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WORLD DEVELOPMENTS
Highlights:
Zimbabwe Flue-Cured Leaf Production Up: Flue-cured production for 1998 reached 215,914 metric tons, up 15 percent from 1997 due to favorable weather. During 1998 flue-cured exports increased by nearly 10 percent over 1997 export figures. Prices for flue-cured tobacco reached Z$34.74 (US$1.34) in 1998 as compared to Z$26.58 (US$2.33) in 1997, down 26 percent. The decline in prices were due to over-supply leaf tobacco on the world market and marginal leaf quality. For 1999, tobacco farmers are expected to decrease area planted by 10 percent because of low prices received during the 1998 auction and a 40-percent increase in the price of inputs. However, sources expect burley production will increase by 12 percent or reach 9,000 tons in 1999 due to higher prices for burley leaf in 1998.
SEITA Announces Plans to Downsize: In an attempt to improve competitiveness, the French Tobacco and Matches Group (SEITA) announced November 10, 1998, that it will be closing one of four cigarette factories and one of two cigar factories within two years. The French market for dark cigarettes is decreasing while blond cigarette consumption is growing during a period when overall cigarette consumption in France is declining. By shutting down one cigarette factory, SEITA will reduce production of dark cigarettes. SEITA plans to reduce dark cigarette production from 19.5 billion sticks in 1997 to 13 billion sticks by 2001. SEITA sold over 601 million cigars in France during 1997. However, SEITA’s share of the French cigar market has declined from 47 percent in 1992 to 38 percent in 1997. By closing one of its cigar factories SEITA hopes to better compete with cigars manufactured in the Netherlands and Belgium.
Auction Reports:
Canadian Flue-Cured Auction Update: Through the 19th sale day of the 1998/99 Canadian flue-cured tobacco marketing season, the Ontario Flue-Cured Tobacco Growers Marketing Board reports that 11,972 metric tons of flue-cured tobacco have been sold. This represents a decrease in sales when compared to the same period of last year's marketing season. Prices in Canadian currency so far this year are averaging $3.44 (US$2.23) per kilogram, down from $3.64 (US$2.61) per kilogram last year. So far this year, sales of grade "A" leaves account for over 64 percent of purchases, down 9 percent from last year.
Canadian Flue-Cured Auction Update Sales Day 19 November 6, 1998 |
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Quantity in Metric Tons |
Average Value per Kilogram (US $ equivalent)* |
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1997/98 |
1998/99 |
1997/98 |
1998/99 |
12,077 |
11,972 |
US$2.36 | US$2.23 |
| Source: Ontario Flue-Cured Tobacco Growers Marketing Board. | |||
Exchange Rates: 1997/98 U.S.$ = CA$ 1.37
1998/99 U.S.$ = CA$ 1.54
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