WORLD DEVELOPMENTS

Highlights:

Azerbaijan: Increased prices are stimulating farmers to increase area planted by 33 percent to 6,000 hectares in 1998. Leaf production is expected to total 11,000 metric tons, up 10 percent. Leaf exports are predicted to total 8,000 tons, up 14 percent.

Domestic cigarette consumption is expected to increase slightly, however, cigarette production is expected to decrease 40 percent or 900 million pieces. Much of the decline in cigarette output is due to the tax structure which discourages local cigarette production. To meet domestic demand, Azerbaijan is expected to import 5.3 billion pieces in 1998, up 15 percent from last year.

Kazakstan: Kazakstan leaf production is expected to increase nearly three fold to 10,000 metric tons in 1998. Much of this increase is due to an increase in area planted of nearly three fold due to higher grower prices and higher grower returns last year. Prices for 1998 are expected to rise an additional 13 percent. Overall leaf quality, however, is expected to be poor. Domestic leaf use is forecast to increase nearly 16 percent to 6,000 tons due to increase cigarette production. Leaf exports are predicted to reach 500 tons, up 25 percent. Much of these exports, however, are expected to eventually reenter the country as cut filler for the production of high quality cigarettes. Sources predicted that Kazakstan will not import leaf tobacco due to sufficient domestic production.

Mexico: Mexico’s leaf production is forecast to increase almost 29 percent in 1998 to over 54,000 metric tons. Much of this increase is due to attractive international prices and increased domestic demand for mid-priced cigarettes. Flue-cured tobacco production is up 50 percent to 10,355 tons, while light air-cured tobacco is forecast to reach 11,643 tons, up nearly 12 percent. Burley production is expected to reach 33,024 tons, up 57 percent. Overall leaf quality this year is expected to be good. Leaf exports in 1998 are expected to total 14,462 tons, down 5 percent from last year. Exports, however, are forecast to increase in 1999.

Romania: Romanian leaf production is projected to increase 5 percent to 14,750 metric tons in 1998 as area planted to tobacco rises 4 percent. Since Romania is not self-sufficient in tobacco production, they are net importers of tobacco. Leaf imports are forecast to total 13,000 tons, up 10 percent this year. Much of the increase in leaf production and imports is being driven by increased production of low quality cigarettes. Cigarette production is expected to increase nearly 11 percent to 260 million pieces in 1998.

Yugoslavia: Improved financial support for processors stimulated tobacco expansion. Yugoslavian farmers are predicted to plant 6,200 hectares in 1998, up 20 percent from last year. Leaf output is forecast to total 7,604 metric tons, up 4 percent in 1998. Leaf imports are expected to total 4,500 tons this year, down 27 percent from 1997. Much of the decline in imports is due to increased domestic production of Virginia tobacco and a lack of foreign currency. However, approximately 50 to 100 tons of US Virginia leaf tobacco will reenter Yugoslavia this year due to a licensing agreement between Div Vranje and US cigarette manufacture RJ Reynolds.

Cigarette production this year is expected to increase 1 percent to 10.8 billion pieces. Cigarette exports this year are forecast to decline 36 percent to 3.5 billion pieces due to increased competition from other suppliers in Macedonia and Croatia.

Auction Reports:

Canadian Flue-Cured Auction Update: Through the 108^th sale day of the 1997/98 Canadian flue-cured tobacco marketing season, the Ontario Flue-Cured Tobacco Growers Marketing Board reports that 68,275 metric tons of flue-cured tobacco have been sold. This represents an increase in sales of 6 percent when compared to the same period of last year's marketing season (last year’s marketing season lasted 100 sale days). Prices in Canadian currency so far this year are averaging $3.83 (US$2.70) per kilogram, down from $4.06 (US$2.96) per kilogram last year. So far this year, sales of "A" graded leaves account for over 79 percent of purchases, unchanged from last year.

Exchange Rates:
1996/97 U.S.$ = CA$ 1.37
1997/98 U.S.$ = CA$ 1.42

Last modified: Wednesday, November 26, 2003