China: The State Tobacco Monopoly Authority (STMA) continues its campaign to phase-out marginal leaf production in an effort to improve overall leaf quality and lower stock levels. Sources in China report that STMA is monopolizing seed supplies, promoting intensive seedling production, and upgrading tobacco curing facilities. For 2000, area planted to tobacco is forecast to drop 3 percent, and production is expected to total 2.406 million tons, down 3 percent from 1999. Chinas leaf stocks are forecast to drop by 13.5 percent and total 3.25 million tons due to lower production levels and new incentives for leaf exporters. Exporters of flue-cured and burley tobacco receive a 13- percent rebate on Chinas 17-percent value-added tax (VAT). Leaf exports are forecast to reach 110,000 tons in 2000, up from 108,000 tons in 1999.
Korea: Domestic cigarette consumption continued a general downward trend in 1999 as a result of increased restrictions on public smoking and a growing anti-smoking movement in Korea. Foreign manufacturers, however, anticipate a 10-percent increase in foreign brand sales, up from 5 percent last year, as consumers return to more expensive imported brands and economic conditions continue to improve. Cigarette production is forecast to total 101.3 billion pieces, down from 103.6 billion pieces in 1998. Due to the general decline in smoking rates and the popularity of foreign brands, the Korea Tobacco and Ginseng Corporation (KT&GC) is reportedly concerned about higher than desired leaf stock levels. Although stock levels are expected to decline by 11 percent in 1999 and reach 132,329 tons, they are still higher than what is considered optimum. Tobacco production is projected to increase by 7 percent in 1999 to 59,500 tons. Korean imports are expected to remain flat, but leaf exports are expected to increase due to efforts to reduce storage expenses associated with the large burley tobacco inventories. Burley tobacco exports are estimated to reach 5,000 tons in 1999 as compared to 3,121 tons in 1998.
Canadian Flue-Cured Auction Update: Through the 19th sale day of the 1999/00 Canadian flue-cured tobacco marketing season, the Ontario Flue-Cured Tobacco Growers Marketing Board reports that 11,525 metric tons of flue-cured tobacco have been sold. This represents a nearly 4- percent 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 $3.37 (US$2.30) per kilogram, down from $3.44 (US$2.23) per kilogram last year. So far this year, sales of grade "A" leaves account for over 60 percent of purchases, down 4.21 percent from last year.
1999 Grade Loan Rates for Dark Air-Cured, Fire-Cured, Virginia Fire and Sun-Cured Tobaccos: The USDAs Commodity Credit Corporation issued price support grade loan rates for the 1999-crop Kentucky, Tennessee dark air-cured tobacco, types 35 and type 36 and fire-cured tobacco types 22 and 23, Virginia fire-cured, type 21 and Virginia sun-cured type 37 tobaccos. The 1999 grade loan rates for Virginia sun-cured tobacco will range from 93 cents to $2.02. Virginia fire-cured tobacco grade loan rates will range from 87 cents to $1.98 per pound. The grade loan rates for fire-cured will range from 63 cents to $2.40 per pound. Tobacco that receives a "semi-fired" designation will receive a 30-percent reduction in the applicable grade loan rate. The grade loan rates for dark air-cured tobaccos will range from 58 cents to $2.27 per pound.
U.S. Flue-Cured Auction Update: The Stoneville-Madison tobacco market held its final sales on November 16th bringing to an end the 1999 U.S. flue-cured tobacco marketing season. Total flue-cured gross sales this year were 322,817 metric tons at an average price of $3.83 per kilogram. This represents a decrease in sales volume and price from last year when 405,341 tons were sold at an average price of $3.87 per kilogram. Over 19 percent of sales this year went under loan compared to about 9 percent last year.
U.S. TRADE SUMMARY FOR JANUARY-SEPTEMBER 1999
U.S. unmanufactured tobacco exports for January-September totaled 148,947 metric tons, valued at $991.2 million. This represents a 5-percent decrease in quantity and an 8-percent decrease in value when compared to January-September 1998. The leading U.S. leaf export markets so far in 1999 are: the European Union, 81,660 tons; Japan, 24,610 tons; the Russian Federation, 6,738 tons; Turkey, 5,163 tons; Korea, 4,337 tons; Malaysia, 4,330 tons; and Dominican Republic, 2,710 tons.
Flue-cured exports for January-September 1999 reached 64,128 metric tons, valued at $449.8 million. This is almost 10 percent down in quantity and down 12 percent in value from January-September 1998. The leading U.S. flue-cured export markets so far in 1999 are: the European Union, 31,316 tons; Japan, 14,187 tons; Korea, 4,333 tons; Malaysia, 3,118 tons; and Turkey, 1,527 tons.
Burley exports for January-September 1999 totaled 42,927 tons, valued at $349.9 million, down 4 percent in quantity and 3 percent in value from January-September 1998. The leading U.S. burley export markets so far in 1999 are: the European Union, 29,341 tons; Japan, 5,849 tons; Thailand, 1,596 tons; the Philippines 1,531 tons; and Turkey, 1,340 tons.
U.S. cigarette exports in January-September 1999 totaled 115.7 billion pieces, valued at $2.4 billion, down 26 percent in quantity and 25 percent in value from January-September 1998. The leading U.S. cigarette export markets so far in 1999 are: Japan, 54.7 billion pieces; the European Union, 17.6 billion pieces (to mainly Belgium/Luxembourg, a major transshipment point for exports to other European markets); Saudi Arabia, 7.3 billion pieces; Cyprus, 5 billion pieces; Lebanon, 4.5 billion pieces; Israel, 3.5 billion pieces; Singapore, 2.5 billion pieces; Hong Kong, 2.3 billion pieces; and Korea, 1.7 billion pieces.
U.S. exports of bulk smoking tobacco for January-September 1999 totaled 52,108 metric tons, valued at $405 million, up 6 percent in quantity and down 2 percent in value from January-September 1998. The leading export markets so far in 1999 are: the European Union, 14,484 tons; Turkey, 9,379 tons; Japan, 8,356 tons; Egypt, 6,296 tons and Poland, 4,304 tons.
U.S. unmanufactured tobacco imports for consumption (duty paid) for January-September 1999 totaled 174,287 tons, valued at $565 million, down 4 percent in quantity and 5 percent in value when compared to January-September 1998. Imports of oriental tobacco, the leading tobacco type imported by the United States, reached 40,655 tons, valued at $187 million in 1999, down 33 percent in quantity and down 38 percent in value when compared to the same period in 1998. Flue-cured imports so far in 1999 totaled 50,577 tons, valued at $170 million, up nearly 84 percent in quantity and 83 percent in value from January-September1998. Burley imports for January-September 1999 totaled 33,240 tons, valued at $116 million, up nearly 30 percent in quantity and up 24 percent in value from the same period in 1998. U.S. imports of stems and scrap tobacco so far in 1999 totaled 27,374 tons, valued at $11.6 million, down 35 percent in quantity and down 31 percent in value from January-September 1998. So far in 1999, the leading suppliers to the United States of unmanufactured tobacco imports for consumption are: Brazil, 47,167 tons; Turkey, 30,993 tons; Malawi, 13,986 tons; the European Union, 11,384 tons; Argentina, 9,716 tons; Zimbabwe, 8,093 tons; Canada, 7,603 tons; and the Dominican Republic, 5,848 tons.
U.S. general imports (actual arrivals) of unmanufactured tobacco so far in 1999 totaled 175,570 tons, valued at $552 million. This represents a 14-percent decrease in quantity and a 16-percent decrease in value from the same period in 1998.
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.