Leaf News

UNITED STATES

Low prices, weak supply, reduced production make for a bleak leaf market

WILSON, N.C..—The market for flue-cured tobacco in the United States was close to collapse in mid October thanks to scant demand and very low prices.

When Tobacco International attended the auction sale at American Tobacco Exchange here in Wilson on October 16, it found a glum group of farmers watching as buyers walked down the rows of bales.

“$1.20 a pound has been the best price I have seen, and that was for some very good tobacco,” said a flue-cured grower from Louisburg, N.C. “A lot of this crop was sold at 90 cents a pound, and some of it was sold at 75 cents!”

He said that the latter price would not be enough to cover cost of production.

“I am worried,” he said. “I have bought several (bulk curing) barns in the last few years. Counting the slabs and other preparation I have had to put into them, I probably have $36,000 in each of them. If I decided to get out of tobacco, I think I would have a hard time selling them for more than $2,500.”

All tobacco was believed to have been harvested in the eastern Belt, but a little flue-cured remained to be gathered in the Piedmont area in western N.C. The process was expected to be done by November 1.

No frost had been experienced in the Piedmont through October 16.

Auction sales, or at least some of them, were expected to continue up to Thanksgiving.

It was hard for these farmers to get excited about the auction sale of their tobacco in Wilson, N.C. “A lot of this crop was sold at 90 cents a pound, and some of it was sold at 75 cents!” The latter price would not be enough to cover cost of production.

COLOMBIA

Growers bemoan PMI departure

MEDELLÍN—Tobacco growers were scurrying in the fall to find some way to cushion the impact of the decision of Coltabaco—Philip Morris International, announced in June, to end contracting of Colombian leaf.

It also announced its intention to end its domestic cigarette manufacturing operations here, in part because of the difficulties of dealing with the growing contraband problem and in part because of the global trend away from tobacco products.

The company has operated factories in the cities of Medellín, Barranquilla and Santander, represented by the National Union of Workers of the Tobacco Industry.

The grower association hoped to persuade PMI to conduct a transition program to help farmers convert to other crops.

Coltabaco was celebrating its hundredth anniversary.

MALAWI

Exceptionally dry weather reduces production

BLANTYRE—Very dry weather conditions reduced production of 2019 burley in Malawi, then the crop encountered a lackluster market, according to a report from Hail & Cotton International Group. At the end of the market, an average price (in US$/kilogram) of $1.32 had been achieved, down from $1.56 in 2018. Kilograms sold were nearly 138 million, down from 164 million in 2018.

There was a high accumulation of “No Sale” tobacco during the course of the season, so “merit sales” were prescribed for unsold tobacco,” Hail & Cotton said. The average running green price for this tobacco was quite low at $0.50 per kilogram.

“[But] competition has increased in the upper stalk segment, with a realization of a lack of leaf availability on offer,” the leaf dealer said.

UNITED STATES

How much tobacco did the U.S. produce?

WASHINGTON, D.C.—The US Department of Agriculture issued its final estimate of American tobacco production in mid-October. It projected that flue-cured would be down 15 percent in volume because of dry weather throughout the season plus the catastrophic effect of Hurricane Dorian in eastern North Carolina and Southern Carolina. But the burley crop was projected only eight percent downward, mainly because of good conditions in the leading state of Kentucky.

Flue-cured harvest wound up on this eastern N.C. farm on October 2.

Following are USDA’s projections for each of the types. For flue-cured and burley, projections by state are included.

Flue-cured: North Carolina—212.4 million pounds, down 15.3 percent from last season. Virginia—30 million pounds, down 28.5 percent from last season. Georgia—18 million pounds, down 24.2 percent from last season. South Carolina—13 million pounds, down 38.5 percent from last season. All U.S. flue-cured—274 million pounds, down 24.1 percent from last season.

Burley: Kentucky—77.9 million pounds, down 2.6 percent from last season. Tennessee—6 million pounds, down 33.3 percent from last season. Pennsylvania—6 million pounds, down 31.8 percent from last season.

North Carolina—0.64 million pounds, down 42 percent from last season. Virginia—1.2 million pounds, down 16 percent from last season. All U.S. burley—91.8 million pounds, down 8.5 percent from last season.

Fire-cured: 47.4 million pounds, down 19.5 percent from last season.

Dark air-cured: 27.6 million pounds, up 3.7 percent from last season.

Pennsylvania Seedleaf: 5 million pounds, down 8.3 percent from last season.

Southern Maryland: 2.2 million pounds, down 28.5 percent from last season.

All tobacco, USA: 448 million pounds, down 16 percent from last season.