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Situation and Outlook
SUMMARY
U.S. oilseed production is forecast to reach a record 86.0
million tons in 1998/99 despite downward revisions for cottonseed
and peanut production this month. The first survey-based
production estimate for U.S. soybeans is for a record 76.9
million tons (2.8 billion bushels), little changed from the July
forecast, but up about 2.6 million tons or 100 million bushels
from last year. Record or near-record yields for some Midwestern
States will easily offset lower yields in smaller producing
States in the South impacted by the hot, dry conditions this
summer. Forecast U.S. yield of 39.5 bushels per acre (2.65
tons/ha) is second only to the 41.4 bushels per acre (2.78
tons/ha) occurring in 1994. A small reduction in forecast
harvested area for U.S. soybeans was made this month with most of
the reduction coming from Southern States.
Overall domestic demand prospects for U.S. soybeans and soybean
meal in both 1997/98 and 1998/99 are little changed this month
although the soybean crush forecast was raised, nearly offsetting
a reduction in soybean exports. Seed use also was increased
slightly reflecting greater use of narrow-row plantings and
increased seeding rates in recent years. Higher U.S. crush
prospects are mostly in response to expansion in U.S. crush
capacity and intense competition to maintain or expand global
market share. In recent years, Argentina and to a lesser extent
the United States have expanded their shares of global crush
while Brazil's share has eroded. Upward revisions for old-crop
production in both Argentina and Brazil along with reduced crush
prospects for 1997/98 this month are adding over 1 million tons
to foreign soybean supply competition in 1998/99.
Foreign import demand prospects for soybeans were down slightly
this month as reductions for China and Taiwan were nearly offset
by increases in other countries including some Asian markets. The
net added supplies this month are shown mostly as larger
carryover stocks in Argentina and Brazil, adding to potential
price pressures in the marketplace, particularly in the first
half of the new marketing year.
Season-average U.S. soybean farm prices are projected at $4.85 to
$5.85 per bushel, unchanged from last month. Soybean meal prices
are reduced from last month to $140 to $155 per short ton.
Soybean oil prices are cut 0.5 cent to 25.5 to 27.5 cents per
pound. Increased exporter supply prospects for both sunflowerseed
oil and palm oil this month will likely weigh on soybean oil
prices.
Global oilseed production for 1998/99 is forecast at a record
288.1 million tons, slightly lower than last month. Foreign
production forecasts are up slightly, partially offsetting a
decline in the United States. Foreign supplies, however, are up
by 1.3 million tons, mostly reflecting upward revisions to
1997/98 soybean crops in Argentina and Brazil. Other significant
changes this month include higher prospective Indonesian palm oil
production and exports, with exports up more than production.
Soybeans
World soybean production in 1998/99 is forecast at 153.9
million tons, reflecting a slight reduction in U.S. soybean
production from last month based on the first survey-based
production estimate from NASS. World soybean exports are slightly
lower this month due to a 3 percent cut in the U.S. estimate
reflecting expected strong competition from South America. The
Brazilian and Argentine soybean export forecasts were raised
reflecting larger supplies carried over from 1997/98. Reduced
import prospects for China and Germany more than offset increased
import forecasts for Indonesia and Mexico to lower forecast world
imports. World soybean ending stocks for 1998/99 were raised 4
percent to 24.8 million tons supported by a combined 1.0 million
ton increase in ending stocks in South America. U.S. ending
stocks were reduced slightly in response to a smaller carry in
and larger crush.
World soybean meal exports in 1998/99 are forecast at 37.69
million tons, down slightly as a 5 percent increase in U.S.
exports were more than offset by reductions for Brazil and
Argentina. The global soybean meal import projection of 37.6
million tons includes a reduction in China's soybean meal demand
from last month's projection that is offset by a higher import
estimate for Germany. Large soybean meal supplies and low world
prices support imports 4 percent higher than estimated for
1997/98. The global soybean oil situation for 1998/99 this month
reflects reduced import demand with a 200,000 ton cut in China's
import forecast to 2.0 million tons. Soybean oil export forecasts
of the three major exporters were also cut this month
contributing to slightly higher ending stocks for September 1999.
1997/98
Brazil's soybean production for 1997/98 was raised 300,000
tons to 31.0 million tons. The additional supplies coupled with a
smaller crush estimate contributes to an 18-percent increase in
ending stocks to 5.2 million tons. Brazil's soybean crush
estimate was reduced 3 percent reflecting a slower crush pace.
The soybean meal and soybean oil export estimates were also
reduced 4 percent and 6 percent respectively in response to the
reduced crush and export activities.
In Argentina, good growing conditions have boosted production to
a record 18.5 million tons, up 600,000 tons from last month.
Argentina's crush estimate was reduced 100,000, tons and exports
were raised 400,000 tons based on strong export activities over
recent months. Some minor reductions were made in the product
export estimates in response to the lower crush. The 1997/98
ending stocks estimate was raised 250,000 tons to a record 6.65
million tons.
Soybean Highlights
China's 1997/98 import estimate for soybeans
and soybean meal have been reduced 200,000 and 300,000 tons,
respectively based on nine months of official customs data and
expected shipments from major exporters which are to arrive in
China over the next two months. Total soybean imports in 1997/98
are expected to reach 3.1 million tons while meal imports are
expected to reach 4.0 million tons, barring further
cancellations. China's 1997/98 soyoil import estimate was reduced
100,000 tons to 1.9 million tons.
Due to a slow-down of growth in the feed and livestock industry
in China, 1998/99 soybean and soybean meal
import forecasts were reduced 400,000 and 300,000 tons,
respectively to 3.3 and 4.2 million tons. Large arrivals of
soybean meal in the first half of 1998 created difficulties for
soybean crushers while meal traders and end-users were hit by the
fall in soybean meal prices over the same period. Meanwhile,
soybean meal inclusion rates are possibly at their highest levels
due to prevailing low prices and large availabilities. China's
1998/99 soybean oil import forecast was reduced 200,000 tons to
2.0 million tons. (See the following report on China's soybean
policy, market, and trade prospects for more information).
Taiwan's 1997/98 and 1998/99 soybean import
forecasts have each been reduced 300,000 tons to 2.2 million
tons. On a calendar year basis, Taiwan's soybean imports are
expected to fall nearly 20 percent in 1998. Taiwan has reportedly
exported small quantities of soybean meal as the pork and other
livestock sectors contracted due to the FMD outbreak in 1997,
declining exports, and increased competition from imports.
Indonesia's soybean import estimate for 1997/98
is raised this month by 130,000 tons to 810,000 tons to reflect
the first open tender conducted by the Indonesian Bureau of
Logistics (BULOG). According to the Indonesian authorities
120,000 tons of soybeans were purchased using the GSM program for
August delivery. The 1998/99 soybean import estimate is raised by
200,000 tons to 700,000 tons.
Other Oilseeds
World oilseed production for 1998/99, excluding soybeans, was
reduced 137,000 tons in August to 134.1 million tons. Reduced
world cottonseed, peanut and copra production forecasts more than
offset increases in sunflowerseed and palm kernel production.
Cottonseed production for 1998/99 is estimated at 33.2 million
tons, down 271,000 tons for the month and 1.4 million tons
compared to 1997/98. Much of this month's decline is due to a
reduction in forecast cottonseed production in the United States
due to recent hot, dry conditions in the South-central States.
Total U.S. cottonseed production for 1998 is forecast at 4.9
million tons, down 270,000 tons this month and 23 percent below
1997 production. Forecast world peanut production was also
reduced this month to 27.5 million tons with much of the decline
coming from the United States. U.S. peanut production is forecast
at 1.6 million tons in 1998, down 124,000 tons this month in
response to the hot, dry weather this year. Particularly hard hit
is production in South Carolina and Alabama. Forecast world
sunflowerseed production was increased 202,000 tons this month to
26.3 million tons reflecting expectations of higher plantings in
Argentina in late 1998. Increases for palm kernel and copra
production resulted from changes in expected production in
Indonesia in 1998/99.
The world oilseed export forecast for 1998/99, excluding
soybeans, was increased 102,000 tons to 13.8 million tons
primarily due to increases resulting from Argentina's projected
increase in sunflowerseed production. Correspondingly, world
other oilseed imports were increased 150,000 tons to 13.7 million
tons this month, primarily as increased sunflowerseed imports by
the EU. Other oilseed crush, which excludes soybean crush, was
increased 77,000 tons this month to 107.4 million tons. The
increase was due to forecast larger sunflowerseed and palm kernel
crush, offsetting reduced cottonseed, peanut, and copra crush.
The world oilseed ending stocks forecast for 1998/99, excluding
soybeans, was reduced 25,000 tons this month in response to lower
palm kernel and peanut stock forecasts.
World protein meal production, excluding soybean meal, was
increased 52,000 tons in August to 59.0 million tons. This
increase occurred in response to an expected larger sunflowerseed
and palm kernel crush more than offsetting declines in
cottonseed, peanut, and copra crush. The increase in
sunflowerseed crush is in response to a projected increase in
Argentina's sunflowerseed production in 1999. Similarly,
increased palm kernel production in Indonesia forecast for
1998/99 is expected to lead to an increase in meal production
this coming year. World cottonseed meal production was reduced
99,000 tons to 12.0 million tons as 1998/99 crush forecasts for
Argentina, Egypt, and the United states were reduced this month.
Forecast exports of other protein meals, which excludes soybean
meal, was increased 160,000 tons to 16.0 million tons in response
to increased sunflowerseed and palm kernel meal exports.
Forecast 1998/99 protein meal consumption, excluding soybean
meal, was reduced 49,000 tons to 58.7 million tons. However, this
is still 4 percent ahead of the 1997/98. Reduced cottonseed,
rapeseed, peanut, and palm kernel meal consumption offset the
increase in sunflowerseed meal consumption expected in 1998/99.
The world ending stocks forecast for protein meals, excluding
soybean meal, was increased slightly this month to 1.7 million
tons but remains nearly 5 percent below the 1997/98 level.
World vegetable and marine oil production, excluding soybean oil,
was increased 343,000 tons this month to 56.9 million tons
primarily due to an increase in Indonesia's palm oil production
forecast. Forecast production of sunflowerseed and palm kernel
oil were also increased this month, more than offsetting declines
in cottonseed, peanut, and coconut oil production. The increase
in Indonesia's palm oil production forecast is expected as the
crop begins to rebound following the fires and drought of last
year. Total palm oil production in Indonesia is expected to reach
6.0 million tons, up 4 percent from 1997/98. Similarly, palm
kernel oil production in Indonesia is also expected to increase
in 1998/99, with the forecast rising 48,000 tons this month to
786,000 tons. The sunflowerseed oil production forecast for
Argentina was also increased this month due to the larger crush
expected from the projected increase in seed production in
1998/99.
Total forecast world exports for 1998/99, excluding soybean oil,
were up 506,000 tons to 23.5 million tons in response to
increased Palm and palm kernel oil exports by Indonesia, and
increased sunflowerseed oil exports by Argentina in the coming
year. World palm oil exports are forecast to reach 11.5 million
tons, an increase of 400,000 tons from the previous month's
forecast and 1 percent above the 1997/98 level. With the increase
in palm oil supplies expected in 1998/99, total vegetable and
marine oil consumption, excluding soybean oil, was also increased
this month rising 297,000 tons to 56.9 million tons. The ending
stocks forecast for 1998/99, excluding soybean oil, was increased
190,000 tons this month to 3.9 million tons with nearly all of
the increase resulting from increased palm, palm kernel, and
sunflowerseed oil.
Other Oilseed Highlights
Indonesia's palm oil production for the 1998/99
marketing year is increased this month by 300,000 tons to 6.0
million tons, up more than 4 percent from last year. Despite the
El Nino induced drought and haze that affected much of the region
this past year, area expansion, new trees reaching maturity and
some timely rains in northern Sumatra are expected to result in
an increased production next year.
Subsequently, the increased production of palm oil for 1998/99
will result in larger palm kernel and palm kernel oil production.
Palm kernel production for 1998/99 is expected to rise to 1.8
million tons, up almost 6 percent from last year while production
of palm kernel oil is expected to reach 786,000 tons, more than 3
percent higher than last year.
Jim L. Matthews (202) 720-5448
Floudia Bradley (202) 720-2257
William V. George (202) 720-6234
George Douvelis (202) 720-2494
Kwamena Cudjoe (202) 720-0141
Robert Hanson (202) 690-2581
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