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Highlights:I
Chile: Chilean cigarette prices are estimated to have increased this year by 25 percent as a result of a steep tax increase on cigarettes since January 1999. Cigarette demand is expected to drop by 11 percent in 1999. Cigarette production for 1999 is to total 12 million pieces, down 11 percent from the same level in 1998. To offset the anticipated fall in domestic consumption, Chilean cigarette producers are increasing their efforts to expand into the Latin American market. Cigarette exports are forecast to increase by 5 percent in 1999.
Czech Republic: The Czech Republic relies solely on tobacco imports for cigarette production. Since Czechoslovakia was divided into two countries in 1993, tobacco production moved to Slovakia. Cigarette production is estimated to remain constant at 32 billion pieces in 1999. Reduced cigarette sales in 1998 are reported down due to a consumption tax hike and an economic recession. Tabak, the largest cigarette manufacturer in the Czech Republic, reported selling 2.5 billion pieces less in 1998. For 1999, cigarette consumption is forecast down 5 percent at 19 billion pieces. To compensate for lost domestic cigarette sales, exports are forecast to rise 6 percent and total 18.5 billion pieces in 1999.
Italy: Italian tobacco output in 1998 is estimated at 141,000 metric tons. This is about 6 percent over the previous year’s crop and the national quota fixed for Italy by the European Union. The European Union’s Common Agricultural Policy excludes any premium payment for output exceeding the EU production ceiling. However, any production exceeding national quotas by up to 10 percent for each variety receive premium payments. But, the excess production will be deducted from the quota in the following crop year. The overproduction will not affect the premiums for the 1998 crop, but will likely affect the payments in 1999. For 1999 total leaf output is forecast at 132,500 metric tons; 6 percent less than the 1998 level. Domestic consumption is likely to remain constant in 1999. Leaf imports are projected to reach 34,300 metric tons in 1999 as compared to 38,765 metric tons in 1998. Sources attributed the big jump in imports in 1998 to transhipped tobacco destined for Eastern Europe or North African countries. Cigarette production is expected to remain constant in 1999 in line with domestic cigarette consumption.
Philippines: Due in part to crop damage from the La Nina rains in the latter part of 1998, total leaf production is expected to be down 19 percent and only reach 58,500 metric tons in 1999. Leaf quality is also reported to have suffered from the off-season rains. Since there is no change in leaf demand and a 19-percent drop in the tobacco crop, leaf imports are forecast to increase by 30 percent in 1999. Total leaf production is expected to recover in 2000 if the National Tobacco Administration maintains attractive floor prices for farmers. However, farmers may be discouraged from planting more tobacco as a result of low prices they are currently receiving from the 1998/1999 crop.
South Africa: Tobacco production in 1999 is estimated to reach 31,399 tons slightly down from 1998, but 16 percent higher than the 1997 crop which suffered severe weather damage. Flue-cured tobacco, which accounts for 82 percent of total leaf production, is forecast to total 11,574 tons, down nearly 3 percent in 1999. Decreased domestic prices as well as more economical foreign leaf affected tobacco production profitability. Farmers are expected to decrease area planted by nearly 6 percent because of lower prices. In addition, uncertainty from strict anti-tobacco legislation as well as poor economic conditions caused domestic demand to decline to 27,162 tons in 1998 as compared to 32,835 tons in 1997. Leaf demand is forecast to rebound by 10 percent in 1999 and stocks are projected to drop by 15 percent. Leaf exports are estimated at 21,000 tons in 1999, up nearly 48 percent from last year. With high stock levels in 1999, foreign leaf import demand will drop to 9,893 tons as compared to 22,597 tons in 1998.
Malawi Tobacco Auction Update: Through the 7th week, the Malawi Tobacco Control Commission reported 2,000 metric tons of flue-cured tobacco were sold at auction in Malawi. Last year 2,909 metric tons were sold in the same number of weeks. Flue-cured prices were nearly 22 percent higher than last year at US$1.18 per kilogram. Burley sales so far this year totaled 38,450 metric tons, up 9 percent than last year. Prices for burley were US$1.44 per kilogram, up nearly 10 percent from last year.
Zimbabwe Tobacco Auction Update: Zimbabwe’s Tobacco Association reported 63,000 metric tons of flue-cured tobacco were sold during the first 9 weeks of the auction season valued at ZW$3.47 billion or US$90.9 million. For the same period in 1998, flue-cured sales total 54,900 metric tons valued at ZW1.32 billion or US$75.8 million. Sales during the ninth week reached 8,300 metric tons and averaged $1.55 per kilogram. Also, 70 percent of the offerings were reported to be fair to good quality tobacco.
Highlights:
USDA Commodity Credit Corporation Announced Grade Loan Rates: USDA’s Commodity Credit Corporation announced the grade loan rates for the 1999-crop of flue cured tobacco, based on the price support level of $1.632 per pound. The 1999-crop grade loan rates range from $1.14 to $1.85 per pound. For the 1998-crop the price support was $1.628 per pound, and the loan rates ranged from $1.06 to $1.91 per pound. The Flue-cured Tobacco Cooperative Stabilization Corporation will deduct one cent per pound from the grade loan rates for administrative overhead costs for tobacco placed under loan.
U.S. TRADE SUMMARY FOR JANUARY-MAY 1999
U.S. unmanufactured tobacco exports for January-May 1999 totaled 109,309 metric tons, valued at $719 million. This represents a slight decrease of 1percent in quantity and a 1- percent decrease in value when compared to January-May 1998. The leading U.S. leaf export markets so far in 1999 are: the European Union, 58,735 tons; Japan, 24,400 tons; the Russian Federation, 3,142 tons; Korea, 3,127 tons; Turkey, 2,739 tons; and Thailand at 2,609 tons.
Flue-cured exports for January-May 1999 reached 49,864 metric tons, valued at $347 million. This is down 1 percent in quantity and down 4 percent in value from January-May 1998. The leading U.S. flue-cured export markets so far in 1999 are: the European Union, 23,238 tons; Japan, 14,187 tons; Korea, 3,124 tons; and Malaysia, 1,690 tons.
Burley exports for January-May 1999 totaled 33,222 tons, valued at $273.3 million, up 8 percent in quantity and 11 percent in value from January-May 1998. The leading U.S. burley export markets so far in 1999 are: the European Union, 22,927 tons; Japan, 5,707 tons; Thailand, 1,596 tons; and Turkey, 1,189 tons.
U.S. cigarette exports in January-May 1999 totaled 68.2 billion pieces, valued at $1.46 billion, down nearly 21 percent in quantity and 18 percent in value from January-May 1998. The leading U.S. cigarette export markets so far in 1999 are: Japan, 29.2 billion pieces; the European Union, 14.8 billion pieces (to mainly Belgium/Luxembourg which is a major transshipment point for exports to other European markets); Saudi Arabia, 3.6 billion pieces; Lebanon, 3.3 billion pieces; Singapore 1.7 billion pieces; and United Arab Emirates, 1.1 billion pieces.
U.S. exports of bulk smoking tobacco for January-May 1999 totaled 24,559 metric tons, valued at $213 million, down 13 percent in quantity and nearly 9 percent in value from January-May 1998. The leading export markets so far in 1999 are: the European Union,7,490 tons; Turkey, 4,360 tons; Poland, 2,973 tons; Egypt, 2,427 tons; and Japan, 1,901tons.
U.S. unmanufactured tobacco imports for consumption (duty paid) for January-May 1999 totaled 79,718 tons, valued at $290 million, down 20 percent in quantity and down 16 percent in value when compared to January-May 1998. Imports of oriental tobacco, the leading tobacco type imported by the United States, reached 24,718 tons, valued at $120 million so far in 1999, down 40 percent in quantity and down 42 percent in value when compared to the same period in 1998. Flue-cured imports so far in 1999 totaled 20,107 tons, valued at $68 million, up 52 percent in quantity and up 56 percent in value from January-May 1998. Burley imports for the first five months of 1999 totaled 15,048 tons, valued at $49.7 million, up 45 percent in quantity and up 51 percent in value from the same five month period in 1998. U.S. imports of stems and scrap tobacco so far in 1999 total 9,304 tons, valued at $4.59 million, down 49 percent in quantity and down 43 percent in value from the same four month period in 1998. So far in 1999, the leading suppliers to the U.S. of unmanufactured tobacco imports for consumption are: Turkey, 18,875 tons; Brazil, 14,012 tons; Malawi, 8,354 tons; Canada, 6,672 tons; the European Union, 5,868 tons; and Zimbabwe, 4,298 tons.
U.S. general imports (actual arrivals) of unmanufactured tobacco so far in 1999 totaled 86,754 tons, valued at $292 million. This represents a 22-percent decrease in quantity and a nearly 24-percent decrease in value from the same period in 1998.
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.
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