TOBACCO YEARBOOK -- SUMMARY December 12, 2001 December 2001, ERS-TBS-251 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. --------------------------------------------------------------------------- Contracting Upends Tobacco Markets Ending a season in which the dominance of auction markets gave way to contract sales, flue-cured tobacco markets closed on November 8, after 59 days. The magnitude of contract sales in 2001 has turned the market upside down. Auction sales reached 114.2 million pounds and were dwarfed by contract sales of 440.5 million pounds. During the 2000 season, only 50 million pounds of contract flue-cured leaf were sold compared with auction sales of 514 million pounds. Final sales of 554.7 million pounds were 3 percent below 2000s 574.7 million pounds. The overall 2001 price averaged 185.8 cents per pound, compared with 179.3 cents in 2000. Contract prices exceeded those at auction by 4.3 cents per pound. Throughout all tobacco production belts, 45 contract centers processed non-auction sales in addition to 66 auction warehouses holding sales. All belts had favorable growing conditions that produced better quality than last season. Total volume slipped due to lower effective quota. Sales were within 1 million pounds of the effective quota. November 1 estimates indicate 247,500 acres of tobacco were harvested, compared with 250,000 acres in 2000 and 303,800 in 1999. As with flue-cured, this burley season ushered in a new era in tobacco marketing. Burley contract centers began accepting deliveries on October 29, and auction sales began on November 13. Through December 10, contract sales have accounted for 63 percent of gross sales. The average price is 4 cents higher for contracted tobacco than that sold at auction at 199.07 cents per pound. As of November 1, total tobacco acreage for the 2001 marketing year was estimated to have declined 4 percent from 2001 to 451,240 acres. Yields improved again, reaching 2,355 pounds per acre for all types of tobacco, compared with 2,229 in 2000. Overall weather conditions were excellent in most tobacco-growing areas. Better yields boosted production in 2001 despite lower acreage. Production of all types is estimated at 1,063 million pounds, about 10 million pounds higher than last season. Based on November 1 estimates, 94 percent of U.S. leaf were types used for cigarettes, up slightly from last season. Cigar leaf, also used for other products such as chewing and smoking tobacco, accounted for 1 percent of production. Other types, mostly dark air- and fire-cured leaf, accounted for 5 percent of production. The 2002/03 flue-cured marketing quota will be announced by December 15, 2001. The burley marketing quota is to be announced by February 1, 2002, and acreage allotments for other types of tobacco participating in the program are to be announced by March 1, 2002. For the 2002 crop season, flue-cured production is likely to rise about 25 million pounds, while burley production may advance slightly. Lower carryover will increase the flue-cured and burley effective quotas. January-September 2001 tobacco leaf exports slipped 5 percent from the same period last year. Shipments were 294 million pounds compared with 308 million pounds last year, continuing the decline seen in previous years. Flue-cured volume slipped 15 percent while burley advanced 8 percent. Compared with 2000, the value of unmanufactured tobacco exports declined 5 percent during the 9- month period. Year-end exports are expected to slip once again during 2001 but not as much as the previous year. Exports will probably end near 395 million pounds,compared with last year's 402 million pounds. Unmanufactured tobacco imports (for consumption, duty paid) from January to September 2001 slipped 3 percent from the previous year. However, general imports (arrivals held in warehouses) advanced 22 percent during the same period. Imports for consumption of Oriental and flue-cured leaf advanced. Burley slipped, cigar wrapper volume held steady, and other cigar types changed little. Stem imports for consumption declined 20 million pounds, driving down the overall total. U.S. cigarette output in 2001 is expected to change little from the previous year, slipping to about 590 million cigarettes. Domestic consumption is expected to fall about 2 percent to 425 billion cigarettes. For the first 9 months of 2001, cigarette exports fell 8 percent behind the same period last year. Year-end shipments are expected to be within 5 percent of 2000 levels. Cigarette imports for consumption during January-September 2001 were 26 percent ahead of 2000. Year-end imports are likely to reach 14 billion pieces. The Tobacco Situation and Outlook will be available in about 2 weeks. For more information contact Thomas C. Capehart, 202-694-5311. The full report will soon appear on the ERS website at: http://www.ers.usda.gov/calendar/. END_OF_FILE