The Fats and oils situation

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Title:
The Fats and oils situation
Physical Description:
301 v. : ill. ; 26-28 cm.
Language:
English
Creator:
United States -- Bureau of Agricultural Economics
United States -- Agricultural Marketing Service
United States -- Dept. of Agriculture. -- Economic Research Service
United States -- Dept. of Agriculture. -- Economics, Statistics, and Cooperatives Service
United States -- Dept. of Agriculture. -- Economics and Statistics Service
United States -- World Food and Agricultural Outlook and Situation Board
Publisher:
The Bureau
Place of Publication:
Washington
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Frequency:
frequency varies

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Subjects / Keywords:
Oil industries -- Periodicals -- United States   ( lcsh )
Oils and fats, Edible -- Economic aspects -- Periodicals -- United States   ( lcsh )
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federal government publication   ( marcgt )
periodical   ( marcgt )
serial   ( sobekcm )

Notes

Statement of Responsibility:
United States Department of Agriculture, Bureau of Agricultural Economics.
Dates or Sequential Designation:
FOS-1 (Mar. 1937) - FOS-301 (Oct. 1980).
Issuing Body:
Issued by: Agricultural Marketing Service, 1954-Mar. 1961; Economic Research Service, May 1961-<Oct. 1977>; Economics, Statistics, and Cooperatives Service, <May 1978>-July 1980; Economics and Statistics Service, Oct. 1980.
General Note:
"Approved by the World Food and Agricultural Outlook and Situation Board," Oct. 1977-Oct. 1980.
General Note:
Title from caption.
General Note:
Item 21-D.

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University of Florida
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oclc - 01588232
notis - ACS2699
lccn - 46039840 //r82
issn - 0014-8865
sobekcm - AA00005305_00055
Classification:
lcc - HD9490.U5 A33
ddc - 380.1/41385/0973
System ID:
AA00005305:00055

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Fats and oils outlook & situation

Full Text


.I: UNITED STATES DEPARTMENT OF AGRICULTURE
l Bureau of Agricultural Economics
:: ashingtone

FOS-33 :iovewber 15, 1939


THE FATS AND OILS SITU A TI 01-b&XFro
S....


.*'" : In this issue:-
S: The outlook for fats, oils, and oilseedslir I4A_ Pgg-OSITO

S.. Summary

Production of fats and oils from domestic materials in 1939-40 is
" i "
expected to be the largest on record. Increased production of lard,

grease, soybean oil, and linseed oil will :much more tian offset decreased

production of cottonseed oil and peanut oil. Stocks of fats and oils on

July 1, 1939, were unusually large. With record supplies of domestically

S produced fats, import requirements for vegetable oils and oilseeds are

considerably less this 'ear tihan they were a year earlier.

Present indications are that both domestic and foreign demand for

food and soap fats will be strengthened somewhat during the next year as a

S result of increases in industrial and war activities. Domestic prices of

edible fats and oils in 1'40 may be somewhat higher tha1i in 1939, despite

the relatively large supplies of such fats and oils available.

The United States has imported fats, oils, aid oilaseds on balance

since 1915, but lard continues to be exported, and d'.uri: -nhe past few years

a surplus of soybeans has been available for export. Pre.,eit conditions

indicate that the United Kingdom will i.icreiso to some extent its takings

of American lard. This will tend to restore to lard its former premium

over prices of cottonseed End other vegetable oils, lo-st i., rcce;.t months

as a result of the large domestic surplus of lard.







FOS-33 2-

Domestic supplies of cottonseed for the 1939-40 mrarke+irg season

are indicated to be slightly sm.-ller th.on those of a yes.r earlier and less

than average. Although supplies of competing oils and feeds ire -large,

the demand for cottonseed oil, hulls, and meal is expected to be somewhat

stronger this season than lIast. Ard the demand for liters may be consider-

ably stronger because of their ucsfulnoes for war purpo. s.

With the continuation of the pcarnut-diversion prograuv, returns per

acre from the 1939 peanut crop are expected to compare favorably with those

from cotton and other competing crops. The poenut crop i:: 1?93 was smaller

tha the record crop of 193S, but bout 200 million pounds of peanuts are

txpoetcd to be available for c'rushii; in the 1939-40 eo...Con.

Soybean production for 1939 is the lr.rgest on record. Although large

supplies of soybeanr ai.d linsood mou.1 will be available, the demand for high-

protein feds: is expected to bu stroniqer than a year earlier. The dcmnnd

for soyboan oil nlso i.s r, eect.d to be stronger. It is probable that more

soybe-i.s will be oeport.'d it l'!3>-0 than a year or-lior.

World supplies cf fla -s.:3ed are about the same -.s in late 1938. But an

increase in the Argenti-,n crop to be harvested l.at 1939 .:;-~ early 1940 is

indicated. iThe acreage of flax seeded i1. the 'Unit'd St.-i.tes i' 1939 was the

largest since 1936, and a further uxpa-sion ir. domestic flxa acrerne seems

probably for 1940. The ,Drop,.ij. dmairnd for flaxscd is xc.pected to be weaker

in 1939-40 than a year -aarli.r, but dcm:..d iJ: the United St -t's probably

will be well maintuincd. Conzi..ued difficulties in securing, shipments of

tur.,, oil from China beca-ieo of milit xy operations in that co'w:.Ltry will tend

to support the demuad for flr.-xsed .and litiied oil i: the United States. With







FOS-33 3 -


lartcr world supplies and a. osomnvht weaker world doum-,ld, iow'eor, flaLx..ecd

prices in 19'40 woy rLvera, e lower thi,-' i.i 1939 unless coinoditi prices

ge-erally score a shrrp kIvar..co.

REVIE'7 OF -:ECE'.T DEVELOPMENTS

September price rise well m ..ijnji:ned in October

AftLr risi',!; sh. ';il i. September, lard prices d..'cli-.'d abcut
15 prTrce.it i.: October, b'T co:-ti:tL. d well above the lo'. lev,.ls of the
mid-suumer mo iths. Prices of othur domestic fits 'and oils, -xi+h the
excoptio,' of butter, linseed oil., a.d penj.ut oil, declined Sli-.htly in
October, but remai-iod 20 to 60 percent higher tha.-I in A'ugst, when prices
of mo3s fats and oils were the low'ct in more tha:1 5 years.

Butter prices adv'niced seasgo.,a2i i-, Octob,.r. Li'need oil al:o
was up, partly because of a relntivel: strong demand for prints ra.d
partly becn.iie of the short suopli4s r-.d hi.,h prices of --ivv oil in this
countr.y.

Prices of imroried oils for which cuotatio is ire *v:dil.l ..are
steady to hi her in October, with adv,'-ceo of 1 to 25) percent. CompJared
with. A' qi.st prices, imported oils were up 1 to 50 perccrt.

I.-. compariool. wirth price- in: October 1935, corn: oil, so:.'he i oil,
cottonseed oil, m:d lrd .::ere 1 to 11 percc t lower in. October this year.
Poeanut-oil prices were about as before, whie prices of o0le oil, tallow,
butter, grease, oleoster ri. o, ac::o linreed oil were S to I. prrce,!t hiLthr.
Prices of. most imported verretable and marine oils -.ere 10 t, 3'0 pe2rceni.
hi-gheir thoa a year earli;.r, ".'ile- price.- of tu:, :uLid Jiticice oil woco
about double those of October 1933.

An'.t-.urct.ic Ywh :li'. op_ .rit .:'- ,._.:'er iG,.

lio.-;e. ia: a-'.d .T.ap-t.es .i.-.li;. r fleets s:.iled for ''he torctic
L-. October, .ccordi.i: to reolrt-: from the AmuricIzL Co .i.late rC. e:':r
at Oslo a-Ld the Ameirica Coim.-rcial Attrcho at Tok.;o. T L' ited St.-tes
factory snip nUlyusee", "ith ni..e killer bo-.ts, also sailed. ,rteian-
and British veosels probably will -:ot participate i:. -haJli 3.cti';ijies
during the 1939--0 season.

In recent .years over 3r0 percent of Thce world supply; of -.;hale oil
has been produced in the A':ti.rctiic. Prod.,c+io: i.. tlat .':cion d'riig the
past s_,asnon totaled ovr 1 billion pounds a.d ",'s e.ceedecd o..l;, by the
record production of 1,247 rAill.io ro p-ds ir 1937-7S. World production of
whale oil i. the 1937-3: season totaled 1,357 million, po'.li.L2. Without
British a_-d Gernia p-articipation, total production of "/,ale oil i:- the
1939-40 senso;- probably will be considerably smaller that i.. rece. t -ears.







FOS-33


Wnrld production of whale oil including sperm oil, by
whaling regions, specified periods and years


S: : : :Antarctic
Period and :n : : Other : Tctal : as per-
year 1/ Antarctic Arctic Africa :grounds : 2/ :centage
year : :grounds :centage
:_____ ::;of total
M il. lb. "il. lb. 1til. lb. ail. lb. Mil. lb. Pet.

Average
1909-10 to 1913-14 : 125 17 59 24 226 55
1914-15 to 1918-19 : 144 5 18 28 195 74
1919-20 to 1923-24 : 164 10 30 24 228 72
1924-25 to 1928-29 : 375 16 53 49 492 76
1929-20 to 1953-34 : 882 12 27 18 939 94

1934-35 : 916 6 44 59 1,005 91
1935-36 : 909 8 50 1r14 1,072 85
1936-37 : 992 25 43 138 1,199 83
1937-3 : 1,247 7 20 83 1,357 92
1938-39 :3/ 1,050


Computed from "International 'Whaling StatiFtics," edited by the Committoe for
1Whaling Statistics appointed by the lNorwegian Government, Oslo, except as
noted. Data converted from barrels to pounds on the basis of 373.3 pounds to
the barrel.

I/ The summer season for the Southern Hemi sphere is combined with the summer
season following in the Tocrthern Penmisphere.
/ Total of urrcunded numbers.
3/ uTrwegian Whaling Gazette, Sandefjord, June 193.5.


- 4 -









World production of whale oil including sperm oil, by countries,
average 1929-33, annual 1934-37 I1

: Average,:
1929-30
Country 1929-3 1934-35 1935-36 1936-37 1937-38 1938-39
: 1933-34 _____
: Ml b. lb. Mi lb. Mi.i lb. Mil. lb. ji.i. lb. Kil. lb.

British Empire 386 481 462 480 487
Norway 501 463 434 445 436
Germany --- --- --- 23 138
Denmark 7 1 1 29 1

Japan 6 16 20 71 158
U.S.S.R. 1 7 7 2/ 6 3

United States 10 9 30 56 62
Panama --- --- 77 68 44
Argentina : 26 20 28 18 19
Chile 1 6 3 2 3
Other countries --- 2 1 1 5

Total all countries 3/ : 939 1,005 1,072 1,199 1,357


Computed from "International 1Whaling Statistics,"
barrels to pcunds on the basis of 373.3 pounds to


Oslo. Data converted from
the barrel.


1/ The summer season for the Southern Herdsphere is combined with the summer
season following in the Northern Herdsphere.
2/ Estimated by the Norwegian Committee for Whaling Statistics.
3/ Total of unrounded numbers.


FOS-33


- 5 -






Table 1.- Price ner pound of specifie difats iad oils, and oil-bearing materials,
October 2137 and 1978, and Auni st-ctober 1939
: 0:t. :1939
Item "
_____ __ : 197 : L93 A_. : Sept.: Oct.
: Cents Cents Cents Cents Cents
Fats and oils-
Butter, 92-Lscore, Chicago .................. : 34.9 25.5 23.5 27.4 28.4
Oleomargarine, dom. ve-., Chicago ............: 15.0 15.8 14.5 14.9 15.0
Lard, rri:-e steam, Chicagn .................: 10.0 7.4 5.6 7.8 6.6
Lard, refined, Chicago ................ ........: 12.0 .5 6.4 9.6 8.0
Lard compound, Chicago ......................: 10.2 10.0 5.8 9.7 9.7

Corn oil, crude, tanks, f.o.b. mills .........: 6.8 6.7 5.1 6. 6.6
Corn oil, refined, bbls., N. Y. ...............: 10.1 9.5 7. 9.1 9.3
Cottonseed oil,crude,tanks,f.o.b. S.E. mills .: 6.1 6.3 4.5 5.9 5.8
Cotton-ced. oil, ...y., Ii ................: 7.3 7.6 5.5 7.1 6.S
Cleo oil, e::tr3, Chicago .....................: 12.4 9.4 6.9 10.6 10.1
Oleostearine, tele., U. Y. ...................: 9.4 7.6 5.r 9.2 8.9
peanut oil, crune, tanks, f.o.b. rills .......: 6.6 7.0 5.1 6.6 7.0
Peanut oil, don. :-eflncd, btls. N. Y. ........ 10.5 10.4 8.6 9.5 10.5
Soybean cil,crade,tank cr.-rs,midrwestern mills .: 5.8 5.0 4.2 5.1 4.9
Soybean oil, refined, iT. Y. ..................: 9.0 7.9 6.7 .0 58.4

Babassu oil, 17. Y. ...........................: --- 6.3 5.5 7.0 7.0
Coconut oil,cr.ide,tanks,f.o.b. pacific Coast i/: 7.4 5.9 5.6 6.6 6.
Coconut oil, edible, I:. Y. L/ ................: 10.0 8.2 7.6 7.6 --
Olive oil, ,intle, bbls., IT. Y. ..............: 32.0 25.1 25.1 27.9 30.0
Falm-kernel oil, e-natured, bKls., N. Y. 1/ ..: 3.C 0.6 6.4 6.4 --
Palm oil, crude,. c.sks, I. Y. I/ J .............: 7.5 b.6 .6 6 --
Rape oil, refined, b tls., U:. Y. / ............: 17.2 15.0 15.4 16.0 18.0
Sesame oil, refined, drmns, U. Y. .............: 10.5 10.5 9.2 10.3
Tease-d oil, cr 1.e, 1L. .....................: 9.4 7. 10.3 12.0 13.5

Tallow, inedible, Chicag'o ....................: 5.7 .0 4.0 5.9 5.6
Grease, A -hite, Chica,;o ..................... : .6 5.2 4.1 6.2 5.9
Menhaden oil, crude, t s f.o.l. l:ltimiore. .: 4.7 4.0 3.2 3.7 4.6
Sardine -il, c-adi. tanks, Facific Cc .rt .....: 4.7 .7 3.1 4.2 4.6
Whale oil,rccfined., beached win.rr,bls.,T.Y. .: 9.9 8.2 7.6 9.1 9.5
Olive oil foots, rririe, cask, II. Y. j/ ......: 10.6 7.1 6.5 9.0 10.0

Linseed oil, raw, ta.rk carlots, Minneannolis ..: 8.5 .1 10.0
Linseed oil. r-r, carlots, blls., 1U. Y ......: 11.0 8.8 8.7 10.1 10.2
Oiticica cil, U. Y. .......... ...............: 17.6 11. 17.4 19.7 21.0
Perilla oil, d. rns, 1 Y. / .......... .......: IS.4 14. 1 6.S 1-.9 19.0
Tung oil, 'run Ui. Y. .......... ...... ......: 21.8 13.5 22.0 26.6 28.2

Castor nil, 1Io. 3, tblz., U. Y. ..............: 10.2 9.2 8.2 8.8 10.8
Col oil, I.Wwfournil-.:d tanked, bbls., UI. Y. ...: 6.9 5.1 /L 4/4.4 --
Oil-b a rinr. .nt. : rl.1s- :
Copra, ta 5s, f.o.l. Facific Coa:t ............ .7 1.9 1.6 2.1 2.3
Cottonseed, U.S. in.i nrice (o01. .--r ton) ...: 1I.4 22.4 16.2 20.6 22.9
Cottons.ed, Danlas (dol. p,'r ton) ............: -- 22.4 15.7 22.4 25.0
Flaxseed, ITo. 1 i:inrinn::olis (n!r bai.) ........: 216.9 184.3 153.5 175.1 185.7
Soybeans, No. 2 Ysllow, Chicaro (er bu.) ....: 9.0 4.0 -- 87.0 87.0
Compiled fro:a Oil, Paint and Drag Reocrt.r, National Provisioner, and reports of the
Agricultural Inlrketirn Service and Bureau of Labor Statistics.
1. Includes e::cise tax of 3 cents b:.:,in-in- May 10, 1934. 2/ Includes excise tax of
,5 c:nts bcirnAnin Auist 21, 1936. 3/ Reported in drums beginning Sept. 2, 1939.
lquotld '3 "urt.'3nl.;."


- 6 -


FOS-33









Table 2.-0lenmargarine: Prpduction and materials used in manufacture,
United States, September 1937 and 1938, July-September, 1939


: September
S1937 :1938 July
* Jul


1939 1/
Aug.


SSept.
I


Olen oil
Oleostearine
Lard neutral
Oleo stock
Beef fat
Total animal

Cottonseed oil
Soybean oil
Peanut oil
Corn nil
Cottonseed stearine
Vegetable stearine

Total domestic vegetable 2/

Coconut oil
Babassu oil
Palm-kernel oil



Total foreign vegetable 3/
Total fats and oils

Milk
Salt and other miscellaneous


Production of oloomargarine


:1,000 lb. 1,OOCl.lp00 ,000 lb. 1,000 lb.

: 764 1,11o 859 1,06o 862
: 364 27.4 246 274 329
112 115 111 125 115
: 94 118 57 59 65
: --- --- 12 20 --
S 1,334 1,617 1,285 1,538 1,371.

: 13,282 10,246 5,522 6,986 9,034
: 3,854 4,292 5,625 5,574 7,371
: 215 331 186 254 .258
: 142 --- 18 22 35
: -- -- --- --- 10
: --- 9 --- --- ---

S17,493 14,878 11,351 12,836 16,708

: 9,054 8,711 1,560 1,763 3,113
: 157 871 1,332 1,3h5 1,409
: 532 114 --- --



: 9,743 9,S96 2,892 3,108 4,522
S28,570 26,191 15,528 17,482 22,601

: 6,411 6,216 3,870 4,315 5,297
: 1,662 1,472 906 1,028 1,281


34,847 32,387


19,262 21,608 28,105


Computed from Bureau of Internal Revenue records and Internal Revenue
Bulletin

1/ Preliminary

2/ Ordinarily domestically produced.


3/ Not domestically produced.


Item


Pos-33


- 7 -








THE OUTLOOK FOR FATS, OILS, AL QJLSESDS FOR 1940 i

With the exception of the paint oils, domestic supplies of fats and
oils for 1939-40 are the largest on record. Hence the need for imports of
vegetable oils and oilseeds is considerably less than a year earlier, when
net imports of fats, oils, and oilseeds in terms of crude oil totaled about
1.5 billion pounds.

Production of fats and oils from domestic materials in 1939-40 pro-
bably will amount to mrre than 8.5 billion pounds, or at least 5 percent
more than the large production of 1938-39. Stocks of fats, oils, and oil-
seeds in terms of crude oil on July 1, 1939, totaling about 2.5 billion
pounds, were 3 percent larger than a year earlier. Most of the increase
in the domestic output in 1939-40 will take place in the production of
lard, soybean oil, linseed oil, and grease.. Production of cottonseed
oil and peanut oil probably will be less than in 1938-39.

Chiefly because of the large supplies of fats, oils, and oilseeds, both
in this country and abroad, domestic prices of fats and oils (except-for the
drying oils) were the lowest in August 1939 for all the months since early
1934. With the outbreak of the European War, however, prices advanced
sharply. This was largely a result of speculative anticipation of wartime
demand from Europe, but also reflected increased costs for ocean shipments for
imported materials, and some strengthening in domestic demand with improve-
ment in industrial activity and consumers' incomes.

Export outlook for 1940

Since 1918, consumption of fats and oils in the United States has in-
creased at a greater rato than domestic production, with the result that
import requirements for vegetable oils and oilseeds are considerably larger
now than in the early years of the World War. Nevertheless, lard continues
to be exported, and with the marked increase in production of soybeans since
1934, a surplus of soybeans also is available for export. Present indications
are that the United Kingdom will increase its takings of American lard in
the next 1-or 2 years. With improved prospects for exports, prices for
lard may regain their former premium over prices for cottonseed and other
vegetable oils, lost in recent months because of the large surplus in
domestic lard supplies.

Since 1933, the United States has exported very little lard to Germany.
Hence the present British blockade of Germany can have no serious effects in
reducing our export trade in lard. The demand for American lard in the
United Kinge.om probably will be increased because of reduced lard production
in western Europe and the difficulties thnt will be experienced in importing
oilseeds and vegntoble oils from distant colonial possessions and the Far
East; the production of whale oil by the United Kingdom, moreover, may be
suspended for thi duration of the war.
1V Condensed wit-, some rYvisions from the annual outlook report of the same
title issued by the Bur.-au of Agricultural Economics and Agricultural Mar-
keting Service on November 15. Copies of the complete report may be obtained
on request te the Division of Economic Information, Bureau of Agricultural
Economics, Washington, D. G.


- 8 -


FoS-33









In 1938, the United States exported 234 million pounds of lard (in-
cluding shipments to noncontiguous territories) more than half of which was
taken by the United Kingdom. In August 1939, before the outbreak of war,
it was estimated that about 330 million pounds of lard would be exported
from this country in 1939.

Assuming that imports of vegetable oils and oilseeds into the United
States from South America and trans-Pacific sources will not be restricted
by the present war, and that import prices will be comparatively low, it
is probable that at least 600 million pounds of American lard will be avail-
able for export in-1940. Actual exports, however, may not be much in excess
ef 400 million pounds.

Price outlook for fats, oils, and oilseeds

Domestic and European demand for food and soap fats and oils is likely
to increase fairly sharply with increased industrial and war activities
during the next year or two. Despite large domestic supplies, prices of
edible fats and oils in 1940 are expected to be somewhat higher than in
1939. Demand for drying oils probably will be reduced in Europe in 1940,
although such demand may be well maintained in the United States. Present
indications are that world supplies of flaxseed and linseed oil in 1940 will
be larger than in 1939. And prices of flaxsecd and linseed oil may average
lower than in 1939 unless commodity prices generally score a sharp advance.

With reduced European imports of products from Southern Hamisphere and
Far Eastern countries, resulting from the blockade of Cermany and the res-
tricted movement of Allied shipping, it is probable thr.t prices of vegetable
oils and oilseeds in the Southern Hemisphere and the Fr.r Zast, in 1940, will
be depressed. Prices in the importing ma:',cts of Eurc-, howov3r, may be in-
creased. The United States is in a relatively favoraT-e geographic position
with regard to imported supplies rf vegetable oils azi oils3eds, and prices
if such products may not be raised materially in this country, despite in-
creased shipping costs. But any general rise in commodity prices probably
would be rflectld in increased prices rf all fats, Pils, and oilseeds in
the United States.

Cottonseed supplies below average; demand for product improved

The supply of cottonseed for the 1939-40 season is estimated at about
5.4 million tons. This quantity is slightly smaller than t'ec supply of the
1938-39 season, and about 13 percent less than the 192E-377 .vra-ge supply.
Of the products of'cottonseed, supplies of liners for the 199j-40 season
are indicated to be relatively large, while supplies of cottonseed oil are
about the same as a year earlier and the 10-year average. On the other hand,
supplies of cottonseed cake and meal and hulls are below average, vnd are less
than the supplies of the 1938-39 season.

Reflecting the low prices of cottonseed products, with large supplies of
edible fats and oils and of high-protein feeds available, prices paid to
farmers for cottonseed in August were below the av-rage price of any season


FOS-33


- 9 -









since 1933-34. But with the outbreak of war in Europe, sharp advances oc-
curred in prices of cottonseed products. Prices of oil and meal declined
somewhat in late September and early October, but a considerable part.of the
earlier advances was maintained. The price advances apparently were due
largely to speculative activity, but they also reflected somo improvement
in consumer income and higher delivered prices for imported oils and fats
due to increased ocoan transportation costs. The farm price of cottonseed
in mid-October at $22.86 was about $6.60 per ton higher than in mid-August,
and was slightly higher than a year earlier.

Farm returns from the 1938 crop of cott.onsoed amounted to about
$80,600,000, or 31 percent less than returns from the large crop of 1937,
and 20 percent loss than the 10-year (1928-37) average. They were the
smallest since 1933. Should cottonseed prices continue at about the October
level during the remainder of the 1939-40 marketing season, returns from the
current crop would be somewhat larger than those from the 1938 crop.

Cotton acreage in 1940 probably will not be greatly different from
that in 1939. With an acreage equal to that of 1939 and a yield about equil
to the average for the 5 years 1934-38, the production of cottonseed in the
1940 season would be smaller than in the 1939 season, and considerably smallei
than thj average for the 10 years 1928-37. The demand for edible oils and
feeds in 1940 is expected to be stronger than in 1939, but supplies of pro-
ducts competing with cottonseed oil, meal, and hulls probably will continue
large.

Cottonseed oil is the principal product of cottonseed when crushed,
and on the average it contributes over 50 percent of th- total value of all
cottonseed products. The indicated domestic supply of cottonseed oil for
the 1939-40 season is about the same as th- average for the 1928-37 period.
Stocks of cottonseed oil on August 1 wore ucasidorably rbove average, but
production of cottonseed oil in 1939-40 is expected to be smaller than a
year earlier, and also below average. Supplies of other edible oils and
fats, notably lard and soybean oil, are considerably larger than a year
earlier, and larger than average.

Reflecting the large supplies of competing fats and oils, prices of
crude cottonseed oil in August 1939 were about 30 percent lower than the
1928-37 average, and were considerably lower than those of a year earlier.
But with the outbreak of war in Europe, prices of cottonseed oil advanced
materially from the low August levels. Both the domestic and the foreign
demand for edible fats and oils is expected to be stronger in 1940 than in
1939, and prices of cottonseed oil in 1940 nay average somewhat higher than
the relatively low prices of 1939.


FOS-33


- 10 -







POS-33


Cottonseed and cottonseed oil: Stocks, production, total surl-ly, and
price, United States, average 192S-37, annual 1935-39


: _Cottor
Year : Mill :
beginnings tocks :Produc-:
Aug. 1 Aug. 1: tion

: 1,000 1,0COO
:tons tons
Average :
1928-37 : 103 6,136


1935
1936
1937
1938
1939 2/


90
22
42
337
120


4,729
5,511
8,426
,310
5, 300


seed : Cottonseed oil, cr-u.e basis
: Farm : Total : : Price per
Total : price :stocks :Produc-: Total : pound,-prime
supply: Ler :Aug. 1 : tion : supply: sunner yellow,
: ton : : : / : evw York
1,000 Million Million Million
tons Dollars pounds pounds poun'.ds Cents


6,231


4,S19
5,533
g,46s
5,647
5,420


24.04 498 1,466 1,,964


31.19
33.27
19.50
21.73
21.72


506
362
4s5
"59
674


1,164
1.364
1,962
1,409
1,300


1 70
1.726

1,96S
1,974


7.71

9.82
10.42
7.73
7.07
7.00


Compiled as follows:
Mill stocks of cottonseed and stocks and production of cottons.'eed oil from
re-orts of the Bureau of their Census.
Production an. farm price of cottonseed from Aricultural Maa:!-:eting SLe'vice.
Price of cottonseed oil from Oil, Paint, and Drui Reporter.
L/ Not including imports. 2/ Preliminary estimates of production and supply.
Prices are averages for Soptember and October only.

Peanut prices support d by diversion program

Peanut production has been at high leave] s in recent .-iar s, and' the 1939
acreage is the largest of record. But yield p-r acre this year is somewhat
below average, ,an the current crop, according to N'Tovember in.i1cat ions, is the
smallest since 1935. Peanut production since 1934 has been in exccsc3. of
utilization by the usual trade outlets, but prices to gr.owCrs have bLen main-
tained at relatively high levels tby means of the diversion progr-~r of the
Agricultural Adjustment Administration. Under the diversion program pa:nents
have been made for diverting peanuts to crushers oacid y-.ar since 194, xc-Ir.t
in the 1936-37 crop year when high prices for peanut oil and pcanut meal mnde
it possible for crushers to use larrg quantities of pt-anus- without Civcrsion
payment s

The quantity of peanuts available for crushing in 1939-"40 probably will
be about 200 jillion pounds. Peanut crushing from 1934 to l33E a r a. cd
about 265 million pounds annually compared with about 70 million pounds in the
period 1929-33. The increase in crushinrs in the past 5 yearss resulted largely
from the peanut-divorcion program, whici cause d peanut prices as well as crush-
ings to be comparatively high.


- 11 -


9






FOS-33


- 12 -


Peanuts: Acreaeo, production, crushings, and price of peanuts, peanut oil,
:and npanut me.l, a.vera,-. 1928-37, ?nrnu 193.-39

S_____ Peoinuts : _Price f.o.b.SE mills 3/
Crop Ac.-:s : : F: .ra : Pcanut : Peanut
marketing: picked : : Crushed : pricc :oil, crude, : meal, 34%
season : and : Production : I : pr : pr : protein
S_____threshed;.: _.: .:. po.mid_2/ found : ocr ton
S1,0.'0 1,000 1,000
: '.crs pounIds pourds Ccnts C:nts Dollars
Ave rae :
192-37 : 1,377 9S9,014 11,556 3.2 7.1 2g.71

1933 : 1,217 319,620 45,000 2.8 4.2 27.92
1934 : 1,4Sr 1,0O9,950 220,282 3.3 9.3 28.08
1935 : 173 1,147 ,25 240,223 3.1 9.0 24.16
1936 : 1, o0 1,253,090 295,199 3.7 9.2 35.69
1937 : 1,500 1,224,190 251,'23 .2 7.1 24.98
193i : 1,713 1,309,400 306,52 /3.3 6.1 21.64
1939 : /1,20 /I,147,?45 5/3.4 /5 7.0 5/30.25

/ I.I trims of po.vnuts in the sh-j!1l, yari" b.'inninr Octoblcr; jar ..u of Census.
2/ "F-rn-r-stock :..anuts, crop-y.-.r avlr:N,. pric's, by S.-.ta.s, v.w.:ighted by pro-
dluction to obtain weight',d :..vcr-.j for the Uniit.edc St..t..s. 1 Y -.- bcinning
October. j- Prclininarr. A/ Avery.'j for Octobr- only.

Sunnlii:s of 'diblo oil and fa'ts for the 1939-40 n:.r!c.kt ing scnson c.re
uausu:al,- lai.:. Surpli-' of f-.:-d stuffs also arc larcr. R,'flccting those
lr.:e s1.i!:li:s. r,.:nut-oil .:tics in Aur-ust wcre the lowest since e the 1933
nm.rkcting rcanon, ondl p aut-r: "1 pricee vw.r, the lowest .inc.: the 1932 scison.
But zince, the, 3Erop.:-n cc;flict b..,'cr., pric.z of p:. nut oil ':.'.. .-.'mced
r]::ll,' n.n th.-:r .-'* be.r, so-.,: ?: nc,.s ir. oric-as f.,-r pi-nrut .' crl. Even
so, the pric.-, a.d-.ncs b:.' rly Tvo.;.: b.r i -ad not b:ern -.uffici'nt to crnoble
crush zr to ,s pl.:rL?,uts without submid,r .tin:-r.tc. Ho o.': -.', -anothr diversion
pro :r-un has b-.ln irn_ .r'at.-d for the. 1l9S9-L0 n-.ikctin-; cr-.son, 7hich a*na.llos
gro-v:r co-n,-r" tiv, e to purchrnc f.-:.rs- sttock pc'nutS -t r'...i 'riccs.

The prices -,aid by the coop.-,'rati;-oc to {ro%'crs are the c-J.iCe .s thoOs
p'.rid for t.;c 1935 crop. The coop -r'.tiv.:es :.in-y sell cit. -:.r to t, edible nT)? .ut
tr de cr to crusher?. Th.: so:cified "-l'ic.-s '*uc so:ic'./: t ii -h..r thar. those
th-.t co-uld be p.-aid by crj:'acL:r or. the L'L.sis of r,.; .-..t rn:ec r fir pic.lnut oil
,and .: -.l. Unl-s s price r for Tr~:.ut -.ro..JLLcts ndv-..cc from ,I'c: c.t levels, sales
of r :*.-ruts tor the cooner:.t iv,'s to cru-i-rs will be b elo-' the purchase prices.
But th-:- c'oo- :rtiv -s will be rcinb-urs. d f r m.Ly lo.:L'S by.- fu-nds :.mrac available
ulrndcr the- AJri culture~ l An:prop:~1.tion: Act for surplus rc' :iO.1.

3eforc 19714, excrpt in the World 7.Y-r :'rriod, crusilhnrs of peanuts had
bzen co;fi.ned 17ii.:-cIy to the low-cr .:r.d:-s which ".re not suited to the trade
for edible pDC-numts.









The World. War apparently hIal but little effect on the peanut-marketing
situation until the 1916-17 season. Ac that time marked advances in prices
of oils and fats resulted in a greatly improved demand for peanuts for crush-
ing. Crushings a.-ounted to about l'J1 million pounds of peanuts in the shell
in the calendar yeLr 193.6, 250 million po-u.s in 1917, about h70 Tmillion --
pounds in 191g, and about 430 million pounris in 1919.

With large supplies of other edible fats nid oils available, the de-
mand lor pear.ut oil probably will not increase sufficiently "-ithin the next
year to bring about rny such m:.rked increase in pe.aut crushings as occurred
during the r.eriod of the World War.

Soybean production Irr'est on record

Based on Novenber 1 condition, the 1939 harvest of .soybeans as beans
in the six important cora-,ercin.l States Ohio, Indiana, Illinois, Iowa,
Missouri, and North Corolin. will be more than 75,000,000 bushels compared
with the previous record in 193g of 53,940,000 bushels for those Sta-tes. Pro-
duction in other States will total about 4,500,0'_)0 bushels, making the total
production in the Uhited Suntec almost c0,000,000 bushels compared with
58,000,000 bushels in l197.

About 4L,900,000 bushels of soybeans, or S5 percent of total production,
'were crushed or e:Torted in the 193-j 3 marketing year. Assuring; that seed
requiremc-nts for soybeans in 1940 vill not recatly excceed those of 1939, the
available; suprll' for crushing :nl e.z;ort during the 1939-40 season will be
about 70,CD0,0OCo bu.sncls. The crushing capacity of mills located in the
commercial- soj,-b.-n area of the Unitcd States has recently been increased, and
now is reported to be around SC,0C0,000 bushels arnually.

Some imorov:ncnt in domesticc der,.nd for so',rb:-nS0 c.octed

-- Total' supri..as of hich-nrot.ein f..;eds available for domestic._u~.tlAato
in 1939-40 are ern'.ctcd to be 1.r.g.r than lit 'rar -ntl ossibl.r the largest
on record. Unles, i very marked increase Ir. cororts of soybeans should occur,
the production of c.o:.bc:'.n c-.. r.i '-1 is eXCectCd to reoch a, nw record
high of about l,3C ',C0) to.1n com"-'.rc-d with appro:dim-tcly 1,050,000 tons in
193%-39. Suppli.es of food grains for 13-7140 are c::pected' to be slightly
larger th-Lan a y-ear c.rlicr. But the nu:.iber of livestock to be fed is con-
siderably lrrg-r., t..is; y-'ar than l:..st. And the d.:imand for feedstuffs generally
is likely to be .*rhat ctro;-,r than in 1 3'-39.

As food products account for about four-fifths nf the t'ot.l consuinption
of soyb--nn oil, the outlook for soybean oil will be similar to the general
outlook for edible oils. Soybcan-oil nrodiiction for the 1933-33 season
amounted to appro::imntely 4;15,C"'O,00C porounds, a record high. Production in
1939-40 is expected to total .Ij'.ut 50C, OCO,00'0 pounds. The quantity of soy-
bean oil used as a drying oil m:~ not sho: auny appreciable increase in 1939-40.
Recent ?experiments have sho-wn that soyb:ean oil is suitable for paints when
mixed with oils of higher drying properties, but with anple supplies of lin-
seed oil available, little incrence, if any., is oex:ccted in this field.


FOS-33


- 13 ,






FOS-33


Foreign demand for soybeans uncertain

Soybnn production in Manchuria, the source of more than 90 percent
of the soybeans entering international trade in recent years, has been in-
creasing since 1934. In spite of increased acreage, however, unfavorable
weather conditions this year apparently have resulted in a crop smaller than
the 170,000,0'0 tushels produced in 1938. Production in the Danube Basin is
expected to exceed 3,600,000 bu:h,-ls compared with about 2,300,000 bushels
last year.

Total D rucn.ian t-ikins of Manchurian soybeans during the 1939-40 season
may be snmew.'.h-t reduced. crr iany, which has taken from 20,000,000 to
30,000,070 bus'iels of Manchurian beans annually, and usually accounts for
more th-n half the total Europemn imports, probably will take a runch smaller
volunm this y..r. It is possible that some beans may be shipped by rail from
Manchurio through the Soviet Union. Imports by other European countries are
uncertain, but in view of abunl.nt supplies of other oilsoe'ds available in
countries closer to Europe than Manchiuria, and relatively large supplies of
lard ,nd soybeans available for export in the United States, European imports
of M-achurian soybeans probably will decline.

Exports of soybeans front the United States in past years have been
small rclrtive to cdonstic production and have depended on sufficiently large
supplies and low prices in this country to enable American exporters to
compete -uccesafully with I.k1nchurian so:-beans in EuropeoLn marketss, United
States ecrorts of so:rbeans from the 193g crop amounted to approximately
4,400,00o0 bushels, the largest on record.

Although the foreign dJ:.'nd is sor'n-.hat uncertain, present conditions
in.icnte tih-t exports of soybt-^ns from the United StAtscs in 1939-40 will ex-
ceod those of the rast season. Because of the relatively hisi. prices of
Manchurian boons in the sluner of 1939, Europtean countries vnre buying the
now crop of American beanrs for Octobr-lTovonbzr shipnc:t. It is believed
that about 4,500,000 burh-ls of the 1939 crop had been bought by Septenbor 1
for export. Additional purchaFres for export have boon made since that date.

Further o:pansion in soybean acre.ne probable

The average farm price of soybeCns in th6 United States for the 1938
crop vas about 68 cents per bushel conprored with 85 cents for the 1937 crop
ind $1.28 for the 1936 crop. In October 1939 the farm price of soybeans
Wvao 73 cents comnnred with 64 cents in August and in October a year earlier.

Despite the low prices, returns for soybeans are still favorable com-
pared with returns from competing crops, especially oats, and it seens prob-
able that the soybeann acre .je in 1940 will show further expansion. The snail
combine has core into extensive use in nuoy soybean districts and has eon-
tributrdA toward lower costs of production.


- 14 -








Soybeans: Production, exports, quantity crushed, quantity used for
feed or seed, and average farm price, averages 1924-28,
1929-33, annual 1934-39

S: Total crushed : Used : Average
ear roduc- Crushed ort and exported : fr feed : farm
beginning: : :Percent: or seed price
October tion : Amount:of ,rro-: 1 : per
: __: :duction: : bushel
:1,000 bu.1,000 bu. 1,000 bu. 1,OObu. Pct. 1'0C0, bu. Ct.
Average
1924-28 : 5,976 487 --- 47 8.1 5,489 211
1929-33 : 13,545 3,397 922 4,31l 31.9 9,226 104

1934 : 23,095 9,105 19 9,124 39.5 13,971 101
1935 : 44,378 25,181 3,490 2E,671 64.6 15,707 79
1936 : 29,983 20,619 --- 20,619 68.8 9,364 128
1937 :45,272 30,310 1,368 31,678 7-?. 17,594 85
193g8 / 57,665 44d, 0 4,416 48,8s6 s4.8 8,779 68
1939 / : 79,689

1/ From Animal and Vegetable Fats and Oils, Bureau of the Census.
2/ From reports of the Bureau of Foreign and Domestic Commerce.
/ Production minus quantity crushed and exported.
SPreliminary.

Further expansion in flax acreage in prospect

The acreage of flax seeded in the United States in 1939 w3s more than
double the abnormally low seedin-s in 1`38. More than four-fifths of the in-
crease was i:L the snring-wheat area comprisingg Minnesota, North Dakota, South
Dakota, and Montana), but considerable expansion was made in such Stats as
Kansas and California. Flaxseed production has now arn-roached or attained
commercial rrouortions in southern Texas, Arizona, Oregon, W-shington, nnd
Idaho. It is estimated that about 47,000 n .crcs were harvested in the last
named States with a :-ro'iuction of 500,,'300 to 600,o00C bushels in 1939. As in
previous years, production in these States has not b-en included in the
United States production estimates of the Crop RerTortin, Board.

Many of the factors that contributed to the ex-pn-rLsion of flax acreage
in the spring-wheat area in 1539 still prevail. Larger per-acre returns
from flaxseed than from wheat were received in 1939, as they were in 1938;
the Septemb,.r 'rice of flaxseed was more than doutl'. that of whent; and the
AAA program for 1940 is .s favorable to the production of flaj.seed compared
with neat as it was in 1959. These factors are likely to encoura-ne a fur-
ther expansion of flax acreage in the spring-whea:.t area in 194' unless the
price of wheat in relation to that of flaxseed advances materially by seed-
ing time.


- 15 -


Fos-33




FOS-33


- 16 -


It is not anticipated that domestic fl-.xseed production in 1940 will
exceed domestic utilization unless abnormally high yields are obtained.
Little expansion in acreage is anticipated in the Pacific Northwest, but
in the new producing rrers of Texcs .nd Arizona it is expected that the 1940
flax acreage may approximate 115,000 acres as compared with less than 25,000
acres in 1939. If this expansion in thu Southwest is realized, and if aver-
age yields are obtained in all producing areas, flax acreage in the older
producing areas could still be increased 71 percent above the 1939 acrenge
before production would eounl average United States crushings during the
5-year period 1934-38. But if yields should eau.l those obtained in 1938
and 1939, the older producing are-s could rxcand their acreage only. 50 per-
cent before domestic production would approximate domestic consumption.

Any expansion in domestic flaxseed production th-t would result in a
crop near or equal to domestic utilization would mean that much of the
spread between domestic and foreign nrices maintained in nast years by a
65-cent tariff vould be lost to domestic producers; such an expansion, more-
over, would tend to lower world prices of flaxseod by increasing world sunplios.

World flaxseed supplies relatively l.rge

World supplies of flaxsi:ed for the remainder of 1939 apparently are
about the same as a year ar-, with an in:crtasc in North American production
of about 10 million bushels being offset by a decrease in remaining stocks
in the Southern Hemisphere. The Argentine flax acreage for harvest begin-
ning December 1939 has been officially estimated at 7,413,n00 acres, an in-
crease of about 12 percent over c1'38-39. Gro-ing cor.ditijns are reported to
be favorable and sugEst a new crop supply of Argentine fluxsned for 1940
considerably larger than that for 1939. The Arg':ntine crop normally sup-
plies about four-fifths of the flaxseei ent,-ring worli trade.

Euronean demand for flaxseed likely to decline

Since flax'ce'd is not a basic war commodity, a dc.cline in European
demand is expected for 19'40. During the, Wo.rld War the dem'mnd for food crops
in Euronean countries increased, whereas the demand for fla"xsccd declined.
The belligerent nations in the present conflict have bei.n the largest Euro-
pnan importers of flaxseed in recent years, but because of the irwr it is
probable that their imports of flaxseed will decline in q190.

The United States demand for flaxset.d probably vill not be greatly
different from thct in lc39. The totel volume of builr'.ing construction is
not expected to change greatly, although gen. ral business activity arnd the
commn-rity price level probably will be high.r. The increase in building
consrLiction in 1939 has been reflected in some imnrovomnt in the demand
for linseed and other drying oils. The demand for linseed oil also has
been sustained by the sharp curtailment in shinmunts of tung oil from China
as a result of military operations in that country. It seems probable that
shipments of tunr oil will continue small for the next several months at least.
Although oiticica oil from Brazil and dehydrated c otor oil may be substituted






FOS-33


- 17 -


to some extent for tung oil, chiefly in the varnish field, it is probable
that, on the basis of supply and price, linseed oil will continue in in-
creased demand in this country as a result of the shortage in domestic
supplies of tung oil.

Supplies of linseed meal for domesticc utilization in 17i39-4', will be
larger than those of a year earlier because of the Irrg.r domestic crop of
fla;sced. But th.* domestic d-emand for linseed meal rrotably will bL u:ll
maintained or improved despite incre-.ised competition fr.'m sol.'.eon meal,
since-total livestock feeding requirements are expected to be lir,-er thun a
year earlier.

With increased world supplies ri reduced Europ.;an demand, flaxse,.-d
prices in 1940 are likely to average lov'er than in 1939 unless commodity
prices gen',rally score a sharp a.vance. Increo'od shior.ii's costs, how v'ver,
will tend to widen the spr..-nd tbt-een prices in Argentina and the. United
States.


Suo lies


(Stjcks at


of spo'cifiud fats and oils, high-protein feeds, nmd
feed grains, United States, avirag'e 1928-77,
annual 1935-39
beginning of markitinf year plus factory nrjduction)


*Fat rr oil Cake ;and meal
:Cot-: ; L
Lard
: ton- : Pe:;-: Soy-: incl. Cot- : Pea-: Soy-: Lin-: :Fod
Seed : nut : bear.:eutr : Total: ton- : nut : beia: se.ed:Tjotnl:grain
: oil oil :oil: oI : :seed : 2/: 2/: 2/: : /
| | 1/


Mil. Mil. M l. il. Idil. 1,C'C0 1,000 1,000 1,00 1,'00n Mil.
ib. lb. lb. Ib. lb'. t.s tons ton tcns tons tons


1,964

1,070
1,726
2,447
1,974
1,974


108 1,4b4 3,585 2,229 29


223
227,
315
471
550


890
996
1,0o8
1,325
1,643


2,880C
3,040
3,953
3,871
4,249


1,937
2,097
2,872
2,238
2,000C


246 506 ,010l 108


Sco
492
716
1,050
1, I0


4?sf
616
433

550


3,065
3,264
4,071
3,595
3,8,95


97
71
10-,
lOl
111
115


Compiled from re-orts of the Bureau of the Cinsus except n:.e nth..rwisc stated.
Year beginning, Au-ust for cottonsFL-cd oil, lard, -eni cott:rnse..d c. :k. and meal;
year beginning October f-r uTeariut ann soyb-an :.ils, -nea-'nut, s.ybri n and linseed
cake and meal. For feed grains, stocks on June 1, Jully 1, or Octijr 1 (den:nd-
ing upon kind of grain) Olus production.

I/ Agricultural Marketing Service. Sto.cksl on August 1 plus prc.iucti:.n undcr
Federal insrpction year beginning suust. 2/ Productin only. 3/ Ccmo'uted from
reports of the ALricu.ltural Marketing Service. 4/ Prnlimin.ry. / Estimotes.


Marketing
year


Average :
1928-37 :




UNIVERSITY OF FLORIDA

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