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Situation and Outlook
SUMMARY
Projected U.S. soybean ending stocks for 1998/99 are increased 544,000 tons (20 million bushels) this month to 11.2 million tons (410 million bushels), more than double the 1997/98 level. Prospective U.S. soybean exports are cut 544,000 tons to 22.0 million tons (810 million bushels), based on increased competition from South America. U.S. soybean crush is reduced 136,000 tons in the September-August marketing year for soybeans but is unchanged at 43.3 million tons for the October-September marketing year for products. Reduced soybean meal and oil exports this month are largely offset by increases in domestic use. Domestic consumption for both soybean meal and oil have been unusually strong through January but are expected to slow later in the marketing year as hog production slows and the strong pace of economic growth cools a little. U.S. season-average soybean prices for 1998/99 are forecast at $5.00 to $5.40 per bushel, off about 15 cents from last month. Soybean meal prices are cut slightly to $130 to $145 per short ton. Soybean oil prices are reduced to 23.5 to 25.0 cents per pound as prices to date have been weaker than expected.
Global consumption of oilseed meals and vegetable oils are nearly unchanged this month. Upward revisions in soybean meal use, mainly for the United States and the EU-15, are largely offset by reductions for China, where soybean meal imports and use have slowed markedly. The strong growth in EU soybean meal use and imports so far in 1998/99 has been helped by declining relative prices for soybean meal and by the EU ban on citrus pulp imports from Brazil. In China, economic growth is still quite robust, but lower profitability in the livestock sector has slowed growth in meal consumption.
World oilseed production for 1998/99 is projected at a record 290.7 million metric tons, up 1.3 million tons from last month and 5 million tons from last year. U.S. and foreign production are both at record levels. U.S. oilseed production of 84.6 million tons is unchanged from last month, and foreign oilseed production of 206.1 million tons is up 1.3 million tons, mostly due to a 1.5-million-ton gain in South American soybean crops. Widespread rains in past few weeks for both Argentina and Brazil have been very beneficial for yield prospects. Argentina's soybean crop is increased 500,000 tons to 18.0 million tons, but is still below the 1997/98 record of 18.7 million tons. Brazil's crop is boosted 1.0 million tons to 30.5 million tons, but is below the upwardly revised record crop of 31.5 million tons for 1997/98. Elsewhere, production is revised down 200,000 tons for copra in the Philippines. For sunflowerseed, a cut in India's sunflowerseed crop of 300,000 tons is nearly offset by an upward revision for the FSU. Argentina's peanut crop is also increased by 50,000 tons this month.
Soybeans
World soybean production in 1998/99 was increased slightly to 156.3 million tons reflecting a larger crop forecast for Argentina and Brazil. Argentina's soybean production forecast was raised 500,000 tons for the third consecutive month in response to higher yields from improved weather and continued good growing conditions. In addition, higher yields in Brazil caused a 1.0-million-ton increase in its crop forecast. Forecast world soybean trade is highlighted by reduced exports in the U.S. due to stronger competition from South America. Brazil's soybean export forecast was raised based on larger supplies and expected export gains from the recent currency devaluation. However, Argentina's export forecast is reduced from last month to support an increase in domestic crush. The world soybean import forecast reflects larger than expected demand in the EU partially offset by lower import forecasts for Japan and Indonesia. World soybean ending stocks were raised 6 percent this month on continued weakness in U.S. exports of soybeans and products. A 500,000-ton increase in Brazil's 1998 production carried into this season also contributed to an increase in ending stocks this month.
World soybean meal trade projections for 1998/99 are basically unchanged from last month as larger import demand in the EU offsets forecast weaker demand in China. The smaller U.S. soybean meal export forecast is a result of larger exportable supplies in South America. World soybean oil trade projected at 7.1 million tons includes a larger export forecast for Brazil and Argentina reflecting an increase in availabilities and stronger import demand in Iran. Iran's soybean oil consumption jumped 65 percent last year because of a shift from sunflowerseed oil imports to soybean oil. In 1998/99, Iran's soybean oil import and consumption forecast is projected to decline from 1997/98 but remain above historical levels.
Other Oilseeds
World oilseed production for 1998/99, excluding soybeans, was reduced 262,000 tons in February to 134.4 million tons primarily in response to a 200,000-ton decline in forecast world copra production. Other changes this month include a 62,000-ton decline in forecast world cottonseed production, a 50,000-ton decline in forecast world sunflowerseed production, and a 50,000-ton increase in forecast world peanut production.
Expected world copra production for 1998/99 was reduced nearly 4 percent this month to 5.2 million tons. This decline resulted from a lowering of the Philippine copra production forecast which was severely impacted by the El Nino drought as well as three successive typhoons that passed through the country in late 1998. It appears that the southern island of Mindanao, where the majority of the coconut palms are located, was hardest hit by the drought.
The decline in this month's world cottonseed production forecast is in response to reduced production forecasts for Pakistan and parts of Africa. Partially offsetting these declines were increases in Turkey and Greece. The world sunflowerseed production forecast was reduced this month to 26.4 million tons in response to a lower production forecast in India, down 250,000 tons to 1.3 million tons, which was partially offset by an increase in Russia's sunflowerseed production forecast to 3.0 million tons. Argentina's peanut production forecast was also increased this month to 550,000 tons. This is up 50,000 tons from the previous month's forecast, but is still 50,000 tons below the 1998 production level.
The world oilseed export forecast for 1998/99, excluding soybeans, was reduced 85,000 tons to 15.1 million tons. A reduction in the world sunflowerseed export forecast led the way, down 100,000 tons to 4.4 million tons. Other changes include a slight downward adjustment in world cottonseed exports, and small increases in forecast world peanut and rapeseed exports. Forecast world imports were increased 82,000 tons this month to 15.1 million tons. A 100,000-ton increase in the world rapeseed import forecast accounts for most of the change this month.
World protein meal production, excluding soybean meal, was reduced 273,000 tons in February to 58.2 million tons. This reduction is primarily in response to lower fishmeal, sunflowerseed, and copra meal production, offset by a 50,000-ton increase in forecast world rapeseed meal production. Forecast world fishmeal production was reduced 125,000 tons this month to 10.6 million tons as production in Chile was reduced 200,000 tons to 900,000 tons. This decline follows a similar decline made in January and reflects a slower rebound in catch following El Nino. Forecast world sunflowerseed production was reduced 112,000 tons this month as reduced crush in India and the Ukraine was partially offset by increased sunflowerseed crush in Russia. Forecasts copra meal production in the Philippines was also reduced this month in response to the expected smaller copra production forecast noted earlier.
Trade in other protein meals, which excludes soybean meal, is forecast lower this month in response to the reduction in fishmeal and copra production. Total protein meal exports, excluding soybean meal, are forecast to reach 15.4 million tons in 1998/99, down 273,000 tons from last month. Total world protein meal consumption, excluding soybean meal, was reduced 207,000 tons this month to 58.1 million tons in response to lower fishmeal, copra meal, and sunflowerseed meal production. The world ending stocks forecast for protein meals, excluding soybean meal, was increased 56,000 tons to 1.7 million tons.
World vegetable and marine oil production, excluding soybean oil, was reduced 613,000 tons this month to 56.3 million tons. A reduction in sunflowerseed, coconut, and olive oil production forecasts accounted for the decline. The decline in sunflowerseed oil production was a result of lower crush in India and the Ukraine and an adjustment in oil extraction rates for the Former Soviet Union. Reduced copra crush in the Philippines led to this month's 122,000-ton decline in coconut oil production to 3.2 million tons. The world olive oil production forecast for 1998/99 was reduced in response to reports of lower olive oil production in Spain. Total world production is forecast at 2.2 million tons with Spain's production expected to decline to 750,000 tons, 410,000 tons below the 1997/98 level. Total forecast world vegetable and marine oil exports for 1998/99, excluding soybean oil, were down 242,000 tons to 22.8 million tons this month primarily due to lower forecast coconut and olive oil exports. Total vegetable and marine oil consumption, excluding soybean oil, was reduced 218,000 tons this month to 56.2 million tons. The ending stocks forecast for 1998/99, excluding soybean oil, was reduced 116,000 tons as forecast olive oil stocks were reduced to 1.0 million tons.
Jim L. Matthews (202) 720-5448
Floudia Bradley (202) 720-2257
William V. George (202) 720-6234
George Douvelis (202) 720-2494
Mark Rassmussen (202) 690-4199
Robert Hanson (202) 690-2581
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