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U.S. DEVELOPMENTS
Highlights:
Burley Purchase Intentions: The U.S. Department of Agriculture announced that U.S. cigarette manufacturers plan to purchase 421.1 million pounds (farm-sales-weight) of burley tobacco from the 1998 crop. Major domestic cigarette manufacturers are required by law to report annually to USDA their intended purchases of burley tobacco from U.S. auction markets and producers. These data along with the average level of exports for the preceding three years and the amount of burley tobacco needed to attain reserve stock levels are used to determine the annual burley tobacco marketing quota. The 1998 burley quota will be announced by February 1, 1998.
Flue-Cured No-Net-Cost Assessments: The U.S. Department of Agriculture announced that the combined flue-cured tobacco no-net-cost assessment and marketing assessment will be 1 cent for the producer and 1 cent for the purchaser with respect to each pound of 1998-crop flue-cured tobacco marketed. The no-net-cost assessment, which is set according to potential losses related to current inventory and 1998-crop loans, was .186 cent per pound for producers and .186 cent per pound for buyers. In addition to the no-net-cost assessment, producers and buyers are required to pay a tobacco marketing assessment equal to one percent of the average flue-cured tobacco loan rate. The marketing assessment for the 1998-crop of flue-cured tobacco was set at .814 cent per pound for producers and .814 cent per pound for buyers.
Auction Reports:
1997/98 U.S. Burley Auction Update: Through the 22nd sale day of the 1997/98 U.S. burley and dark tobacco auction season, total gross sales of U.S. burley tobacco (type 31) reached 252,055 metric tons, up 6 percent from the same 22 day period last year when 238,616 tons were sold. Prices for type 31 are averaging $4.20 per kilogram so far this year, down 4 cents per kilogram from last year. So far this year about 8 percent of sales have gone under loan compared to no tobacco going under loan last year at this time. Sales of Virginia fire-cured (type 21), and Virginia sun-cured (type 37) are reported to be higher so far this year, while sales of eastern district fire-cured (type 22), western district fire-cured (type 23), one sucker (type 35), and greenriver (type 36), are lower. Prices are averaging higher for dark type tobaccos in all markets this year when compared to last year with the exception of western district fire-cured (type 23). Loan take so far this year is unchanged or lower.
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