Food Outlook 10/96

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In 1996/97, global production of the seven major oilseeds is forecast at 260 million tons, which is slightly above the previous season's level.

World soybean output in 1996/97 is expected to recover and exceed last season's level by almost 6 percent, but to remain below the 1994/95 record. Although production prospects at this time are still tentative, the crop currently harvested in the United States is estimated at 64 million tons, an increase of about 8 per cent over the previous year. Brazil's production, to be harvested in early 1997, is likely to show a strong rise as farmers are expected to expand cultivated areas in response to favourable prices and improved farm credit conditions. The Argentinean production might also rise further due to a sharp expansion in the double cropped wheat/soybean area. By contrast, indications are that farmers in China would favour the cultivation of grains over soybeans, suggesting a decline in planted area and a further increase in the country's deficit in soybeans and soybean-based products.


1994/95 1995/96 estim. 1996/97 f'cast

(. . . . . . million tons . . . . . .)
Soybeans 138.4 124.7 131.8
Cottonseed 34.4 35.1 33.8
Groundnuts 28.7 27.8 28.3
Sunflowerseed 24.0 26.4 24.7
Rapeseed 30.1 34.9 31.4
Palm kernels 4.8 4.9 5.1
Copra 5.3 4.7 5.1


World output and global availability of sunflower seed are expected to decline by about 1.7 million tons, mainly as a result of likely contractions in output in Argentina, the United States and the countries of the former USSR, following a shift towards wheat and maize plantings.

World production of rapeseed is foreseen to decrease by over 3 million tons from last season's level, as a consequence of reduced plantings and/or unfavourable weather conditions in Canada, eastern and western Europe and China.

World cottonseed production is anticipated to contract by about 4 percent to 33.8 million tons, as cottonseed has lost area to grains or to other oilseeds in China and India due to relatively less attractive prices of lint.

An increase of 7 percent is foreseen in the production of copra, owing to favourable rainfall and the expected recovery in the biological yield cycles in the Philippines and Indonesia. Likewise, production of palm kernels and palm oil is expected to increase mainly in Indonesia and Malaysia, and marginally in the other producing countries.

Moderate to slight increases are projected for groundnuts mainly due to recovery of production in India.

With regard to oilseed products, the global output of oils is expected to be nearly half a million tons below last season's level. Prospects are for a fall in sunflowerseed, cottonseed and rapeseed oil, while production of soybean, palm and coconut oil is to expand. World output of oilmeals is expected to increase by almost 2 percent, mainly due to sustained soybean meal production.


The combination of sharply reduced carry-over stocks in all regions (except for parts of Africa and Latin America) with only moderate increases in oilseed production, points to a continued tightness of oilseed supplies in 1996/97.

Global consumption of oilseeds in 1996/97 is anticipated be close to or fall slightly from last season's level, mainly reflecting reduced supplies. The anticipated rise in soybean production, coupled with the decline in output of high-oil-yielding seeds, is likely to increase the share of soybeans in total oilseed crushings. Increased dependence on soybeans to cover world demand for oils might contribute to a situation similar to 1994/95, which would be reflected in higher soybean oil prices relative to those of soybean meal.

Global consumption of protein cakes and meals, while continuing its upward trend, will be affected by developments in feedgrain prices, which could influence the overall profitability of compound feeding and/or trigger substitution between various feedingstuffs. The demand outlook for cakes and meals is uncertain at this time for the EC and the United States, where high meal prices have slowed demand growth. In the major Far Eastern countries (in particular China) the gap between domestic supplies and growing demand for cakes and meals is expected to continue widening, thus possibly leading to record net imports of soybean meal during 1996/97.

Commodity-wise, soybean meal will cover the largest part of the consumption needs of cakes and meals in 1996/97, as a result of the foreseen rise in production and relatively large supplies likely generated by the expected crush-for-oil situation of this meal-rich oilseed. The additional supplies of soybean meal will largely offset the possible reductions in the output of rapeseed and sunflower cakes.

Although consumption growth in oils and fats is also expected to be conditioned by relatively high prices, world demand for oils and fats is still expected to rise, largely on account of further increases in demand in Asia. In the main importing countries, domestic production of oils is likely to fall short of consumption needs, and stocks in 1996/97 will have to be drawn down to well below normal levels. The bulk of world import requirements of oils should be met by palm oil from Indonesia and Malaysia.

China's import needs of oilseeds, fats and oils are expected to exceed their 1995/96 level, a result of the considerably lower oilseed crop expected next season, the reduction in stocks and the continued strong increase in domestic demand. Net import demand in all other major Asian importing countries is also expected to increase, largely because of a depletion of stocks and growing domestic utilization of oilseed-based products. In India, net import needs are anticipated to decline due to the prospective increase in domestic production of oilseeds and the accumulation of stocks of oilseeds and oils from the previous season. Import needs of oils, fats, cakes and meals (often covered by purchases of oilseeds for crushing) in the largest African and Latin American importing countries are likely to stagnate in 1996/97, mainly because of the unusually strong increases in domestic production.


The overall tightness of oilseed supplies expected for 1996/97, associated with the anticipated decreases in world supplies of oils and fats, is likely to lead to a further strengthening in prices of oilseeds and related products, at least for the first half of the season. The anticipated expansion in the import needs of China is expected to contribute to the firming of world market prices of oilseeds, oils and meals. Prices of soybean, rapeseed and sunflower should rise the fastest. At the same time, prices for annual oilcrops could prove volatile and sensitive to weather risks in the next few months.

World prices of oils and fats are expected to remain above their long-term averages due to supply tightness. Prices for lauric oils are also expected to remain relatively high, although their premiums vis-à-vis soft oils are likely to narrow as a result of anticipated increases in supplies and export availabilities of the Philippines, Indonesia and Malaysia. Prices for oilmeals are expected to remain high, given the overall tightness of supplies, but declines in grain prices could be followed by more or less pronounced declines in oilmeal prices as the share of grains in livestock feeding would probably increase. As a result, the share of oils in the combined product value of oils and meals, particularly of high-oil-yielding oilseeds, is likely to increase during the next season.

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