TOBACCO--SUMMARY April 3, 1996
Approved by the World Agricultural Outlook Board
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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.
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TOBACCO ACREAGE UP 7 PERCENT
In early March, U.S. tobacco growers indicated intentions to increase this
year's plantings about 7 percent to 720,000 acres. With a 2-percent increase
in the flue-cured effective quota, flue-cured growers expect to plant an
additional 3 percent in 1996, or 398,000 acres. Burley tobacco acreage is
expected to increase 14 percent to 280,000 acres, bolstered by a 25-percent
increase in the effective quota and higher prices in 1995.
A crop with average yields should produce 1.6 billion pounds, compared with
1.3 billion pounds in 1995. With lower beginning stocks, the overall 1996/97
supply of tobacco will change slightly from 1995/96.
Price supports in 1995 will rise .4 cent per pound for flue-cured and 1.2
cents per pound for burley. Price supports for other types are up from 1.7 to
2.7 cents per pound. Before the marketing season begins, USDA sets grade loan
rates for the various kinds of tobacco receiving support. The flue-cured
no-net-cost assessment will again be relatively low in 1996 for producers and
purchasers, and burley is likely to be low also.
On January 1, 1996, off-farm stocks of U.S.-grown leaf were down 9 percent,
but stocks of imported leaf were about the same as a year earlier. With an
anticipated increase in domestic use and increased leaf exports, total use of
U.S.-grown tobacco in 1995/96 should increase from a year earlier.
Consequently, October 1, 1996 carryover stocks of all U.S.-grown tobacco will
probably decline.
Cigarette output rose 5 percent last year to 760 billion units, the highest
ever. Domestic use increased slightly, and exports were up. U.S. smokers
consumed an estimated 487 billion cigarettes in 1995, up slightly from a year
earlier. However, annual consumption per adult declined by 7 cigarettes to
2,515 cigarettes. Both total and per capita consumption are expected to
decline in 1996 because of higher taxes, health concerns, increased
restrictions and prohibitions on smoking, and reduced social acceptance of
smoking.
The value of U.S. leaf and tobacco product exports in 1995 was $6.6 billion,
down 1 percent from 1994 due to lower cigarette prices, in spite of an
increase
in volume of tobacco leaf and products. The value of exports exceeded imports
(arrivals) by $5.9 billion. The record export surplus was up 1 percent from
the year earlier, after rising 45 percent in 1994. Cigarette export volume
rose 5 percent to 231 billion pieces with lower unit values. Exports of
unmanufactured leaf were 462 million pounds (615 million pounds, farm sales
weight).
Leaf export volume should decline in 1996 because of lower U.S. supplies. The
quality of the 1996 flue-cured crop will influence exports late in the
calendar year.
In 1995, unmanufactured tobacco imports (arrivals) fell 22 percent to 419
million pounds because of reduced cigarette leaf and stem imports. Imported
leaf accounted for about 28 percent of total U.S. leaf stocks on January 1,
1996, slightly higher than a year earlier.
Consumption of cigars, chewing tobacco, and snuff rose again in 1995, while
consumption of smoking tobacco fell. Use of cigars and snuff may continue to
increase, but use of other tobacco products besides cigarettes may decline.
Disappearance of U.S.-grown flue-cured tobacco in the current marketing year
is forecast slightly higher than last year's 915 million pounds. Domestic use
and exports are expected to be higher. Disappearance in 1995/96 will likely
exceed marketings, so the carryover of domestic flue-cured tobacco on July 1,
1996, may decline from the 1.2 billion pounds of a year earlier. Marketings
in 1996 may increase from 1995's 854 million pounds.
Disappearance of U.S.-grown burley tobacco in 1995/96 is expected to decline
from 1994/95's 623 million pounds, with reduced domestic use and exports.
Burley sales this season totaled 483 million pounds, 15 percent less than last
season.
USDA set this season's burley marketing quota at 634 million pounds, 15
percent above last year. The 1996 effective quota, which reflects last year's
over-and under-marketings, totals about 724 million pounds, 148 million pounds
more than last season.
Individual farm acreage allotments were reduced 5 percent for dark air-cured,
unchanged for Virginia fire-cured and Kentucky-Tennessee fire-cured tobacco,
and increased 10 percent for Virginia sun-cured tobacco. The allotments were
steady for Wisconsin binder and Ohio filler growers and zero for Puerto Rican
cigar filler growers. Farm acreage allotments unused in recent years were
adjusted downward. Prices for the 1995 crop were mostly higher. Maryland
auction prices were up, cigar prices mostly steady, and fire-cured and dark
air-cured auction prices advanced in 1995/96.
Printed copies of the Tobacco Situation and Outlook report should be available
in about 1 week. For further information contact Tom Capehart (202) 219-0890.
Text of the full report will also be available electronically. For details,
call (202) 219-0515.
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