TOBACCO--SUMMARY June 14, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. The complete text of TOBACCO is available 2-3 working days following release of this summary. ----------------------------------------------------------------------------- Disappearance Up; Domestic Leaf Supplies Down Disappearance of U.S.-grown tobacco during the 1994/95 marketing year is likely to rise about 15 percent because of increased cigarette production and substitution of U.S.-grown for foreign-grown leaf. Use will likely exceed 1994/95 marketings, so stocks carried over to the new marketing year (beginning July 1 for flue-cured and October 1 for burley and other kinds) should decline from last year's 2.47 billion pounds. Despite higher price supports, 1995/96 auction prices will likely change little from the previous season because of ample supplies of U.S.-grown and foreign- grown leaf. Cigarette production may decline in 1995/96 because exports are not expected to offset reduced U.S. consumption. Despite an increase in 1994/95, leaf exports may decline in 1995/96 because of competition from countries such as Brazil, Zimbabwe, and Malawi. March planting intentions point to a 10-percent increase in flue-cured acreage from a year ago. Production should total about 890 million pounds if average growing conditions prevail and planted acreage approximates growers' intentions. Including tobacco carried over on farms, available tobacco may total more than 1 billion pounds in 1995. However, marketing quota constraints will likely limit 1995 sales to about 925 million pounds. Total flue-cured supplies are expected to increase from 1994/95. Loan receipts may be near last year's level. Burley growers indicated they would plant 5 percent less acreage in 1995. With average yields, burley production should fall about 6 percent from 1994/95 marketings. Production and the carryover of 1994-crop tobacco might exceed 600 million pounds. However, quota constraints will limit 1995/96 burley sales to about 550 million pounds. Higher exports will cause cigarette production to rise about 10 percent for the year ending June 30, 1995. During 1994/95, Americans will smoke slightly fewer cigarettes than a year earlier. Increased prohibitions and restrictions, health concerns, and growing social unacceptability of cigarette smoking offset stable prices. Unmanufactured tobacco exports, between July 1994 and March 1995, were 4 percent above a year ago. Export volume on a marketing year basis will likely increase slightly from a year earlier because of expected increases in shipments of the two major kinds--flue-cured and burley. For the 1994/95 marketing year, an estimated 370 million pounds of flue-cured and 160 million pounds of burley, farm sales weight, will be exported. The anticipated 1994/95 increases reflect some recovery from the declines of 1993/94. During July 1994-March 1995, unmanufactured tobacco imports (duty paid) fell 31 percent. On April 1, U.S. manufacturers' stocks of imported cigarette tobacco were above a year ago. Stocks of flue-cured and burley were up 28 percent and 16 percent, respectively. Oriental stocks were down 3 percent. Cigar leaf stocks were down slightly. Disappearance of U.S.-grown flue-cured tobacco in 1994/95 is forecast up 15 percent from last season's 792 million pounds because of increased domestic use. Disappearance is expected to exceed 1994 marketings, so July 1 carryover will decline. Marketings in 1995/96 will probably be above use. Burley disappearance in 1994/95 is likely to increase somewhat from last season's 552 million pounds. Both domestic use and exports are up. Use is expected to exceed marketings, so October 1 stocks likely will decline from last year's 1.01 billion pounds. Prices of 1994-crop Maryland tobacco (type 32) rose 5 cents to $1.48 a pound because of higher prices in Maryland. The 1994 crop auctions in southern Maryland ended April 6, 1995, and prices averaged $1.635 a pound, 12 cents above a year earlier. Prices declined in Pennsylvania. Disappearance will likely decline from last season. The use of fire-cured tobacco is projected up in 1994/95 because of higher domestic use and exports. Dark air-cured use is also higher this season. With an anticipated smaller 1995 dark air-cured crop, supplies are expected to decline next season. A smaller cigar leaf crop is projected for 1995, and carryover is smaller. Consequently, cigar leaf supplies will decline. Printed copies of the Tobacco Situation and Outlook report will be available in about 2 weeks. For more information contact Verner Grise (202) 219-0890. The text of the report will also be available electronically. For details, call (202) 720-9045. END-END-END