TOBACCO -- SUMMARY April 5, 2001 April 2001, ERS-TBS-249 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. --------------------------------------------------------------------------- Growers' Harvesting Intentions for 2001 Down 6 Percent U.S. tobacco growers indicated on March 1 that they intend to harvest 457,670 acres of tobacco during the 2001/02 crop year. The coming season's intended acreage is 55 percent of 1997's acreage (the highest in a decade) and 94 percent of last season's acreage. Lower potential marketings caused by diminished effective quotas for flue-cured and burley led growers to cut acreage. Production in 2000 was estimated at 1.1 billion pounds. Sales of flue-cured totaled 564.1 million pounds, and estimating for contracts, burley sales approached 320 million pounds. Together with beginning stocks of 2.4 billion pounds, supplies in 2000 are expected to be 1.8 billion pounds, 7 percent below 1999. A 45-percent cut in the effective quota and substantial non- auction sales under contracts reduced 2000/01 volume to levels not seen since the establishment of the quota system in 1938. However, average prices were the highest on record. Gross volume, including resales, reached 245.9 million pounds, averaging $1.95 per pound, compared with 580.7 million pounds at $1.90 per pound last season. Producer sales were 223.7 million pounds. Burley cooperatives took 19.4 million pounds, or 8.7 percent of the crop. Sales began November 20, 2000, and final sales were February 22, 2001. As auctions ended, contract sales had reached 87.5 million pounds, selling for $1.98 per pound. The national basic marketing quota for the 2001 crop flue- cured tobacco is 548.9 million pounds, compared with 543.0 million pounds in 2000. After 2 years of sharp declines, the quota has stabilized. Manufacturer purchase intentions increased slightly to 297 million pounds, and the reserve stock adjustment was smaller in magnitude than last year. The effective quota is obtained by adjusting each farm's basic quota by net undermarketings. March 1 harvesting intentions are 245,500 acres. With normal yields, 544 million pounds should be available to market. After years of sharp declines, the 2001 effective quota for burley totals 352 million pounds, only 4 percent below 2000. Nevertheless, the 2001 effective quota is 60 percent of the effective quota in 1997. The basic quota is 332 million pounds, 34 percent higher than 2000. The size of the reserve stock adjustment diminished as a result of legislation passed exempting 1999 loan stocks from quota calculations. Manufacturers' purchase intentions for the 2001 crop are 225.0 million pounds, compared with 242.5 million pounds in 2000. With normal yields, 2001 production will reach 368 million pounds, about 50 million pounds above 2000 net marketings. The quota of 352 million pounds is not sufficient to market all the tobacco likely to be produced in 2001. After a sharp drop in 1999, the tobacco balance of trade-- the value of manufactured and unmanufactured exports less imports--reversed its downward trend and increased 4 percent to about $150 million in 2000. Higher unit values for U.S.- produced cigarettes shipped overseas and lower leaf imports were the main factors in turning the trade balance around. The value of U.S. leaf exports fell by about $70 million to $1.2 billion. The value of U.S. leaf imports plunged $184 million to $579 million. The total tobacco trade surplus advanced from $4.0 billion to $4.1 billion. The volume of U.S. exports of unmanufactured tobacco in 2000 fell 4 percent compared with a year earlier to 402.4 million pounds, declared-weight (182,518 metric tons). Imports of unmanufactured tobacco slipped to 480 million pounds (declared-weight) compared with 495 million pounds in 1999. Based on normal trends in production and January-December 2000 cigarette export data, output for calendar 2000 is estimated to be around 570 billion pieces. Taxable removals should reach 420 billion pieces, and exports totaled 148.3 billion pieces (12 months of data). Exports stabilized, slipping only 2.8 billion cigarettes compared with the 1998- 99 plunge of 50 billion pieces. Consumption has remained remarkably resilient to recent higher prices. Year-end 2000 cigarette consumption is expected to be 430 billion pieces, unchanged from earlier estimates. Calendar 2000 cigarette exports totaled 148.3 billion cigarettes, down from 151.4 billion in 1999. Federal cigarette excise tax collections in fiscal 1999 (October 1998-September 1999) totaled $5.9 billion, not including excise taxes for imported cigarettes. During the October 1999-June 2000 period, Federal excise tax collections advanced 40 percent compared with a year earlier. Stocks of domestic leaf were 88 million pounds higher, at 2.4 billion pounds, for the beginning of the 2000/01 marketing year on July 1, (October 1 for burley and other kinds) than at the beginning of 1999/2000. U.S. stocks of imported cigarette leaf were down about 170 million pounds on January 1, 2001, compared with a year earlier. Printed copies of the Tobacco Situation and Outlook will be available in about 2 weeks. For further information contact Thomas C. Capehart (202) 684-5311. Full text of the report will also be available on the ERS web site at www.ers.usda.gov. END_OF_FILE