TOBACCO June 24, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- TOBACCO Situation and Outlook is published four times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. TBS-235. Please note that this release contains only the text of TOBACCO-- tables and graphics are not included. Subscriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #TBS, $19/year. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Contents Tobacco Products U.S. Exports and Imports U.S. Tobacco Leaf Situation and Outlook Flue-Cured Burley Southern Maryland Fire-Cured Dark Air-Cured Cigar Tobacco Statistical Summary List of Tables Principal Contributor Tom Capehart Voice (202) 219-0890 FAX (202) 219-0042 Database Coordinator and Graphics Design Fannye Lockley-Jolly Design & Layout Wynnice Pointer-Napper Approved by the World Agricultural Outlook Board. Summary released June 14, 1996. The summary of the next Tobacco Situation and Outlook is scheduled for release September 16, 1996. Summaries and text of Situation and Outlook reports may be accessed electronically. For details, call (202) 219-0515. The Tobacco Situation and Outlook is published in April, June, September, and December. See back cover for subscription information. Summary Total disappearance of U.S.-grown tobacco during the 1995/96 marketing year is likely to be unchanged as cigarette production is steady. However, use will likely exceed marketings, so stocks carried over to the new marketing year (beginning July 1, 1996 for flue-cured and October 1, 1996 for burley and other kinds) should decline. March planting intentions indicate a 3-percent increase in flue-cured acreage from last year. Production should reach about 900 million pounds if average growing conditions prevail and planted acreage reflects growers March intentions. Supplies in 1996/97 could exceed 2 billion pounds, with marketings approaching production. Burley growers indicated they would plant 20 percent more acres than last year. Low production in 1995 resulted in an effective quota of 724 million pounds for 1996/97. With average yields, production is set at nearly 590 million pounds. Transplanting was delayed by wet weather, but the planted crop appears to be in good shape. Cigarette production was fairly steady in 1995/96. Higher cigarette exports offset slightly lower consumption, resulting in a slight increase in removals. In 1994/95, Americans smoked 488 billion pieces, but are expected to smoke 2 billion fewer during 1995/96. Unmanufactured tobacco export volume on a marketing year basis will likely increase 9 percent from the previous year. Shipments of flue-cured and burley may be slightly higher for 1995/96 than the previous year. An estimated 350 million pounds (farm sales weight) of flue-cured and 170 million pounds of burley (farm sales weight) will be exported. During 1995/96, unmanufactured tobacco imports (duty paid) are expected to gain 13 percent, reaching 443 million pounds. On April 1, 1996, U.S. manufacturers stocks of imported cigarette tobacco were above a year ago. Stocks of foreign flue-cured were up 11 percent while imported burley leaf stocks fell 8 percent. Oriental stocks increased 25 percent, and cigar stocks rose 9 percent. Total disappearance of U.S.-grown flue-cured tobacco in 1995/96 is forecast up 3 percent from last season s 915 million pounds due to greater exports and use in cigarette manufacturing. Disappearance is expected to be higher than marketings, so carryover is expected to decline. Marketings in 1996/97 are expected to about equal use. Total burley disappearance in 1995/96 is likely to decline from last season s 623 million pounds, by about 23 million pounds. Domestic use is also expected to decline but exports should rise. October 1 stocks will be lower than last year s 959 million pounds. Prices of 1995-crop Maryland tobacco rose 9 cents per pound to $1.57 per pound, auction prices gained 4 cents per pound to reach $1.67. Auction sales in Maryland began on March 8 and lasted 15 days. Prices in both Pennsylvania and Maryland increased. Total disappearance in 1995/96 will likely decline from 1994/95. Total disappearance from October 1995 through March 1996 was 6 million pounds, down 2 percent from the previous year. Total fire-cured tobacco use will likely be lower in 1995/96 due to reduced exports. Domestic use is expected to decline slightly. Dark air-cured tobacco total use in 1995/96 is expected to decline because of lower domestic use and exports. Acreage intentions in 1996/97 for all types of tobacco are 9 percent higher than in 1995/96. Auction prices for 1996/97 will likely decline slightly from the previous season because of higher production. Maryland type tobacco planting intentions for 1996/97 were lower, and given average yields, production will decline by almost 1 million pounds. Fire-cured tobacco (types 21-23) planting intentions were down about 4 percent. Normal yields will produce a crop about 3 percent smaller than 1995/96. Given reduced planting intentions, dark air-cured production in 1996/97 should be slightly lower, and supplies are expected to decline. Cigar tobacco acreage is projected up 2 percent in 1996/97, but production is expected to fall from 1995/96 as yields that year were unusually high. Tobacco Products Cigarette Output and Consumption Down Slightly U.S. cigarette consumption for July-June 1995/96 is expected to decline to 486 billion pieces, 2 billion pieces less than the previous year. The decline is attributed to a May 1995 wholesale price increase of $1.50 per thousand cigarettes, restrictions on where people can smoke, and links between disease and cigarette smoking. June 1995-July 1996 manufactured output is also expected to decline by about 1 billion. Federally taxed removals are expected to gain almost 1 percent. The latest data available at the time of publication indicates an upward trend in output but relatively steady consumption for calendar 1996. Recent price increases will likely continue to reduce cigarette consumption. Consumption during calendar 1995 rose by 2 billion compared with 1994. Output in the United States during July-June (1995/96) is expected to be 754 billion cigarettes. Of these, two-thirds were used for domestic consumption, and about a third were tax exempt removals, primarily exports. Manufacturers raised the wholesale price of both premium and discount cigarettes by $1.50 per thousand in May 1995, up about 3 percent. In May 1996, another price increase of $2.00 per thousand cigarettes, up about 4 percent, went into effect. This increase is likely to have a negative impact on cigarette consumption in the upcoming year. No States have raised cigarette excise tax rates so far in 1996. Five States increased their cigarette taxes in the last half of 1995, and Washington is expected to raise its tax another cent later this year as part of a long-term package of increases. Washington currently has the highest cigarette excise tax at 81.5 cents per pack, and Virginia ranks lowest at 2.5 cents per pack. The number of States imposing a sales tax on cigarettes remains at 43. The Federal cigarette excise tax remains at 24 cents per pack. Class Action Certification Revoked in Castano Suit On May 23, 1996, a three-judge appeals panel agreed with the tobacco industry's appeal of the class action certification of the Castano suit. They agreed that a class action of 50 million smokers would be too unwieldy for the court system, and voided a previous judge's certification. The panel ruled that trying the case as a class would ignore differences in State liability codes and ignore issues affecting individual members of the class. The plaintiffs had argued that trying the cases individually would be too time-consuming and would delay decisions on related issues. New Smokeless Cigarette Unveiled Early this year, R.J. Reynolds began private introduction of a new cigarette that produces less smoke by heating the tobacco leaf rather than burning it. Market testing is ongoing in two locations. The Food and Drug Administration is considering a petition that the new cigarette be regulated as a "nicotine delivery system." Large Cigar Consumption Continues Upward Cigar output for 1995/96 (July-June) is expected to increase to 2.2 billion cigars. For the year-to-date ending June 30, 1996, the gain was 10 percent over 1994/95. Taxable removals will likely gain about 16 percent. Cigar imports gained 35 percent during the same period, with most of the gain in the premium categories. Cigar consumption reached its peak in 1964, after the first Surgeon General's report, when many cigarette smokers made a temporary switch to cigars. Since then, with a few minor exceptions, cigar smoking declined annually, reaching its lowest level, 2.1 billion, in 1993. July 1994-June 1995 consumption totaled 2.3 billion cigars and consumption for July 1995-June 1996 is estimated at 2.6 billion cigars. Cigars have increased in popularity in recent years. Snuff Output Steady; Consumption Advances Snuff output was unchanged in July 1995-March 1996 compared with a year earlier. Snuff use has been increasing for the last 8 years, and higher taxable removals during this period indicate snuff consumption for July 1995-June 1996 likely continued rising by about 2 percent, reaching 60 million pounds. Consumption has increased during the last few years because restrictions on smoking have encouraged some people to turn to less conspicuous smokeless tobacco products, such as snuff. Declines for Chewing and Smoking Tobacco July 1995-June 1996 domestic production of smoking tobacco is expected to decline 5 percent, totaling 11.5 million pounds. Taxable removals of smoking tobacco fell 9 percent during the July-March period. Chewing tobacco output also fell by 5 percent, putting total output for 1995/96 at 61.9 million pounds. Chewing tobacco taxable removals slipped 1 percent. U.S. Exports and Imports Exports Gain in 1995/96 Total marketing year (July 1995-June 1996) unmanufactured tobacco exports are projected at 560 million pounds (624 million pounds farm sales weight) 9 percent over July 1994-June 1995. July 1995-March 1996 shipments totaled 443 million pounds. So far this marketing year (July 1995 to March 1996) flue-cured shipments have gained 2 percent to 204 million pounds. Burley shipments totaled 59.8 million pounds, a 21-percent gain over this time last year. Maryland tobacco shipments advanced 55 percent. Sales of cigar wrapper rose 8 percent to 2.3 million pounds and cigar binder shipments went from negligible to about 180 million pounds. All other types declined compared with last year. Kentucky-Tennessee fire-cured exports fell 15 percent and Virginia fire- and sun-cured shipments fell by 40 percent. European countries continued to take more unmanufactured tobacco during July 1995-March 1996. Through March, shipments to Europe gained 25 percent over last year although Germany, the major European customer, lowered U.S. purchases by 18 percent. Exports to Germany increased 50 percent in 1994/95. Japan took 22 percent less U.S. unmanufactured tobacco continuing its shift towards lower-priced sources, although it remains the largest customer for U.S. leaf. Total unmanufactured leaf exports declined less than a percent in the first quarter of 1996 compared with the first quarter of 1995. Flue-cured shipments plummeted 19 percent during the period offset by burley which surged 36 percent. The European Union accounted for much of the increase in burley shipments. World tobacco stocks have been declining since 1993, so demand for U.S. exports is likely to continue to increase through calendar 1996, boosting July 1995-June 1996 export quantity. World consumption, not including China, should increase slightly. Imports Rise with TRQ Since the tariff rate quota (TRQ) replaced the domestic content requirement in September 1995, imports have advanced. The implementation of the minimum domestic requirement for U.S.-produced cigarettes severely dampened imports of tobacco beginning in 1994. Beginning in January 1994, U.S. cigarette manufacturers faced stiff penalties if the total tobacco used in cigarettes was more than 25 percent foreign-grown leaf. July 1995 to March 1996 imports for consumption (duty paid) were 13 percent ahead of the same period last year. 1/ Total January - March 1996 imports were 33 percent ahead of the previous year. Even so, imports from South America were still down 22 percent from extremely low levels the previous year but Brazilian harvesting and curing is complete and shipments should pick up. Flue-cured production in Brazil is estimated 40 million pounds greater than last year. Imports of stems fell to half usual levels. ------------------------ 1/ Includes tobacco, manufactured or not manufactured except smoking tobacco in retail packages; flue-cured; and tobacco, manufactured or not manufactured, not specifically provided for. ------------------------ July 1995-March 1996 general imports (arrivals) of tobacco were nearly steady compared with the same period the previous year. However, first quarter 1996 imports surged 77 percent and should continue to be strong through June. TRQ Update President Clinton proclaimed a TRQ effective September 13, 1995 for certain types of imported tobacco, primarily flue-cured and burley. The proclamation also eliminated duties on Oriental and cigar tobaccos. Countries supplying tobacco leaf to the United States are each assigned a quota based on previous shipments. The total quantity allowed under the TRQ for the first year is 331.7 million pounds, declared weight. Through June 2, 1996, 41 percent of the quota had been imported. Tobacco imports above the TRQ level are subject to a 350-percent duty. By April 1, 1996, stocks of foreign-grown cigarette and smoking tobacco had risen to 1.12 billion pounds, 10 percent higher than a year earlier. Imported flue-cured stocks gained 11 percent, burley declined 8 percent, and Oriental gained 25 percent. Cigar leaf stocks were 9 percent over a year earlier. Flue-Cured Tobacco Production and Sales in Major Producing Countries 2/ Zimbabwe Market Zimbabwe's 1996 tobacco auction opened on April 23, 1996. During the first 6 weeks of sales 102.4 million pounds of tobacco sold at an average price of $1.35 per pound (U.S.). Demand was strong early in the season but has softened in the last few weeks. Average price for the first 6 weeks was well above the same period last year and the crop is reported to be excellent quality. Canada's Flue-Cured Market Canada's 1995/96 flue-cured auction markets closed on April 24. During the 127 days of sales, 152 million pounds of flue-cured were sold. The market was open 37 more days than last year and 17 percent more tobacco was sold. Prices were 1 percent higher at $1.20 (U.S.) per pound. Grade "A" leaves made up 74 percent of purchases, compared with 69 percent in 1994/95. U.S. Tobacco Leaf Situation and Outlook 1/ Wet weather, including record rainfalls in Kentucky and parts of Tennessee has delayed transplanting throughout the burley belt. As of late May, only about 45 percent of burley had been transplanted, less than had been transplanted this time last year. By early June, transplanting of flue-cured was almost complete and the crop appeared to be in good condition. Auctions for the 1996 flue-cured crop are expected to begin between mid- and late July, although scheduling depends on the recommendations of the Flue-Cured Tobacco Advisory Committee (scheduled to meet June 28) and the availability of sufficient marketable volume. Last year's auctions opened July 18, 1 day earlier than the previous year and lasted 58 days, culminating on October 30. Larger flue-cured and burley crops in 1996, combined with lower beginning stocks, will result in slightly lower supplies. Price supports will increase 0.4 cents per pound to 160.1 cents per pound for flue-cured and will increase 1.2 cents per pound to 173.7 cents per pound for burley. Price supports for flue-cured and burley are calculated based on the level for the preceding year, adjusted for changes in a 5-year moving average of prices (two-thirds weight) and the changes in a cost-of-production index (one-third weight) as mandated in the Omnibus Budget Reconciliation Act (OBRA) of 1985. For Virginia fire-cured (type 21), Kentucky-Tennessee fire-cured (types 22-23), Kentucky-Tennessee dark air-cured (Types 35-36), Virginia sun-cured (type 37) and Ohio filler and Wisconsin binder (types 42-44 and 54-55), price supports for 1996 will increase from 1.7 to 2.7 cents per pound in 1996. The increases are based on the change in the average parity index of the 3 previous years compared with 1959 and evaluations by the Secretary of Agriculture on market conditions. Under the OBRA of 1990, the marketing assessment has been set at 1.601 cents per pound for flue-cured and 1.737 cents per pound for burley (divided equally between growers and purchasers). For other types the marketing assessment ranges from 1.12 cents per pound for Wisconsin binder to 1.557 cents per pound for Kentucky-Tennessee fire-cured tobacco. In 1996, the no-net-cost assessment for flue-cured tobacco totals 1.199 cents per pound; .1995 cent per pound for producers and .9995 cent per pound for purchasers. The no-net-cost assessment for burley has not yet been determined. The Agricultural Adjustment Act of 1949, as amended in 1986, requires that producers and purchasers share equally in no-net-cost assessments, to the extent possible, in maintaining the no-net-cost accounts for 1985 and subsequent crops of flue-cured and burley tobacco. Flue-cured purchaser assessments are greater than producer assessments because purchasers did not pay assessments for the 1985 crop of flue-cured and burley tobacco, and additional purchaser assessments are needed to equalize contributions of the two groups for flue-cured. Producer assessments began in 1982 and buyer assessments began in 1986. The no-net-cost assessment for Virginia fire-cured (type 21) and for Virginia sun-cured (type 37) has not yet been announced. For Kentucky-Tennessee fire-cured (types 22-23), Kentucky-Tennessee dark air-cured (types 35-36), and Wisconsin binder (types 54-55) the assessment had not been set as of June 14. No-net-cost assessments for kinds other than flue-cured and burley are paid solely by growers. The 1981 amendment to the Tobacco Inspection Act of 1935 requires growers to pay for the USDA grading service. The fee has been set at 83 cents per hundred pounds for 1996, the same as last year. USDA's National Agricultural Statistics Board will publish separate estimates of acreage, yield, and production by State for each type and class of tobacco in August, September, October, and November Crop Production reports. Acreage, yield, and production estimates will be published for flue-cured in July and burley in December. In addition, acreage estimates will be published by State for each type and class of tobacco in late June. Flue-Cured Stocks Fall on Higher Use through March Stocks of U.S.-grown flue-cured tobacco (types 11-14) totaled 1.27 billion pounds on April 1 this year, 99 million pounds below a year earlier. Loan stocks fell due to reduced takings from the 1995 crop, and manufacturer's stocks changed little. In December 1994, cigarette companies agreed to purchase the 298.2 million pounds of 1990-93 loan stocks. At the end of March 1996, loan inventory included 47.5 million pounds from the 1994 crop and 10 million pounds from the 1995 crop. About 1.5 million pounds of 1995-crop tobacco has been sold in 1996. Total disappearance during July 1995-March 1996, three-quarters of the marketing year, was 772 million pounds, about 39 million above a year earlier. Both domestic use and exports rose. For the marketing year ending June 30, 1996, U.S. flue-cured exports will likely be slightly higher than last year. For the 9 months through March, exports totaled 295 million pounds, up 2 percent from the same period the previous marketing year. However, compared with last year, January-March flue-cured shipments are trailing by 19 percent, dampening expectations for the entire marketing year. During January-March 1996, Japan cut its purchases by nearly half compared with last year. For the 9 months beginning July 1995, shipments to the United Kingdom, Korea, and Turkey increased , while those to Germany, Italy, Switzerland, Thailand, and Taiwan declined. Disappearance To Rise Disappearance of flue-cured tobacco for 1995/96 is expected to be 940 million pounds, about 3 percent higher than 1994/95's 915 million pounds. Use continues to exceed marketings, so carryover will decline (table 7). Uncommitted loan stocks on May 31, 1996 totaled 50 million pounds, compared with 64 million pounds last May 31st. The record is 960 million pounds, set in January 1965. Flue-Cured Crop Slightly Larger in 1996 The 1996 effective quota is about 944 million pounds, up 1 percent from last year, but 40 percent below the 1975 peak (table 9). Grower planting intentions in March were 398,000 acres, up 3 percent from last year's 386,200 harvested acres. The 1996 crop should total nearly 900 million pounds, given a normal growing season, the effective quota, and estimated acreage. About 5 million pounds of unmarketed flue-cured remain from the 1995 crop, much less than last year's 130 million pounds of unsold flue-cured tobacco. The amount of leaf available for marketing should about equal production and not be constrained by the effective quota. Combined marketings and carryover would decrease the 1996/97 supply slightly from 1995/96's 2.04 billion pounds. In relation to use, this represents a 2.2-year supply, about the usual level. Since 1987, lease and transfer of quota have not been permitted before planting. However, the Agricultural Reconciliation Act of 1987 authorized lease and transfer of flue-cured quota after June 30 under certain conditions. Since 1982, quota sale-purchase has been authorized. Over 40 percent of the quota was sold from 1982 to mid-1995. Growers can also obtain quota by cash or share renting a farm to which the quota is assigned. Under certain conditions, growers may combine more than one farm into a single farming unit. The conditions include: (1) the operator has complete control of the farming unit, and uses the same accounting and management system on all tracts, (2) the rental agreement lasts for more than 1 year, and (3) one or more program, allotment, or quota crops are rotated among all tracts. Price Support Details for 1996 Flue-cured tobacco is under acreage-poundage marketing quotas, and price support is not provided for growers who plant in excess of their allotment, or for marketings exceeding 103 percent of the growers effective quota. To receive price support, producers must certify that their pesticides have been approved by the Environmental Protection Agency for use on tobacco and were used in accordance with label directions. As a condition of price support for flue-cured tobacco, USDA requires growers to designate a warehouse or warehouses where they intend to sell their tobacco. Also, growers must pay a no-net-cost assessment to cover projected losses in operating the price support program. In addition, a marketing assessment is imposed to help reduce the Federal deficit. In 1995, the combined assessments totaled 2.6 cents, with growers assessed 0.8 cent and purchasers 1.8 cents. The overall flue-cured price support level is set at $1.601 per pound, compared with $1.597 in 1995. The price support for flue-cured is the level for the preceding year, adjusted by changes in the 5-year moving average of prices, excluding the highest and lowest (two-thirds weight), and changes in a cost-of-production index (one-third weight). Costs include general variable expenditures, but exclude costs of land, quota, risk, overhead, management, marketing contributions, and other expenses not directly related to tobacco production. The 1995 loan rates for various grades of flue-cured tobacco has not been set as of June 14. As in the past, no support will be offered on tobacco graded P5L, P5F, P5G, N1L N1GL, N1XL, N1XO, N1PO, No-G (no-grade), N2 (second quality nondescript), W (doubtful keeping order), U (unsound), or scrap. Also, no support or only limited support is provided for discount varieties, and the support for tobacco with excessive sand is reduced. Growers Again Designate Warehouse Preferences By mid-May, growers of flue-cured tobacco had designated about 100 percent of their effective quota to the auction warehouse where they want to sell their 1996 crop. Growers may designate up to 103 percent of their effective quota. Since the procedure began in 1974, sales schedules and inspection services have been provided at individual auction warehouses according to the quantity of tobacco designated (table 10), resulting in more orderly and efficient marketing of tobacco. After growers make warehouse designations at their local Farm Service Agency offices, grower lists are prepared for each warehouse and the information is provided to the Flue-Cured Tobacco Advisory Committee. In addition to recommending opening dates and sales schedules, the committee advises USDA on the geographic grouping of auction markets and distribution of graders. Burley Burley Use Lower Total disappearance of burley tobacco in the first 6 months of the 1995/96 marketing season was down 8 percent because of strong export performance. Exports advanced 22 percent. Domestic use however, declined 18 percent to 197 million pounds. For the entire 1995/96 marketing year, total disappearance will likely fall by 23 million pounds. Domestic disappearance declined compared with a year ago because higher cigarette output was offset by increased use of imported leaf. Greater use of imported burley under the tariff rate quota, and tight supplies due to last year's low production are factors contributing to reduced domestic disappearance. October 1995-September 1996 burley leaf exports are projected to increase above the previous years' 155 million pounds. For the first half of the marketing year, shipments totaled 95 million pounds, compared with 78 million pounds last marketing year. However, burley exports are expected to decline during the last half of the marketing year due to tight supplies. The carryover at the beginning of 1995/96, 959 million pounds, was 5 percent below a year earlier. By April 1, 1996, stocks totaled 1.15 billion pounds, 115 million pounds below a year earlier. Loan holdings have fallen and should be about 150 million pounds by October 1. With lower disappearance and no loan purchases during the 1995/96 marketing year, carryover in 1996/97 is expected to decline 12 percent below 1995/96's carryover. Crop Set To Increase in 1996 For the 1996 crop year, the effective burley quota (preliminary) is 724 million pounds, up 25 percent from last year. In early March, farmers reported intentions to set about 280,000 acres, 20 percent greater than last season. If normal yields are achieved on the estimated acreage, burley production would total about 588 million pounds, 22 percent over last year's marketings. On-farm carryover is limited due to the small 1995 crop. Burley marketings in 1996/97 are projected to total about 588 million pounds, about equal to production due to the lack of quota restraints and insignificant farm carryover. The 1996/97 supply should be about 12 million pounds lower than this season's 1.44 billion pounds. The burley price support has been set at an average of $1.737 per pound, 1.2 cents per pound above last year, based on the 5-year moving average of market prices (two-thirds weight) and changes in the cost-of-production index (one-third weight). Grade loan rates have not been set at this time. The 1996 burley and no-net-cost assessment, which is divided equally between growers and purchasers, have not been determined. The marketing assessment was set at 1.737 cents per pound, also divided evenly between growers and buyers. Southern Maryland Production Declines The 1995 crop of Maryland tobacco grown in Pennsylvania and Maryland (type 32) was about 10 percent smaller than in 1994. It sold for an average $1.57 per pound, about 9 cents over 1994. Auction sales in Maryland began March 5 and closed March 28, after being open 15 days. Auction prices in Maryland were $1.67 per pound, 4 cents above the previous year. Drought and heat affected the 1995 crop. Growers of Maryland tobacco have not approved marketing quotas since the 1965 crop, so they are not eligible for price support. The 1981 Food and Agriculture Act provided prohibitive penalties for growing and marketing Maryland tobacco in quota areas. However, in 1995, about 3,400 acres of Maryland tobacco were produced in Pennsylvania, a nonquota area. Quotas are not in effect for Pennsylvania tobacco. Exports Advance, Domestic Use Reduced Maryland tobacco goes almost entirely into cigarettes. Total use during 1995/96 will likely rise 1 million pounds from the previous year, reaching 17.7 million pounds. During October 1995-March 1996, domestic disappearance showed a 2-percent decline from October-March the previous year. Exports were 2 million pounds, up 18 percent during the first half of the marketing year. Carryover will decrease slightly in 1996/97 (table 12). Planting Intentions Lower The March survey of planting intentions indicates 700 fewer acres will be planted in 1996/97. Production is likely to be almost 1 million pounds less, given normal yields. Fire-Cured Disappearance May Rise Fewer acres and lower yields for fire-cured tobacco (types 21-23) resulted in a smaller crop in 1995/96. Beginning stocks were higher but domestic disappearance increased, and supplies rose by 2.4 million pounds. Kentucky-Tennessee fire-cured prices recovered from the previous year's $2.092 per pound, reaching $2.172 per pound. Virginia fire-cured (type 21) prices averaged 1.625 per pound, up slightly from the previous year. Loan takings were higher at 4.9 percent for types 22-23, and 4.5 percent for type 21. Total Kentucky-Tennessee fire-cured (types 22-23) disappearance for the 6 months so far in the marketing year is down 8 percent. Domestic disappearance of fire-cured (types 22-23) during the first half of 1995/96 was about 22 million pounds, about 2 million pounds below than last season. Both domestic use and exports declined. Disappearance of Kentucky-Tennessee fire-cured will likely decline for the entire marketing year. Total disappearance of Virginia fire-cured tobacco (type 21) was about 1 million pounds for the first half of the marketing year. Disappearance for the same period last year was slightly less. For the entire marketing year (October 1995-September 1996), disappearance of Virginia fire-cured tobacco is expected to decline, mostly due to lower exports. Based on March planting intentions, 1996/97 fire-cured (types 21-23) acreage is expected to decline 4 percent compared with the previous year. The decline is in Kentucky, as Tennessee and Virginia planting intentions were unchanged from last year's harvested acres. Normal yields should result in a crop of about 37 million pounds for Kentucky-Tennessee fire-cured. Supplies in 1996/97 should increase due to larger carryover and increased production. Dark Air-Cured Disappearance Down, But Blackfat Exports Surge Total disappearance of dark air-cured tobacco (types 35-37) was 5.7 million pounds, down 16 percent on higher Blackfat exports and increased domestic consumption. Domestic disappearance during the first half of the marketing year (October 1995-March 1996) was about 3 million pounds, up 25 percent from the same period last year. Exports of Blackfat increased 69 percent over the previous year for the October-March period, but domestic use was steady and exports declined about 7 percent. Blackfat is a semi-manufactured product made from dark air-cured tobacco and is shipped solely to West Africa. Compared with 1994/95, growers received 7.7 cents per pound more than the previous year, for a average price of $1.760 per pound. The crop was 2.7 million pounds smaller. Prices for Kentucky-Tennessee dark air-cured (type 35) rose 11.1 cents per pound, while prices for Green River (type 36) rose .9 cent per pound. Loan takings totaled 1.7 percent of the dark air-cured crop, down substantially from the previous year. For 1996/97, disappearance is expected to increase. Planting intentions indicate acreage will decline 5 percent in 1996/97. Given normal yields the crop will be smaller than in 1995/96. With lower production and carryover, 1996/97 supplies will likely decline. Cigar Tobacco Production and Use Decline in 1995 October 1995-March 1996 (July for wrapper), disappearance of cigar tobacco totaled 16 million pounds, 16 percent below the previous year. Supplies of domestically grown cigar tobacco were down in 1995/96 due to lower production and smaller carryover from 1994/95. October 1995-September 1996 total disappearance is expected to decline. With indicated acreage up about 4 percent (at 10,150 acres), normal yields would lower 1996 production by about 300,000 pounds because yields were especially high last year. October-March disappearance of filler tobacco totaled 8 million pounds, down 27 percent. With average yields and planting intentions indicating unchanged acreage, filler tobacco (types 41-46) could increase slightly due to low yields in 1995/96. Again this year, allotments for Connecticut binder (types 51 and 52) do not apply. Marketing year-to-date (October-March) disappearance of binder tobacco was 3 percent higher, at 6.2 million pounds. Higher disappearance of Connecticut-Massachusetts binder tobacco more than offset a decline in Wisconsin binder disappearance. Production of Wisconsin binder may decline slightly in 1996/97 if yields are normal in the upcoming crop year. Acreage intentions for 1996/97 are 10 percent less than 1995/96 harvested acreage. Use is expected to be steady. Wisconsin binder goes mostly into loose-leaf chewing tobacco, and consumption has declined for several years. April 1, 1996 holdings of U.S. and Puerto Rican cigar tobacco (types 41-61) were 52.1 million pounds, 9 percent below April 1 last year. On April 1, U.S. stocks of foreign-grown cigar tobaccos were 82.9 million pounds, 9 percent higher than last year. List of Tables Table 1. Cigarettes: U.S. output, removals, and consumption, 1986-96 2. U.S. cigarette exports to leading destinations, 1994-96 3. Cigars and smoking tobacco: Output, removals, and consumption, 1992-96 4. Tobacco products: Output, 1994-96 5. U.S. exports of unmanufactured tobacco by types and to principal importing countries, 1992-96 6. U.S. imports of unmanufactured tobacco for consumption and general imports, principal categories, and countries of origin, 1995-96 7. Flue-cured tobacco, types 11-14 and burley tobacco, type 31: Acreage, yield, marketing, carryover, supply, disappearance, season average price, and price support operations, 1986-96 8. Tobacco loan stocks, 1994-96 9. Flue-cured and burley tobacco: Marketing quota and marketings, 1985-96 10. Flue-cured tobacco: Effective farm quotas, designations, and auction marketings, 1994-96 11. Burley tobacco: Farm marketings by State and across-State line movement, 1995 crop 12. Southern Maryland tobacco, type 32: Acreage, yield, production, carryover, supply, disappearance, and season average price, 1987-96 13. Fire-cured tobacco, Kentucky-Tennessee, types 22-23 and Virginia fire-cured, types 21: Acreage, yield, production, carryover, supply, disappearance, season average price and price support operations, 1986-96 14. Dark air-cured tobacco, types 35-36, and sun-cured tobacco, type 37: Acreage, yield, production, carryover, supply, disappearance, season average price, and price support operations, 1986-96 15. Cigar tobacco, types 41-61: Domestic supplies, disappearance, and season average prices, 1987-96 16. Cash receipts from tobacco as percentage of cash receipts from crops and all farm commodities, by States, 1992-95 17. U.S. exports of unmanufactured tobacco by types, to principal importing countries, crop years, 1994/95-1995/96 18. Imported foreign-grown cigarette leaf stocks, by quarters, 1985-96 19. Tobacco: U.S. Department of Agriculture price support loan and program operations, and other expenditures, 1992-95 20. Marketing quota referenda, by kinds of tobacco 21. Tobacco: No-net-cost assessment, by kind, 1986-95 Statistical Summary 1/ Includes tobacco, manufactured or not manufactured except smoking tobacco in retail packages; flue-cured; and tobacco, manufactured or not manufactured, not specifically provided for. 2/ Summarized from various Foreign Agricultural Service reports. 3/ All quantities in this section are stated in farm-sales weight unless otherwise noted. END-END-END