TOBACCO YEARBOOK -- SUMMARY December 8, 1999 December 1999, ERS-TBS-245 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of the report will be available electronically about 1 week following this summary release. --------------------------------------------------------------------------- Cigarette Production, Exports, and Domestic Consumption Down in 1999 Total U.S. cigarette production in 1999 is expected to slip about 7 percent from 1998 levels to 635 billion pieces. Both exports and domestic consumption are expected down. According to Bureau of Alcohol, Tobacco, and Firearms data, taxable removals were down 9 percent through March, the last month available. Nontaxable removals slipped 6 percent during the same period. During January to September 1999, cigarette exports declined 26 percent to 116 billion pieces. Calendar 1999 exports are likely to be about 150 billion pieces, nearly 100 billion below record 1996 shipments of 243 billion pieces. Since 1996, increased overseas production by U.S. manufacturers has reduced U.S. exports. Furthermore, cigarette consumption in some nations that are major buyers of U.S. cigarettes has declined. Domestic consumption is expected to slide to 435 billion pieces. Per capita cigarette consumption in 1999 is estimated at 2,146 pieces, 173 pieces below 1998. The cumulative effects of higher wholesale prices, on top of higher State taxes, restrictions on smoking, and increased awareness of links between smoking and disease continue to dampen demand for cigarettes. In 1999, higher retail prices will be the major factor in declining consumption. U.S. tobacco leaf production for 1999 is expected to be 14 percent less than a year earlier. Total tobacco acreage fell 9.6 percent from a year earlier, and the average yield for all tobacco fell about 100 pounds per acre. Effective quotas plunged 18 percent for flue-cured and 20 percent for burley. Flue-cured yields fell 2 percent, and burley yields are estimated down 7 percent. Total leaf disappearance in 1998 was 1.44 billion pounds, slightly lower than in 1997. Higher ending stocks in 1998 were offset by lower 1999 production, resulting in a 5-percent decline in supply for 1999. Producer sales of flue-cured tobacco for the 1999 season were the lowest in 58 years. Prices for desirable leaf were steady, but lower quality leaf prices declined compared with last year. Lower quota, disease in the Georgia crop, very hot and dry weather during July and August, and floods from Hurricane Floyd all contributed to lower quality and value. Despite these problems, loan receipts were high. Prices for the 1999 flue-cured crop declined 1 percent from 1998. With much reduced volume, the value of producer sales fell about 20 percent from a year earlier. Loan placements surged to 136.4 million pounds, compared with 82.4 million pounds in 1998. Loan receipts were 22 percent of net sales, about double 1998. U.S. cigarette manufacturers submitted purchase intentions of 286 million pounds (farm-sales weight) for the 2000 flue-cured tobacco crop. Purchase intentions for the 1999 crop year were 327 million pounds. Unless substantial purchases are made from loan stocks, the 2000 basic quota will be below 500 million pounds, the lowest since poundage quotas were introduced. The 1999-2000 burley tobacco marketing season was delayed because processing plants in North Carolina were recovering from damage and delays resulting from Hurricane Floyd. Markets opened on November 29, 1999. During the year ending September 30, 1999, burley disappearance totaled 520.5 million pounds, 5 percent below the previous year. Domestic use fell 8 percent, and exports rose 2 percent. This season's burley supply, 1.44 billion pounds (estimated marketings plus carryover), is 1 percent below a year earlier. January-September 1999 exports of flue-cured, the principal export class, fell 14 percent. Exports of burley--the second most important export class--were down 9 percent. Flue-cured marketing year exports for 1998/99 (July-June) were 235 million pounds, (declared weight) nearly the same as the previous year. Burley marketing year exports (October-September) were down 4 million pounds to 107 million pounds (declared weight). During January to September 1999, total U.S. imports for consumption (duty paid) reached 381 million pounds, 6 percent below a year earlier. January-September arrivals of tobacco leaf (general imports) declined 15 percent (by weight) to 384 million pounds. Cigarette leaf imports fell 9 percent overall. U.S. stocks of foreign-grown cigarette tobacco fell over the last 12 months. On October 1, 1999, foreign cigarette leaf stocks in the United States totaled 930 million pounds (farm-sales weight), 13 percent below a year earlier. Printed copies of the Tobacco Situation and Outlook report will be available in about 2 weeks. For more information, contact Thomas Capehart 202-694-5311. This report will contain three special articles "U. S. Tobacco Import Update," "The Changing Tobacco User's Dollar," and "Contracting in Tobacco." The text of the report will also be available electronically via the ERS website at www.econ.ag.gov. END_OF_FILE