 39.5 bushels per acre are unchanged from last month because of generally favorable conditions in other regions.
Demand prospects for U.S. soybeans and soybean meal have slowed, with exports projected to drop in 1998/99. Consumption and imports in several Asian countries are forecast to fall while exporter competition remains strong, particularly in the first half of 1998/99. Full-year export declines will be moderated by expected production declines in South America next spring. In European and Latin American markets, sharply lower soybean meal prices and feeding of more high-protein-consuming animal units are raising soybean meal use. China is expected to remain a large user and importer of protein feeds, although meal use growth is forecast to slow to only 2 percent. U.S. soybean meal use will be bolstered by gains in both pork and poultry numbers and the sharp drop in cottonseed supplies. Soybean crush is projected to reach a record 43.5 million tons (1.6 billion bushels), even though crush margins remain under intense competitive pressures and soybean meal exports are declining to 7.8 million tons from this year's record 8.2 million tons. Projected U.S. soybean oil stocks are forecast to fall 3 percent to 644,000 tons in 1998/99 as growth in exports and domestic demand outstrip the rise in soybean oil production this year.
Season-average U.S. soybean farm prices are projected at $4.85 to $5.85 per bushel, up 10 cents from last month but off sharply from $6.45 in 1997/98. A reduction of 25 million bushels in carryin stocks is expected to strengthen early-season prices, although carryover stocks for 1998/99 remain high at 11.8 million tons (435 million bushels). Soybean meal prices are up $5 per short ton from last month at $143 to $157 per ton while soybean oil prices remain unchanged at between 26 and 28 cents per pound for 1998/99.
Global oilseed production is projected at 288.3 million tons, up slightly from last month but up nearly 3 million tons from 1997/98. Most of this gain is in the United States, with foreign oilseed output up only 0.5 million tons from last year to 201.8 million tons. However, foreign oilseed supplies are up over 4 million tons, and large soybean inventories in South America will offer stiff competition for U.S. exports in the early months of 1998/99. Foreign oilseed production features a near 4-million-ton gain in high-oil content oilseeds, offset largely by a decline in soybeans. With a below-trend growth forecast for palm oil production, rapeseed and sunflowerseed oils will be critical in meeting global vegetable oil demand as inventories remain tight.
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