TOBACCO -- SUMMARY                                     September 18, 2000
September 2000, ERS-TBS-247
             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.

U.S. Tobacco Production Set To Decline 15 Percent in 2000

U.S. tobacco production was forecast as of September 1 at 1.09
billion pounds. The 2000 crop is 15 percent lower than last year
because of a 24-percent decline in acreage due to lower effective
quotas for flue-cured and burley and lower acreage for cigar
types. Flue-cured auctions are currently underway, with 264.3
million pounds, or 44 percent of estimated production sold
through September 12th.

The supply of U.S.-grown tobacco for 2000/01 will likely
decrease, as higher carryin is offset by decreased
marketings. Carryin of U.S.-grown leaf for the 2000/01 marketing
year (July 1 for flue-cured and cigar wrapper types, October 1
for all other types) is likely to increase about 2 percent from a
year earlier due to declining disappearance. Total stocks of
imported leaf fell 12 percent to 0.9 billion pounds on July 1,
2000, compared with July 1, 1999.

Estimated use of U.S.-grown leaf declined to 1.21 billion pounds
in 1999/2000, 16 percent below 1998/99. Both domestic use and
exports slipped. U.S. leaf tobacco exports in 1999/2000
(July-June) fell 16 percent, reaching 390 million pounds,
declared weight.

In 2000, U.S. cigarette production is expected to decline to 536
billion pieces, down 16 percent from 637 billion a year ago.
Domestic consumption is expected to decrease about 3 percent in
2000 and exports are expected to fall nearly 20 percent.
Cigarette consumption (18 years or older) in 2000 will likely
fall an estimated 3 percent to 420 billion pieces. In 2000, per
capita consumption is expected to decrease from 2,148 cigarettes
to 2,054 cigarettes.

Manufacturers' price increases and Federal tax increases dampened
cigarette consumption during 2000. The Federal excise tax
increased by 10 cents per pack of 20 cigarettes in January 2000.
Manufacturers have increased wholesale cigarette prices two times
so far in 2000, boosting the wholesale price 10 percent. The
consumer price index for cigarettes indicates retail prices rose
9 percent between July 1999 and July 2000.

As of September 1, the 2000 flue-cured crop was estimated at
597.1 million pounds, 9 percent below 1999. On-farm carryover
this year was about 43.0 million pounds. Limited by the effective
quota, this season's marketings will likely total about 570
million pounds, below estimated production. Beginning stocks on
July 1, 2000, were 1.2 billion pounds, 4 percent below 1999. The
total 2000 supply of U.S.-grown flue-cured was estimated at 1.79
billion pounds, 4 percent below 1999. Use this season may decline
from 1999/2000's 699 million pounds because of expected lower
cigarette production and exports.

Flue-cured sales began August 1. By September 12 growers had sold
264.3 million pounds of leaf, with 5 percent going under loan.
After 24 sales days, flue-cured auction prices are 6 cents per
pound higher than last season. Sales through September 12
averaged $1.73 per pound. Lower marketings in 2000 will result in
lower cash receipts for the season, despite price advances.

This year's burley tobacco production is expected to be 26
percent below last season's due to lower acreage in response to
lower effective marketing quota. Production and farm carryover of
burley will probably exceed 400 million pounds, but quota
restrictions limit maximum possible marketings to about 378
million pounds. However, actual marketings are likely to be much
less, leaving significant quantities of unsold tobacco. Because
of reduced domestic use, beginning stocks in 2000 are likely to
be about 100 million pounds more than in 1999 due to reduced
domestic use. Burley supplies on October 1 will slide despite
higher 1999 carryin as marketings will likelyfall by nearly a
third.

Larger crops in 2000 are forecast for Maryland, dark air-cured,
and dark fire-cured, while cigar tobacco production is expected
to decline.

The national marketing quota for the 2001 flue-cured crop must be
announced by December 15, 2000. Individual farm quotas and
allotments will reflect undermarketings and overmarketings for
the current crop. For burley, the 2001 marketing quota will be
announced by February 1, 2001, and allotments for other types
will be announced by March 1, 2001.

Price supports for 2001 flue-cured and burley tobacco will be
based on a 5-year moving average of market prices and changes in
costs of production. For other types, changes in support will
continue to be based on the average of the parity index during
the previous 3 years compared with 1959.

Printed copies of the Tobacco Situation and Outlook report will
be available in about 2 weeks. For more information contact
Thomas C. Capehart, 202-694-5311. This issue contains two special
articles, "Cost of Production for Flue-Cured Tobacco" and "U.S.
Tobacco Import Update, 1999." The full text of the report will
also be available electronically via the ERS website at
www.ers.usda.gov.

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