U.S. DEVELOPMENTS

Highlight:

The USDA has announced grade loan rates for the 1997 crop of burley tobacco. Based on a price support level of $1.76 per pound, the 1997-crop grade loan rates range from $1.11 to $1.88 per pound. In 1996, the price support level was $1.737 per pound, and the grade loan rates ranged from $1.00 to $1.82 per pound. Both burley associations, the Burley Tobacco Growers Cooperative Association and the Burley Stabilization Corporation, will deduct one cent per pound from the grade loan rates for administrative overhead costs.

The USDA has announced producer assessments for the 1997-crop of Wisconsin cigar binder and Ohio cigar filler tobacco. Producers of Wisconsin cigar binder tobacco (types 54 and 55) must pay 1 cent per pound in assessments on each pound of tobacco marketed. This assessment consists of the no-net-cost assessment of .4155 cent per pound and a marketing assessment of 1.169 cents per pound which is shared equally between producers and purchasers with each paying .5845 cent per pound of tobacco marketed. Producers of Ohio cigar filler tobacco (types 42-44) must pay a no-net-cost assessment of $1.169 per pound for the 1997-crop. This is the same amount as the price support level and was based on substantial losses which were incurred by the CCC in connection with prior crop-year loans.

The U.S. Senate and House of Representatives have voted against an amendment that would have eliminated crop insurance subsidies for tobacco. Crop insurance, which costs taxpayers roughly $34 million annually, protects an estimated 89,000 tobacco farmers from loss due to disasters such as drought, floods, and insects. Tobacco supporters argued that if tobacco crop insurance were to be eliminated, many growers would be forced out of farming and many rural economies damaged.

Auction Reports:

The 1996/97 U.S. flue-cured tobacco auction season began on July 22, 1997. Through 3 days of sales, total gross sales of U.S. flue-cured tobacco (types 11-14) reached 6,993 metric tons. This represents an increase in gross sales of 25 percent when compared to the same 3 day period last year. Prices so far this year are averaging $3.64 per kilogram, nearly 14 cents per kilogram higher than last year. The higher prices during early sales reflect large marketings of upper stalk 1996-crop farm carryover tobacco. To date, 5.3 percent of sales have gone under loan, compared to nearly no tobacco last year.

United States Flue-Cured Auction Update
Through 3 Sale Days
July 24, 1997

Source: Daily Market News Summary No.3

Last modified: Wednesday, November 26, 2003