TOBACCO OUTLOOK -- SUMMARY September 18, 2002 September 2002, ERS-TBS-253 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 report will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- U.S. Tobacco Crop in 2002 Estimated 10.5 Percent Smaller Than Last Season U.S. tobacco production for the 2002 season was forecast at 887.0 million pounds as of September 1. The crop is 10.5 percent lower than last year’s 991.5 million pounds. Acreage in 2002 is projected at 435,460 acres, up less than 1 percent from 2001’s 432,400 acres. Flue-cured acreage increased by 10,700 acres to 248,800 acres. Flue-cured production is estimated at 522 million pounds, compared with 579.1 million pounds during the 2001 season. Lower yields due to drought caused the 57.1-million-pound shortfall. Burley acreage fell only 2 percent to 161,500 acres, after declining 15 percent from 2000 to 2001. Burley also suffered from drought-induced yield losses, resulting in a 29.2- million-pound decline in production. Acreage for Maryland, dark fire- and air-cured tobacco slipped, while acreage advanced for cigar types. The 2002 season flue-cured auctions and contract sales are currently underway, with 317.3 million pounds, or 61 percent, of estimated production sold through September 10. Last season, 394.1 million pounds, or 72 percent of total producer sales, had been sold at this point in the season. Last season, 80 percent of the flue-cured drop was sold using contracts, the first season in which contracts were a major marketing method. So far this season, 86 percent of sales have been under contracts through September 10, the 46th day of sales. Supplies of U.S.-grown tobacco in 2002 will likely decrease due to lower production and beginning stocks. Beginning stocks are expected to be about 16 percent lower than last season, and production slipped 11 percent. The U.S. leaf supply is expected to fall 14 percent to 2.5 billion pounds. Estimated use of U.S.-grown leaf is expected to gain about 2 percent by the end of the 2001-02 marketing year to reach 1,170 million pounds. Use in 2000-01 was 1,143 million pounds. Exports are expected to advance about 6 percent to 440 million pounds, while domestic use is expected to be nearly steady at 730 million pounds. U.S. leaf exports in 2000-01 (July-June) fell 2 percent, reaching 380.7 million pounds, declared weight. Based on limited data for 2001, cigarette output is expected to decline slightly to about 580 billion pieces. Consumption is expected to slide about 1 percent to 425 billion pieces. Taxable removals for the first 6 months of 2001, the latest data available, are down 1.1 percent at 206.0 billion cigarettes. Exports during 2001 reached 133.9 billion pieces, nearly 10 percent below the previous year. Imports continued to advance, reaching 14.7 billion pieces, but still only about 3 percent of domestic sales. Cigarette output in 2002 is expected to decline between 1 and 2 percent from 2001 to about 570-580 billion pieces. Consumption is projected down 1 percent, ending at about 420 billion pieces. No data on output or taxable removals are available at this time. Cigarette exports during the first 6 months of 2002 reached 67.8 billion pieces, nearly 3 percent below last year’s level. Imports during the first 6 months of 2002 advanced 53 percent, reaching 8.9 billion pieces. The 2002 flue-cured crop is forecast at 522 million pounds as of September 1. About 19 percent of the crop has been designated for auction leaving the remaining 81 percent to be sold under contract. On-farm carryover this year is estimated at 104.6 million pounds, and this leaf will be available for marketing. The effective quota for the 2002 season is 578 million pounds compared with 543 million pounds last season. Production plus carryover totals about 625 million pounds, so on-farm carryover at the end of the 2002 season is expected to be less than last season. Through September 13 (49 days of sales, 26 days of auction sales), total flue-cured producer sales for the season have reached 336.9 million compared with 405.4 million pounds after 49 days last year. Gross sales (includes resales) totaled 339 million pounds and returned $181.32 per hundred pounds compared with 410.5 million pounds at $190.49 per hundred pounds last season. Flue-cured yields fell 14 percent this season due to drought and high temperatures throughout much of the belt. South Carolina and Georgia have experienced blue-mold and tomato spotted wilt virus, depressing yields in those areas. Virginia endured cool weather after transplanting which has delayed that crop. The resulting yield for the entire belt is 2,098 pounds per acre, compared with 2,432 pounds last season. Beginning flue-cured stocks on July 1, 2002, were 915.9 million pounds, compared with 1,036 million pounds on July 1, 2001. Total reported supply of U.S.-grown flue-cured in 2002 is about 1.4 billion pounds, compared with 1.6 billion pounds in 2001. Use in 2001 totaled 664.9 million pounds, 6 percent greater than the previous season and is not expected to change significantly in 2002. As of September 1, burley production in 2002 is estimated at 304.9 million pounds compared with actual production of 334.1 million pounds last season. Marketings this year will likely be about 300 million pounds, 13 percent below the effective quota of 344.0 million pounds, resulting in projected supplies of about 900 million pounds. This assumes normal on-farm carryover. Smaller crops are forecast for Maryland, dark air-cured, and dark fire-cured tobacco. Cigar tobacco production will increase slightly. January-June 2002 exports of flue-cured leaf (declared-weight) slipped 6 percent to 78.2 million pounds. Burley shipments gained 16 percent to reach 68.2 million pounds. Total leaf shipments during the first 6 months of calendar 2002 were 197.5 million pounds compared with 220.7 million pounds during the same period in 2001. Germany, Japan, and Belgium were the leading destinations for U.S. leaf. Leaf imports during the first 6 months of 2002 reached 309.6 million pounds (consumption imports) compared with 254.3 million pounds during the same period last year. Imports of Oriental tobacco declined and imports of both flue-cured and burley advanced. By December 15, 2001, the U.S. Department of Agriculture (USDA) will announce the flue-cured poundage quota and matching acreage allotment for 2003. Individual farm quotas and acreage allotments for the next year will reflect this year’s overmarketings and undermarketings. By February 1, 2003, USDA will announce the 2003 burley poundage quota, and by March 1, it will announce the 2003 acreage allotments for other kinds of tobacco. Price supports for 2003 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. END_OF_FILE