Oil Crops YEARBOOK -- SUMMARY   March 21, 2006
March 2006, ERS OCS-2006s

Approved by the World Agricultural Outlook Board
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This SUMMARY is published by the Economic Research Service,
U.S. Department of Agriculture, Washington, DC 20036-5831.   
The complete report will be available electronically
about 1 week following the summary release.
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March 21, 2006

Despite Outlook for Record Soybean Stocks in 2005/06, Prices Stay Firm

The U.S. Department of Agriculture (USDA) trimmed its 2005/06 export forecast 
in March from 910 million to 900 million bushels as anemic demand continues 
to slow this year’s export pace.  The 2005/06 forecast of soybean crush was 
unchanged at 1,720 million bushels.  The forecast of 2005/06 ending stocks 
consequently rose to an unprecedented 565 million bushels.  Based on strength 
of farm prices to date, the U.S. season average was forecast higher this 
month, to $5.40-$5.80 per bushel from the previous $5.20-$5.80.

The improbability of making up a current lag in soybean oil exports led USDA 
in March to cut the 2005/06 export forecast to 1,125 million pounds from the 
previous 1,350 million.  For the end of the current marketing year, an 
unusually large rise in soybean oil stocks is now forecast at 2,679 million 
pounds.  Despite the mounting supplies, a recent rally in prices resulted in 
USDA raising the 2005/06 average price forecast this month from 20.5-22.5 
cents per pound to 21.0-23.0 cents.

The USDA forecast of 2005/06 soybean meal exports was raised from 6.6 million 
to 6.8 million short tons, but still short of the 7.3 million tons exported 
in 2004/05.  Domestic use in 2005/06 was forecast lower at 33.9 million tons, 
0.2 million tons lower than last month, and just 1 percent higher than in 
2004/05.  

For China, final 2005 soybean production was 18.3 million metric tons (up 
from 17.0 million previously), rapeseed output was raised to 13.05 million 
tons (from 11.4 million), and the sunflowerseed crop was increased 0.1 
million tons to 1.7 million.  Greater availability of domestic crops reduced 
the 2005/06 forecast of China soybean imports to 27.0 million tons from the 
27.5 million forecast previously.  Similarly, China’s rapeseed imports are no 
longer seen capable of rising to the previous forecast of 1.2 million tons 
and are now forecast at 0.4 million. 

In the European Union (EU-25), rapeseed crushing is projected to go up by 9 
percent in 2005/06, to a record 14.25 million tons.  Conversely, EU-25 
soybean imports could decline to 14.4 million tons from 15.5 million in 
2004/05.  Overall consumption of soybean meal was forecast slightly lower to 
32.5 million tons due to increased use of rapeseed meal and sunflowerseed 
meal. 

Indonesian palm oil production for 2005/06 was forecast higher to 15.0 
million tons versus the previous 14.2 million, and as possibly the world’s 
largest source.  Less-favorable weather conditions for Malaysia are expected 
to trim that country’s current production of palm oil to 14.8 million tons 
from the previous forecast of 15.1 million.