WORLD DEVELOPMENTS

Highlights:

Croatia: Croatian cigarette exports are expected to reach 2.6 billion pieces in 1999, a nearly 3 percent increase. Modest growth in cigarette exports are attributed to increased sales to Slovenia, Bosnia, and Herzegovina. Consequently, cigarette production is expected to increase by nearly 6 percent in 1999. However, U.S. cigarettes companies may see increased market opportunities in Croatia due to trade liberalization and increased consumer incomes. Croatia is expected to reduce tariffs to 12.5 percent from 25 percent in order to comply with WTO requirements. Also, the government is expected to end the excise tax on imported cigarettes.

Nicaragua: According to a recent report from the FAS office in Managua, Hurricane Mitch destroyed over 50 percent of Nicaragua’s 1998/1999 tobacco crop. Due to the hurricane damage the Nicaraguan Ministry of Agriculture and Forestry reduced its estimate for the 1998/1999 from 5,352 metric tons to 2,549 mt. However, production is expected to rebound somewhat in 1999/2000 and be between 4,700 tons and 4,800 tons. The report further explains that almost all tobacco in local storage was exported prior to Hurricane Mitch and tobacco processing facilities and warehouses were not damaged.

Auction Reports:

Canadian Flue-Cured Auction Update: Through the 73rd sale day of the 1998/99 Canadian flue-cured tobacco marketing season, the Ontario Flue-Cured Tobacco Growers Marketing Board reports that 46,111 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 are averaging $3.55 (US$2.53) per kilogram, down 4 percent compared to last year. So far this year, sales of "A" graded leaves account for 69 percent of purchases, down slightly from last year.

Exchange Rates: 1997/98 U.S.$ = CA$ 1.43
1998/99 U.S.$ = CA$ 1.40

U.S. DEVELOPMENTS

Highlights:

USDA Announces 1999 Burley Tobacco Program: USDA announced the following provisions of the 1999 burley tobacco program. The national marketing quota for the 1999 crop is 452.9 million pounds, down from the 1998 quota of 637.8 million pounds and is based on the following: purchase intentions by domestic cigarette manufactures, 291.0 million pounds; unmanufactured exports (3-year average), 185.9 million pounds; reserve stock adjustment, -37.2 million pounds; and discretionary adjustment, 13.2 million pounds.

Auction Reports:

1997/98 U.S. Burley Auction Update: After 10 weeks of sales in the burley market, type 31 and Kentucky-Tennessee fire-cured tobacco, types 22 and 23 are the only markets open. Through the 37^th sale day of the 1998/99 U.S. burley and dark tobacco auction season, total gross sales of U.S. burley tobacco reached 286,219 tons as compared to 284,790 tons from the same 37^th sale day period last year. Producers received on average $4.19 per metric ton for burley tobacco, up slightly from a year ago. Volume of sales were reported light and the percent of tobacco placed under loan remained low. During the 10^th week, producers placed 40.1 percent of gross sales into the loan program as compared to 12.1 percent the same period a year ago. To date 10.9 percent of burley gross sales have been placed under loan. Fire-cured, types 22 and 23, are expected to close at the end of the month. So far 7,954 tons have been sold as compared to 7,688 tons during the same period a year ago.

U.S. TRADE SUMMARY FOR JANUARY-DECEMBER 1998

U.S. unmanufactured tobacco exports for 1998 totaled 211,917 metric tons, valued at $1.4 billion. This represents a 4-percent decrease in quantity and a nearly 6-percent decrease in value when compared to 1997. This drop is primarily due to competitive prices on the world market for flue-cured and burley tobacco and uncertainty from the tobacco settlement. The leading U.S. leaf export markets were: the European Union, 104,349 tons; Japan, 38,672 tons; Turkey, 20,053 tons; Thailand, 6,443 tons; the Republic of Korea, 4,243 tons; and the Dominican Republic, 4,276 tons.

Flue-cured exports for 1998 reached 110,434 metric tons, valued at $766 million, down 5 percent in quantity and 7 percent in value from 1997. The leading U.S. flue-cured export markets were: the European Union, 52,362 tons; Japan, 23,841; Turkey, 10,804 tons; Taiwan, 4,240; and the Republic of Korea, 4,152 tons.

Burley exports for January-December 1998 totaled 50,166 tons, valued at $410 million, down 12 percent in quantity and 10 percent in value from January-December 1997. The leading U.S. burley export markets were: the European Union, 26,289 tons; Japan, 7,593 tons; Turkey, 7,031 tons; Thailand, 3,935 tons and the Philippines, 1,786 tons.

U.S. cigarette exports for January-December 1998 totaled 201 billion pieces, valued at $4.2 billion, down 7 percent in quantity and down 6 percent in value from January-December 1997. The leading U.S. cigarette export markets were: Japan, 70.9 billion pieces; the European Union, 49 billion pieces (to mainly Belgium/Luxembourg which is a major transshipment point for exports to other European markets); Lebanon, 10.9 billion pieces; Saudi Arabia, 8.71 billion pieces; and Russian Federation, 7.25 billion pieces.

U.S. exports of bulk smoking tobacco for January-December 1998 totaled 64,659 metric tons, valued at $537 million, up 21 percent in quantity and 22 percent in value from January-December 1997. The leading export markets were: the European Union, 23,795 tons; Turkey, 12,849 tons; Egypt, 5,977 tons; Japan, 5,736 tons; and Czech Rep, 4,419 tons.

U.S. unmanufactured tobacco imports for consumption (duty paid) for January-December 1998 totaled 223,503 tons, valued at $771 million, down 24 percent in quantity and down 29 percent in value when compared to the same period. U.S. general imports (actual arrivals) of unmanufactured tobacco in 1998 totaled 246,762 tons, valued at $779 million. This represents an 18-percent decrease in quantity and nearly 31- percent decrease in value from the same period in 1997. These decreases are partly due to the large tobacco stocks in the United States, a fall in cigarette consumption in some markets, and the uncertainty concerning the outcome of the U.S. tobacco settlement. Imports of oriental tobacco, the leading tobacco type imported by the United States, reached 83,551 tons, valued at $417 million in 1998, down nearly 3 percent in quantity but up 4 percent in value when compared to the same period in 1997. Flue-cured imports in 1998 totaled 30,175 tons, valued at $101 million, down 55 percent in quantity and down 63 percent in value from 1997. Burley imports for 1998 totaled 28,726 tons, valued at $108 million, down 54 percent in quantity and down 66 percent in value from a year ago. U.S. imports of stems and scrap tobacco in 1998 total 46,206 tons, valued at $22.5 million, up 20 percent in quantity but down 15 percent in value from 1998. The leading suppliers to the United States of unmanufactured tobacco imports for consumption in 1998 were: Turkey, 66,450 tons; Brazil, 36,610 tons; the European Union, 23,125 tons; Argentina, 10,775 tons; Malawi, 8,304 tons; Canada, 8,206 tons and Dominican Republic, 8,006 tons.

CONVERSION FACTORS

1 Metric Ton = 2,204.622 Pounds
1 Pound = 0.0004536 Metric Tons
1 Kilogram = 2.2046 Pounds
1 Pound = 0.4535924 Kilograms
1 Hectare = 2.471 Acres
1 Acre = 0.4047 Hectares
Dry Weight (DW) = 88 to 92 percent of Farm Sales Weight (FSW) 1/

1/ Unmanufactured tobacco's conversion from dry weight to farm sales weight varies depending on a country's cultivation and processing conditions and practices. The average conversion factor ranges from 88 to 92 percent, but it can be as low as 60 percent.

Last modified: Wednesday, November 26, 2003