Tobacco: Flue-cured – flue-cured tobacco supply 1974 through 1991, price, foreign flue-cured production and sales

Flue-cured – flue-cured tobacco supply 1974 through 1991, price, foreign flue-cured production and sales – U.S. Dept. of Agriculture. Economic Research Service report

1991 Auction Prices Higher

Prices for the 1991 flue-cured crop rose 3 percent from last year, compared with almost no change a year ago. However, with smaller volume, the value of 1991 producer sales fell about 1 percent from a year earlier. Loan placements were down about one-third. Still, purchases from this year’s smaller crop were below those of a year earlier. However, sales continue from 1976-84 loan stocks (under terms set by the Budget Reconciliation Act of 1985) as well as from more recent crops.

Compared with the 1990 season, prices of most grades of tobacco were up because of higher price supports and tighter supplies. Increases were usually 1 to 4 cents except in the North Carolina-South Carolina border belt because the quality of this season’s crop improved from 1990’s dry weather crop. The season-average price for gross sales (including resales) was $1.725 a pound, 5.2 cents above last year. Average prices were up about 12 cents a pound in the North Carolina-South Carolina border belt, 5 cents in the old and middle belt of North Carolina and Virginia, and 4 cents in the eastern North Carolina belt. Prices were virtually the same in the Georgia-Florida belt. Among the 65 markets having sales, season averages ranged from $1.57 to $1.77 a pound.

With reduced quota, producers’ marketings were 4 percent below last season. Auction and nonauction sales totaled about 883 million pounds, about 37 million less than in 1990.

Larger Proportion of Better Grades

Overall crop quality improved a little from last year despite excessive rain throughout the flue-cured belt, and especially in the Georgia-Florida belt. There was a larger proportion of fair and good tobacco and less low and poor quality tobacco. The share of nondescript tobacco rose. The share of leaf fell, while cutter and lug shares rose. Growers sold a larger amount of ripe and mature tobacco in the three more northern belts, but growers sold less ripe and mature tobacco in the Georgia-Florida belt.

Loan volume was 5.6 percent of producer sales, down from 8 percent in 1990. Leaf grades accounted for over 80 percent of loan receipts.

Auction Sales

The Georgia-Florida market opened July 15 for 1991-crop and 1990-carryover tobacco. Similar to last season, the market opened earlier than in recent seasons because of early transplanting and larger production than in 1986-89. Weekly sales were near sales opportunities (USDA-sanctioned schedules) from the start of the season and sales ended sooner than usual.

The sales opportunity averaged about 85 million pounds a week, about the same as last year. Since 1974, growers have designated warehouses where their crop will be sold, and the USDA Flue-Cured Tobacco Advisory Committee has recommended opening dates and selling schedules. Selling times have been allocated according to grower designations. Growers could change their designations at the beginning of each month.

Resales averaged 10.6 percent of gross sales, a little larger than in 1990. Again this season, there were no provisions for the Stabilization Cooperative or warehouses to handle carryover tobacco. Because 1991 production and estimated carryover of 1990-crop tobacco exceed estimated marketings, some tobacco is being held by individuals for sale next year.

Export Volume May Decline a Little

With higher prices and tighter supplies, 1991/92 flue-cured exports may decline a little. Also, even though the 1991 crop was of desirable quality, excessive rain hurt some of the crop. U.S. exports are held down because of the shift to exporting more tobacco as products, stagnant or declining cigarette consumption in major importing countries, reduced leaf use per cigarette, quotas and tariffs that discriminate against U.S. tobacco, and sufficient world supplies.

Supplies Decline in 1991/92

Reduced carryin stocks and a smaller crop have lowered the flue-cured supply to 2.1 billion pounds, 6 percent below last year. The flue-cured outturn was 6 percent below 1990 marketings. Marketings in 1991 were about 4 percent lower than in 1990. Harvested acreage was down 2.5 percent and yields were down 5.5 percent. [Tabular Data Omitted]

This year’s total disappearance may decline from last season’s high level. Both domestic disappearance and exports may decline. Next year’s carryover could be lower, with declines in both trade and loan stocks.

The Flue-Cured Stabilization Cooperative sold 86 million pounds during January-November, while loan receipts reached 50 million pounds. By January 1, 1992, unsold loan stocks will decline from the 210 million pounds held a year earlier.

On December 16, USDA announced a national flue-cured marketing quota of 891.8 million pounds for 1992, 1.6 percent higher than a year earlier. The quota was in accordance with the three-part formula that maintains supply in line with use. The national acreage allotment was set at 427,107 acres, 1.6 percent above 1991.

Acreage allotments and poundage quotas reflect 1991 undermarketings and overmarketings. The basic quota, plus estimated net undermarketings, makes the 1992 effective quota about 899 million pounds, 1 percent above 1991. A crop close to quota, when added to prospective carryover, would provide a smaller 1992/93 supply than this year.

Foreign Flue-Cured Production and Sales

This year’s flue-cured production in Canada is estimated at 148 million pounds, 8 percent above last year. Auctions opened in October and by December 1, sales averaged Can$1.39 per pound, about 4 percent higher than a year earlier. The U.S. equivalent price was about $1.22.

Brazil’s flue-cured production fell about 6 percent in 1991. India’s output was up, but China’s probably declined a little.

The 1991 flue-cured crop in Zimbabwe was 27 percent larger than the year before. Markets closed in October. Prices averaged US$1.03 a pound, or 16 cents below a year earlier. However, prices were up sharply when comparisons are made in Zimbabwean currency. The crop’s quality was probably similar to a year earlier.

Table : Table 19 – Flue-cured tobacco: Production in specified countries, 1988-91

Country 1988 1989 1990 1991

Thousand metric tons

Canada 69 74 62 67

India 59 116 101 110

Zimbabwe 120 130 134 170

Brazil 281 310 295 278

Total 529 630 592 625

Compiled from records and reports of Foreign Agricultural Service trade circulars, USDA.

U.S. Flue-Cured Production and Use Trends

Flue-cured tobacco marketings fell 53 percent from 1975 to 1986, before increasing 32 percent from 1986 to 1991. Still, 1991 outturn remained 39 percent below 1975’s marketings; the 1991 effective quota was 43 percent lower than the 1975 quota. The declines stemmed from reduced use due to decreased cigarette consumption, less tobacco per cigarette, and substitution of imported flue-cured and air-cured for domestic flue-cured.

Between 1975 and 1986, domestic use of flue-cured fell about one-third before increasing in 1987 to about 80 percent of 1975’s use. Domestic disappearance fell in 1988 before rising in both 1989 and 1990, reaching 90 percent of 1975’s use. Despite recent increases, leaf exports remained below 1975 because of high U.S. prices, large world supplies, the strong dollar during the early 1980’s, and other factors.

PHOTO : Figure 5 Flue-Cured Tobacco: Supply, Price, Use

COPYRIGHT 1991 For more information, contact US Department of Agriculture Economic Research Service. Phone: 1-800-999-6779 (8:30-5:00 ET).

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