World production of the seven major oilseeds in the 1996/97 season (generally October to September) is expected to amount to about 263 million tons, only one percent higher than the last season but nearly 5 million tons below the anticipated consumption requirements. The increase is almost entirely on account of the 7 percent rise in the global production of soybeans, resulting from sharp expansions in the cultivated areas and harvests in the United States, Argentina and Brazil.
WORLD PRODUCTION OF SEVEN MAJOR OILSEEDS
|(. . . . . . million tons . . . . . .)|
A drastic fall of 13 percent is anticipated in the world output of rapeseed, which should not exceed 30 million tons in 1996/97 following reduced
plantings and/or unfavourable weather conditions in Canada, Europe and China. Likewise, world production of cottonseed is expected to decrease to 34.3 million tons, due to a switch to grains and/or other oilseeds in Pakistan, Argentina and China. World output of sunflowerseed is expected to stagnate at last seasons level of 26 million tons, as contractions in production of the United States and of countries in the area of the former USSR, resulting from the shift towards wheat and maize plantings are likely to be compensated by increased harvests in China and the European Union. Global output of groundnuts is also foreseen to stagnate at the 1995/96 level. By contrast, production of coconut/copra is foreseen to increase by 4 percent from the last season, owing to favourable rainfall and to the upturn in the biological cycles of trees in Indonesia and the Philippines. Production of palm kernel is also anticipated to increase due to rises in Indonesia and marginally in Malaysia. As a result of these production developments in the major seedcrops , together with estimates for the other oilbearing crops, world production of edible/soap fats and oils is anticipated to amount to 97 million tons in 1996/97, 1.6 percent higher than during the previous season (Table A.15).
Commodity-wise, production of soybean oil should increase by about 1.8 million tons over the last season, following sharp rises in the output in Brazil, the United States, Paraguay and Argentina, while olive oil output is likely to rise to 2.1 million tons, 23 percent above the previous seasons performance, as a result of increased production in Tunisia, the European Union and Turkey. Production of lauric oils and palm oil is foreseen to rise by 10 percent and 4 percent respectively, mainly due to increased production in the Philippines, Indonesia and Malaysia. Increases in production of the above-mentioned oils should more than compensate for the expected drop in rapeseed oil output (in Canada, the European Union, Poland and China) and cottonseed oil (in Pakistan, India and China). Very slight increases are foreseen in world production of groundnut oil, butter and lard.
World output of oilmeals in 1996/97 is expected to amount to slightly under 65 million tons of protein equivalent, nearly 4 percent above last seasons level. The increase in world oilmeals output is almost entirely on the account of the 9 percent combined rise in the production of soymeal in Brazil, Argentina, the United States and Paraguay, which should offset largely the expected decreases in production of rapeseed and cottonseed cakes.
Global apparent consumption of fats and oils in 1996/97 is anticipated to rise by 3 percent to nearly 99 million tons, under the combined effect of the growth in population and income and of the increased non-food use of rapeseed and sunflower oils in the European Union. Consumption is expected to grow faster in the major Asian markets, the United States and in Latin American countries, in particular for soybean, palm and lauric oils, while a slower increase in consumption is foreseen in Europe, Africa and countries in the area of the former USSR.
World consumption of oilcakes and meals is expected to rise to just above 65 million tons of protein equivalent , only one percent higher than during the last season, with most of the expansion in Asia and the United States. The increase in consumption, almost entirely on account of soybean meal, is likely to be contained by the high level of prices of cakes and meals and the concomitant unfavourable price ratios with other competing feedstufs.
The limited increase in the 1996/97 production of oilseeds and in the output of fats, oils and oilmeals from the new crop is likely to be insufficient to meet the anticipated increases in consumption. Consequently, world stocks are expected to be drawn upon for oils and less so for meals during the 1996/97 season.
International market prices of edible/soap fats and oils during the first half of 1996/97 season, as measured by the FAO Index of International Prices expressed in US dollars, were 5 percent lower than during the first half of 1995/96, reflecting improved supplies from the harvest of the Northern Hemisphere. However, the evolution of prices of soft oils (soybean, sunflower, rapeseed and cottonseed oils), lauric oils (palm kernel and coconut oil), palm oil and tallow diverged, reflecting the specific situations in these commodity markets. While prices of soft oils, under the lead of soybean oil decreased by nearly 10 percent on average, prices of palm oil decreased by less than one percent, lauric oil prices increased by 5 percent and tallow prices rose by 7.5 percent.
During the second half of this season, the tightening of supplies of oilseeds, oils and fats is expected to lead to a reversal of recent decreases in the price index. The recent strenghtening in prices of soybeans should eventually be reflected in a rise in soybean oil prices. Palm oil prices are anticipated to remain firm, as a result of the production decreases which occurred in Malaysia and Indonesia during the first half of the season. Although prices of lauric oils are expected to remain relatively high, their very large premiums vis-à-vis soft oils are likely to narrow during the second half of 1996/97, as a result of increases in export availabilities of coconut oil from the Philippines, and of coconut and palm kernel oil from Indonesia.
The FAO Index of International Market Prices of cakes and meals expressed in US dollars rose by 12 percent during the first half of this season over the first half of 1995/96. The average market price of soybean meal rose 16 percent during the same period while, on the contrary, relatively high stocks and sufficient supplies of fishmeal led to a fall in fishmeal prices by 6 percent and its consequent attractiveness for feed compounders and importers, particularly in China.
With the arrival in the international market of a good South American soybean crop, harvested during the first half of 1997, prices of meals may come under pressure. However, the overall close balance of supply and demand for meals and cakes over the 1996/97 season as a whole, is likely to maintain their average prices well above the previous seasons levels.
INTERNATIONAL PRICES OF OILSEED-BASED PRODUCTS, 1993-1997
|FAO indices of international market prices||Average international market prices|
|Edible/soap fats and oils||Oilcakes and meals||Soybean||Soybean oil||Palm oil||Soybean cake|
|(. . . 1984-87=100 . . .)||(. . . . . . . . . . . . . . U.S.$/ton . . . . . . . . . . . . . .)|
|1994/95 - Oct.-March||135||100||239||670||671||179|
|1995/96 - Oct.-March||122||135||292||580||564||242|
|1996/97 - Oct.-March||116||152||301||527||560||282|
World trade in fats and oils is expected to rise to 33.6 million tons in 1996/97, 5 percent above last seasons level. Import requirements of fats and oils are anticipated to increase as a result of considerably lower domestic outputs, reduced levels of stocks and the continued rise of domestic demand in the major Asian markets, China in particular, as well as in Mexico, Venezuela and the countries of the former USSR. Increased export availabilities of soybean oil from Brazil and the United States, of palm oil from Indonesia and Malaysia, of lauric oils from Indonesia and the Philippines and of olive oils from Tunisia, Turkey and Syria are anticipated to cover the increase in world import requirements in 1996/97.
World trade in oilcakes and meals in 1996/97 is anticipated to amount to 30.7 million tons of protein equivalent, 4 percent higher than in 1995/96. Imports by the major Asian countries, in particular China, are expected to rise sharply, as the gap between their domestic supplies and the growing demand for cakes and meals in the livestock sector widened following lower oilcrop outputs. Higher import requirements are also foreseen for the countries of the former USSR, while
imports into the European Union are expected to fall. The increase in exports should consist mainly of larger shipments of soybean from the United States, Argentina, Brazil and India and of fishmeal from Peru and Chile.
The outlook for 1997/98 is for increased oilseed plantings and additional production of oilseed-based products. Strong oilseed prices have already encouraged expanded plantings across the northern Hemisphere. United States farmers are expected to harvest about 27.8 million hectares of soybeans, about 7 percent more than in the last season and the most since 1982, in response to higher soybean prices, arising from the shift in the grain/soybean price ratio in favour of soybeans and from increased flexibility in farmers planting decisions under the new US Farm Act. In addition, over 10 percent of the 1997 soybean plantings are expected to be genetically modified soybeans, whose yield potential is reported to be 7 percent above conventional varieties, thus contributing to an additional increase of the US harvest in 1997/98. Likewise, area is likely to be shifted from wheat to sunflowers and flaxseed .
The rapeseed area in Canada is foreseen to expand to 5 million hectares, 25 percent above last seasons plantings, in response to the buoyant outlook for canola relative to alternative crops and the attractive levels of oilseed prices at planting time. The improved rapeseed/grain price ratio from the last season and the reduced set-aside requirement led to higher winter rapeseed plantings in the European Union. Plantings of sunflower in Ukraine are planned to be 10 percent higher than last season , while increases of up to 4 percent in cotton plantings are foreseen in Tajikistan. Plantings of soybeans in China are expected to increase by 9 percent to 8.1 million hectares and cotton seeding should increase by 4 percent , as the prices of these crops started to rise significantly, just in time for early spring plantings.
Early indications suggest substantial increases in plantings in the southern hemisphere too, in particular of soybean in Bolivia, Paraguay and Brazil and of rapeseed in Australia. Increases in area planted with oilcrops is expected to be more modest in Argentina, because of the strong competition with maize and wheat. On the assumption of normal weather conditions and trendyields, the preliminary outlook for the oilseeds market in 1997/98 is for an increase in global production of the seven major oilseeds to over 275 million tons.
Present prospects are for the combined production of vegetable oils and fats and of the output of tree crop and animal fats to rise substantially and exceed 100 million tons for the first time. The forecast level of production of oils and fats in 1997/98 is likely to be sufficient to meet world consumption requirements and to allow for a modest replenishment of global stocks. Given the continued close balance between supply and demand, international prices of fats and oils are likely to remain relatively high.
The above forecasts also point to a large rise in oilmeals production. Although world consumption of oilmeals could be above trend, output is likely to exceed consumption and stocks could recover considerably, leading to a downward pressure on international market prices for oilseeds.