TOBACCO--SUMMARY April 17, 1997 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 (TBS-238) will be available 1- 2 weeks following release of this summary. ============================================================================== U.S. tobacco growers intend to plant 807,000 acres this year, 10 percent more than was planted in 1996. Reacting to an 8-percent increase in the effective quota, growers of flue-cured tobacco indicated in the annual plantings intentions survey that they would plant 452,700 acres, 9 percent more than last season. Burley growers, with a 22-percent gain in effective quota, are planning to set 312,500 acres, 14 percent more than in 1996. A crop with average yields should total over 1.7 billion pounds, farm sales weight, compared with 1.5 billion pounds in 1996. Increased production will likely offset lower beginning stocks to increase supply in 1997/98. Price supports for 1997 will rise 2.0 cents per pound for flue-cured and 2.3 cents for burley. Price supports for other types are up from 4.3 to 6.6 cents per pound. Before the marketing season begins, the United States Department of Agriculture (USDA) sets grade loan rates for the various kinds of tobacco receiving support. The flue-cured and burley no-net-cost assessments have again been set at relatively low levels in 1997. On January 1, 1997, off-farm stocks of U.S.-grown leaf were down 1.6 percent, and stocks of foreign-grown leaf were up 4.5 percent from a year earlier. With an anticipated increase in domestic use that more than offsets a small decline in leaf exports, total use of U.S.-grown tobacco in 1996/97 will increase from a year earlier. Consequently, October 1, 1997, carryover stocks of all U.S.-grown tobacco will probably decline. Cigarette output rose 2 percent in 1996 to an estimated 760 billion, the highest level ever. Domestic use was unchanged from 1995, and exports increased. U.S. smokers consumed an estimated 487 billion cigarettes in 1996, about the same as a year earlier. However, annual consumption per person 16 years and over declined from 2,415 to 2,390 cigarettes. Per capita consumption is expected to continue declining in 1997, but total consumption may not change much. Cigar consumption increased 18 percent and snuff also gained in 1996, while consumption of smoking and chewing tobacco fell. Use of cigars will increase in 1997, and snuff consumption is likely to increase also. Use of most other tobacco products is expected to continue declining. The value of U.S. leaf and tobacco product exports in 1996 declined slightly because of lower export prices for tobacco leaf and cigarettes. The value of exports exceeded imports (arrivals) by $5.3 billion, down from last year's record $5.9 billion. The tobacco trade surplus was down 10 percent from a year earlier. Cigarette exports rose 5.5 percent to 244 billion pieces, and exports of unmanufactured leaf gained 5 percent to 486 million pounds. Export leaf volume may increase further in 1997 due to greater U.S. production and low world stocks, although increased global production may dampen the increase somewhat. Higher flue-cured production in 1997 will in a large part determine exports during the last half of the calendar year. In 1996, unmanufactured tobacco imports (arrivals) advanced 64 percent to 720 million pounds. The increase reflects higher cigarette production and higher imports under the tariff-rate quota. Imported leaf accounted for about 29 percent of total U.S. leaf stocks on January 1, 1997, slightly more than a year earlier. Disappearance of U.S.-grown flue-cured tobacco in the current marketing year is forecast up from last year's 875 million pounds. Domestic use, tempered by slightly lower exports, accounts for the additional use. Disappearance in 1996/97 will likely exceed marketings, so carryover stocks at the beginning of 1997/98 will be slightly diminished. Production in 1997 will likely increase from 1996's 910 million pounds. Disappearance of U.S.-grown burley tobacco in 1996/97 is expected to increase from 1995/96's 551 million pounds, mostly due to higher domestic use. Burley sales this season totaled 525 million pounds, about 9 percent greater than last season. The U.S. burley carryover next October 1 may decline 6 percent from the previous year. USDA set this season's burley marketing quota at 705 million pounds, 74 million pounds greater than last season. The 1997 effective quota, which reflects last year's over- and under-marketings, totals about 880 million pounds, a record high since poundage quotas were established for burley in 1971. Prices for the 1996 crop were higher for all types. Accordingly, individual 1997 farm acreage allotments were increased 2.5 percent for Kentucky- Tennessee fire-cured and 12.5 percent for Virginia fire-cured. Allotments for dark air-cured types gained 5 percent and Virginia sun-cured 15 percent over the previous season. Allotments were steady for Wisconsin binder tobacco. Acreage allotments unused in recent years were adjusted downward. Printed copies of the Tobacco Situation and Outlook will be available in about 2 weeks This issue contains a special article "The Tobacco Program, A Summary and Update." For more information contact Tom Capehart (202) 219-0890. The text of the report will also be available electronically. For details, call (202) 219-0515. END_OF_FILE