Situation and Outlook
A sharp boost in 1998/99 prospective foreign supplies this month is forecast to significantly curtail U.S. soybean and soybean product exports and raise both U.S. and foreign soybean carryover stocks. U.S. soybean carryover is forecast at 12.8 million tons, up 1.6 million tons from last month and the largest carryover since 1985/86. Forecast soybean exports are cut 817,000 tons to 21.2 million tons while U.S. soybean crush is lowered 817,000 tons to 42.5 million tons. Most of the decline in soybean crush is due to a reduction of 817,000 tons in soybean meal exports, to 6.4 million tons. U.S. soybean oil exports are reduced by 157,000 tons this month to 1.0 million tons because of larger exportable supplies from South America. Other significant changes this month include a 400,000-ton cut in Taiwan's soybean imports, and reductions in China's imports of soybean meal and vegetable oils in response to larger internal supplies of oilseeds. Some modest upward revisions are made for imports of soybean meal in the Philippines and for soybean and other soft oil imports by India.
Season-average U.S. soybean producer prices are lowered to $4.95 to $5.15 per bushel this month. Soybean meal prices are cut to $125 to $135 per short ton while soybean oil prices are lowered to 21 to 23 cents per pound. Forecast season-average soybean meal prices are the lowest since the early 1970's.
Global oilseed production for 1998/99 is forecast at a record 294.1 million metric tons, up 3.5 million tons from last month. An upward revision in foreign beginning stocks of 1.3 million tons raises total supply 4.8 million tons from last month. Much of this month's production gain is for soybeans, up 1.8 million tons to 158.1 million tons. China's forecast peanut production is up 1.5 million tons based on official Chinese data. Soybean gains were most notable in Argentina, with the new crop raised 1.2 million tons to 19.2 million tons. Very good crop conditions prevailed for February during the critical pod-filling stage for soybeans, boosting yield prospects. Brazil's crop is raised 500,000 tons to 31 million tons, based on higher yield prospects. Other soybean production changes include a 300,000-ton increase for China, to 13.8 million tons, and a 200,000-ton cut in Indonesia's soybean crop.
Projected foreign oilseed ending stocks are raised sharply this month, and are only slightly below last year's very high level. Production estimates for old-crop, 1997/98 soybeans are raised 500,000 tons for Argentina and 200,000 tons for Paraguay.
World soybean production in 1998/99 was increased slightly to 158.1 million tons reflecting a larger crop forecast for Argentina, Brazil and China. Argentina's soybean production forecast was raised 1.2 million tons in response to higher yields from good growing conditions. The Brazilian soybean crop estimate was raised based on higher yields for most of the producing areas. In addition, Rio Grande do Sul which was affected by drought earlier has received rain and growing conditions have improved. China's soybean production forecast was raised 300,000 tons this month to 13.8 million tons reflecting improved yields and less flood damage to the crop than reported earlier.
Continued strong competition from South America reduces the U.S. soybeans and products export potential. The world soybean export forecast for March reflects a 4 percent reduction in the U.S. exports which more than offsets increases for Brazil and Argentina. According to the U.S. Export Sales report for the week ending March 4, 1999, the U.S. soybean export pace is lagging 23 percent compared to the same period last year. Whereas, trade sources report Brazilian soybean export registrations at 5.1 million tons as of February 28, 1999, compared to only 1.5 million tons at the same time last year. Brazil's currency devaluation, the elimination of the differential export tax and lower world soybean prices are expected to favor larger gains in exports over growth in domestic crush. Brazil's soybean export forecast is currently 8.6 percent higher than last year's record.
Reduced imports for China, the EU and Taiwan are reflected in the world import forecast this month. China's soybean import forecast was lowered 150,000 tons based on the larger crop estimate. Lagging soybean import activities for Taiwan and the EU are also reflected in the reduced forecast this month. World soybean ending stocks for September 1999 were raised 14 percent this month and include a 15-percent increase in projected ending stocks in the United States. The South American soybean ending stocks forecast was raised in response to larger carry-in stocks for Brazil due to smaller than expected exports in 1997/98. Argentina's ending stocks forecast also reflects a higher carry-in stock forecast in response to a 500,000-ton increase in the 1997/98 soybean production forecast.
The world soybean meal export projection for 1998/99 continues to highlight South America's strong export potential due to larger availabilities. The U.S. export forecast is reduced by 820,000 tons in response to larger exports from South America, and weaker global import demand. China's larger soybean crop and slower import progress to date support a 400,000-ton cut in its import forecast.
The world soybean oil trade projection reflects a smaller U.S. and EU export forecast this month. The South American soybean oil export forecasts were increased due to larger supplies. World soybean oil import demand is reduced reflecting smaller import forecast for China, Brazil and Colombia.
World oilseed production for 1998/99, excluding soybeans, was increased 1.7 million tons in March to 136.1 million tons primarily in response to a 1.5-million-ton increase in China's peanut production. Peanut production in China is projected to reach a record 11.7 million tons as good weather in 1998 pushed yields higher. Other production increases this month include China's cottonseed, up 160,000 tons to 7.9 million tons, Australia's rapeseed, up 60,000 tons to 1.7 million tons, and Nigeria's palm kernel production, up 100,000 tons to 350,000 tons. World sunflowerseed production for 1998/99 was lowered this month as Spain's sunflowerseed production estimate was reduced 200,000 tons to 1.1 million tons based on lower projected yields.
The world oilseed export forecast for 1998/99, excluding soybeans, was increased 155,000 tons to 15.3 million tons. An increase in world rapeseed and sunflowerseed exports accounted for the increase. Rapeseed exports for Australia were increased 60,000 tons in response to the increase in forecast production this year. Total exports are expected to reach 1.7 million tons in 1999, more than double the level of 1998. U.S. exports were also increased 50,000 tons for 1998/99 to 300,000 tons, but were compensated by an identical 50,000-ton increase in imports for the period. Forecast 1998/99 U.S. sunflowerseed exports were also increased this month based on recent trade trends and is the highest export level since 1985.
The world oilseed crush forecast for 1998/99, excluding soybeans, rose 651,000 tons in March due to increases in projected cottonseed, peanut, and palm kernel crush. Both peanut and cottonseed crush increases are derived from increases in China while increased palm kernel crush stems from an increase in Nigeria's production. Offsetting these was a lower world rapeseed crush, down 180,000 tons to 33.4 million tons. Reductions in Canadian and U.S. crush accounted for most of the change this month. Forecast 1998/99 world sunflowerseed crush was nearly unchanged this month as reductions in Spain and Morocco were offset by increases in Uruguay, Australia, and Bulgaria. Oilseed ending stocks for 1998/99, excluding soybeans, were up 197,000 tons to 3.4 million tons in response to increases in U.S. and Canadian rapeseed stocks.
World protein meal production, excluding soybean meal, was increased 298,000 tons in March to 58.5 million tons. An increase in China's peanut meal production forecast for 1998/99 accounts for most of the increase. Other changes include an increase in China's cottonseed meal production and Nigeria's palm kernel meal production. Offsetting these increases was a decline in forecast world rapeseed meal production, down 64,000 tons to 20.1 million tons in response to reduced crush forecast for Canada.
Protein meal exports, excluding soybean meal, were nearly unchanged this month at 15.4 million tons. Forecast rapeseed meal exports were reduced 75,000 tons this month in response to lower rapeseed meal production in Canada. This was offset by higher world palm kernel meal and sunflowerseed meal exports. Total world protein meal consumption for 1998/99, excluding soybean meal, was increased 215,000 tons this month to 58.3 million tons in response to increased peanut meal consumption in China. Other changes this month include an increase in cottonseed meal consumption, and lower rapeseed meal consumption. Ending stocks of protein meals, excluding soybean meal, remained unchanged at 1.7 million tons for 1998/99.
World vegetable and marine oil production for 1998/99, excluding soybean oil, was increased 443,000 tons this month to 56.7 million tons. Increased peanut, palm, and rapeseed oil forecasts accounted for most of the change. The increase in peanut oil production was in response to a projected increase in China's peanut production in 1998. Total peanut oil production in China is expected to reach 1.9 million tons, an increase of 160,000 tons compared to last month. The larger palm oil production figure is in response to a 170,000-ton increase in Nigeria's 1998/99 palm oil production forecast to 760,000 tons. China's rapeseed oil production forecast for 1998/99 was raised this month to 3.1 million tons based on an increase in the projected oil extraction rate. The 1998/99 vegetable and marine oil export forecast, excluding soybean oil, was nearly unchanged this month in response to offsetting adjustments. While palm oil exports were reduced 71,000 tons to 11.1 million tons, rapeseed oil exports were increased 65,000 tons to 2.9 million tons. For imports, total other oil imports for 1998/99 was reduced 73,000 tons to 22.5 million tons. Palm oil imports, which were down100,000 tons this month, accounted for most of the change. With the increase in production, forecast vegetable and marine oil consumption, excluding soybean oil, was increased 300,000 tons to 56.5 million tons. Increased palm, rape, and peanut oil consumption estimates for 1998/99 accounted for most of the change this month. The 1998/99 vegetable and marine oil ending stocks forecast, excluding soybean oil, was increased 198,000 tons this month to 4.7 million tons. Most of the change is due to an increase in Indonesia's palm oil stock level to 436,000 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