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Situation and Outlook
SUMMARY
U.S. oilseed production for 1998/99 is forecast at a record 84.2 million tons, up slightly from last month due to a small increase in cottonseed production. Other changes this month include small upward revisions for imports of rapeseed products in response to larger availabilities in Canada and reductions in U.S. soybean meal exports and soybean crush. Ending stocks of soybeans are increased while stocks of soybean products are reduced.
U.S. soybean crush prospects are lowered 272,000 tons this month to 43.7 million tons (1.6 billion bushels), only slightly above last year's record. Larger South American soybean production and crush prospects offer more competition for U.S. soybean meal exports, which are cut 136,000 tons this month to 7.7 million tons, 9 percent below a year earlier. Increased soybean meal consumption prospects for the EU in 1998/99 are helping to cushion the impact of rising supply competition. EU soybean meal use and soybean imports are revised sharply higher for 1997/98, and will continue high in 1998/99 reflecting a sharper-than-expected rebound in EU hog numbers and production. U.S. soybean oil domestic use is reduced 22,000 tons this month because of increased imports of competitive vegetable oils. Soybean oil exports are unchanged at 1.2 million tons as increased export supplies in South America are largely negated by stronger import demand, mainly in India, where oilseed crops are revised down substantially.
U.S. season-average prices for soybeans and soybean meal are unchanged this month while soybean oil prices are lowered by 0.5 cent per pound to 25.0 to 27.5 cents because of early-season price weakness.
Global oilseed production for 1998/99 is projected at a record 288.0 million tons, little changed in total from last month, but with many offsetting changes. World soybean production is raised 472,000 tons to 154.1 million, with larger crops in Argentina and Canada more than offsetting small drops for the EU and India. In Argentina, drought caused a switch of some area from corn to soybean planting. Global sunflowerseed output is cut 268,000 tons to 26.2 million tons as smaller sunflowerseed crops for Russia and the Ukraine are only partly offset by a larger crop in South Africa. A small gain for rapeseed reflects a larger Canadian crop partially offset by lowered production estimates for India and Australia. Finally, global peanut production is cut by 480,000 tons to 27.6 million tons as weather reduced crop prospects in India and Argentina.
Soybeans
World soybean production in 1998/99 was increased slightly to 154.1 million tons reflecting a larger crop forecast for Argentina and Canada. Soybean acreage in Argentina was raised this month as area is switched from corn because of drought conditions. Canada's soybean crop was raised 200,000 tons to 2.75 million tons. Reduced yields in India caused a 100,000 ton reduction in its crop forecast to a still record 5.7 million tons. Forecast world soybean trade reflects import adjustments in response to strengthened demand in the EU. Exports are forecast higher with larger supplies in Argentina. World soybean ending stocks were nearly unchanged in total. The U.S. ending stocks forecast was increased 3 percent reflecting a reduction in crush while Argentina's stocks are projected 100,000 tons higher given its larger production estimate. These changes were more than offset by a drop in Brazil's ending stocks forecast driven by prospects for a larger crush.
World soybean meal exports for 1998/99 are forecast at 38.6 million tons. Changes this month reflect larger supplies in South America and a slight rebound in soybean meal demand in Asia. The smaller U.S. soybean meal supply and export forecast are based on stronger competition from South America. World soybean oil trade projected at 6.9 million tons reflects a larger export forecast for Brazil and Argentina in response to an increase in availabilities and stronger import demand. Soybean oil consumption was raised 2 percent this month with stronger demand in Iran and India. Iran's soybean oil import estimate was raised slightly based on trade information that reveals soybean oil imports are ahead of last year's pace. India's soybean oil import forecast was increased this month supported by strong early season imports compared to the same period a year earlier, despite the larger domestic vegetable oil output forecast in 1998/99.
Soybean Highlights
India's soybean production in 1998/99 was reduced 100,000 tons to 5.7 million tons. The associated reduction in soybean meal production is expected to result in lower domestic consumption leaving projected exports unchanged at 3.2 million tons. Accordingly, both soybean meal and oil production forecasts were reduced for 1998/99
Elsewhere in Asia, larger-than-expected demand for soybean meal has led to a combined increase of 225,000 tons in the 1998/99 soybean meal import projection for the region. Import forecasts were increased 50,000 tons each for Korea and Thailand while forecasts for Malaysia and Pakistan were increased 25,000 tons. The soybean meal import forecast for the Philippines was increased 75,000 tons as there are indications that additional soybean crushing capacity will occur later than expected.
The 1997/98 soybean import estimate for the European Union was increased 1.3 million tons to 16.4 million tons (excluding intra-trade) as demand for soybean meal increased for the period. Soybean meal consumption rose to 24.6 million tons for the period, up 736,000 tons from last month and 2.5 million tons above 1996/97 consumption. The rise in soybean meal demand is in response to a rebound in the EU pork industry following disease problems which resulted in a significant reduction in hogs being fed. In 1997/98, EU producers greatly expanded hog numbers with the Netherlands, where disease problems were most severe, expected to show a 43 percent increase in pork output in 1998/99. Total EU hog numbers were up in 1997/98 with output in 1998/99 expected to rise 6.1 percent.
Canada's 1998 soybean production estimate was increased 200,000 tons in December to a record 2.8 million tons. Production was higher this year despite a 7 percent reduction in area as good weather prevailed through most of the growing season. Despite the drop in area in 1998, Canadian growers remain committed to expanding soybean acreage over the next few years.
Other Oilseeds
World oilseed production for 1998/99, excluding soybeans, was reduced 482,000 tons in December to 133.9 million tons. Declines in forecast world peanut and sunflowerseed production this month offset increases in forecast rapeseed and cottonseed production. Forecast world peanut production for 1998/99 was reduced 480,000 tons in December to 27.6 million tons as production estimates were lowered for India and Argentina. India accounted for much of the decline this month with production reduced 400,000 tons to 7.9 million tons in response to dry weather during the growing season and untimely rains at harvest. A similar reduction in India's peanut crop was made for 1997/98 based on recently released official Indian statistics. World sunflowerseed production, at 26.2 million tons, was reduced 268,000 tons this month as lower production estimates for Russia and the Ukraine offset increased output expected in South Africa. Dry weather in Russia and the Ukraine resulted in a combined 600,000 ton drop in sunflowerseed production for 1998 and brings production down to last season's low level. South Africa's sunflowerseed production was raised 350,000 tons this month to 850,000 tons as growers expand area in response to good returns and improved weather.
World rapeseed production was increased 120,000 tons to 36.8 million tons this month as increases in Canada's rapeseed production estimate outpaced declines in Australia and India. Canada's rapeseed production estimate for 1998 was increased 300,000 tons to a record 7.6 million tons. Good returns for rapeseed relative to other competing crops coupled with improved weather in the latter half of the growing season led to the increase. Rapeseed production in India was reduced 100,000 tons to 6.1 million tons due to reports of insect and weather damage early in the growing season. However, the crop is currently expected to exceed last year's harvest by nearly 24 percent as growers expand acreage in 1998/99. The Australian rapeseed production estimate was reduced 100,000 tons this month to 1.6 million tons based on lower yield projections. However, the crop is still expected to be nearly double the level harvested in 1997/98. World cottonseed production was increased 146,000 tons in December to 32.5 million tons. Increased production estimates for the U.S. and India more than offset declines in Egypt and parts of the FSU. The production estimate for the U.S. was increased 81,000 tons this month to 4.6 million tons, but remains nearly 27 percent below a year ago. India's production forecast was increased 200,000 tons to 5.5 million tons.
The world oilseed export forecast for 1998/99, excluding soybeans, was increased 180,000 tons to 14.7 million tons primarily due to a decline in sunflowerseed exports forecast for the Ukraine and Russia. Other export forecast changes this month include a reduction in Australia's rapeseed export forecast, offset by increased Canadian exports, and reduced Argentine peanut exports for 1998/99, partially offset by an increase in projected peanut exports by India.
Total world other oilseed crush, which excludes soybean crush, was reduced 466,000 tons to 106.2 million tons. Declines were led by lower peanut and sunflowerseed crush forecasts in response to lower expected production. Rapeseed crush remained relatively unchanged from last month as lower crush in Australia, Poland, and India nearly offset increased crush in Canada and the EU. The world oilseed ending stocks forecast for 1998/99, excluding soybeans, was increased 46,000 tons to 3.1 million tons this month in response to an increase in forecast rapeseed stocks in Canada.
World protein meal production, excluding soybean meal, was reduced 210,000 tons in December to 58.7 million tons. This reduction is primarily in response to lower world peanut production and crush forecasts for 1998/99. Other changes this month include lower rapeseed meal production and higher cottonseed meal production. For sunflowerseed meal, forecast world production remained nearly unchanged this month as reduced production expected in Russia is offset by an increase in expected production in South Africa. Forecast exports of other protein meals, which excludes soybean meal, were increased 95,000 tons to 16.2 million tons in response to lower cottonseed meal exports. Total world protein meal consumption, excluding soybean meal, was reduced 182,000 tons this month in response to lower peanut meal production. The world ending stocks forecast for protein meals, excluding soybean meal, remained unchanged at 1.7 million tons in December.
World vegetable and marine oil production, excluding soybean oil, was reduced 83,000 tons this month to 56.6 million tons. A lower peanut oil production forecast, partially offset by increased sunflowerseed oil production, accounted for the change. Much of the peanut oil production decline was in India where lower peanut production and crush is expected to lead to reduced peanut oil production. The increased sunflowerseed crop in South Africa and associated increase in crush is forecast to lead to higher sunflowerseed oil production. Total forecast world vegetable and marine oil exports for 1998/99, excluding soybean oil, were down slightly to 23.1 million tons this month primarily due to lower 1998/99 sunflowerseed and rapeseed oil export forecasts in December. Total vegetable and marine oil consumption, excluding soybean oil, was reduced 72,000 tons this month to 56.3 million tons. The ending stocks forecast for 1998/99, excluding soybean oil, was increased slightly this month to 4.2 million tons.
Other Oilseed Highlights
In India, the 1997/98 rapeseed production estimate was reduced nearly one million tons to 4.9 million tons based on official data compiled by the Ministry of Agriculture. The rapeseed production forecast for 1998/99 was also reduced this month, down 300,000 tons to 6.1 million tons. Domestic rapeseed oil production was reduced nearly 300,000 tons for 1997/98, and 75,000 tons in 1998/99. Forecast peanut production for India was also lowered in 1997/98 and 1998/99 by 420,000 and 400,000 tons respectively.
The reductions in Indian oilseed production, including soybeans, have led to a combined reduction of domestic edible oil production of over 600,000 tons in 1997/98 and 1998/99. Edible oil imports, especially palm olein, have escalated dramatically in recent months as a result. Imports of all edible oils registered over one million tons for the Aug-Oct period alone. As a result, imports of palm oil were increased 100,000 tons to 1.43 million tons in 1997/98 and 175,000 tons to 1.45 million tons in 1998/99. Soybean oil imports were also increased 50,000 metric tons in the current year to 200,000 tons.
The increase in palm oil imports in India does not reflect an increase in world palm oil exports. Rather, the palm oil import estimates for China were reduced by roughly corresponding amounts (down 100,000 and 200,000 in 1997/98 and 1998/99 respectively) based on a comparison of Chinese and Indian import data as well as Malaysian and Indonesian export data. For a summary of key edible oil markets, see Table 10 in this circular.
In Australia, the 1998/99 rapeseed production forecast was reduced 100,000 tons to 1.6 million tons this month on account of isolated areas of drought and frost damage. The majority of the reduction was taken out of the domestic crush while rapeseed exports were reduced 30,000 metric tons. Rapeseed exports are still forecast to reach a record 1.2 million tons in 1998/99.
Russia and Ukraine's 1998 sunflowerseed production was reduced to 2.8 and 2.3 million tons, respectively this month in response to lower yields. In Russia, area planted in 1998 was up 14 percent from a year ago to 4.1 million hectares. However, severe drought brought yields to 0.68 tons per hectare, a record low level though comparable to the 0.71 tons per hectare yield experienced with the 1996 drought impacted crop. In the Ukraine where drought conditions were not as severe, yields are estimated at 1.1 tons per hectare, significantly above the 1.0 ton per hectare in 1996 and 0.88 tons per hectare in 1994. In both Russia and the Ukraine, total production for 1998 is expected to remain nearly unchanged from a year earlier. Compared to 1997/98, sunflowerseed exports for both countries are expected to be slightly lower in the coming year with crush in the Ukraine expected to reach its highest level since 1995/96.
South Africa's 1998/99 sunflowerseed production forecast was increased 41 percent to 850,000 tons in response to good soil moisture conditions during planting in late 1998. Both area and production are at record levels. Yields in 1998/99 are forecast to remain near the average of 1.0 ton per hectare. With this year's larger crop, production of sunflowerseed meal and oil are expected to increase in 1998/99.
Jim L. Matthews (202) 720-5448
Floudia Bradley (202) 720-2257
William V. George (202) 720-6234
George Douvelis (202) 720-2494
Greg Edwards (202) 690-4199
Kwamena Cudjoe (202) 720-0141
Robert Hanson (202) 690-2581
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