Tobacco Farmer Newsletter, April 1, 2011

The USDA Prospective Plantings Report for 2011 projected a slight increase in flue-cured tobacco acreage and a three percent decrease in burley tobacco plantings when it was released March 31. Both projections were lower than what tobacco professionals in the producing states were estimating. For instance, one economic report for North Carolina said the most likely scenario for flue-cured was an increase in contracting of 10 million pounds, roughly five percent, while a burley cooperative leader told Tobacco Farmer Newsletter that  burley acres would be up 10% or more based on what growers were saying.

  

Highlights of the USDA report: Flue-cured--Up one percent from 2010 intentions at 213,000 acres. Among individual states, acreage in North Carolina is up one percent, and Georgia and Virginia expect increases of five percent and six percent respectively. South Carolina acreage is expected to decrease by nine percent from last year. Burley--Down three percent from last year at 94,750 acres. This would be the lowest burley acreage on record, lower than the previous record of 97,500 acres in 2008. Acreage in Kentucky is expected to decrease by seven percent from a year ago, while Pennsylvania is up 19 percent, Tennessee is up 13 percent, Virginia is up three percent, and North Carolina is about the same. Ohio projects the biggest decrease at 28 percent. Fire-cured tobacco--Up four percent from 2010 at 16,250 acres. Growers in Tennessee expect acreage to remain unchanged from last year, while acreage in Kentucky is expected to increase from last year by eight percent. The small acreage in Virginia is expected to decrease by 15 percent at 550 acres. Dark air-cured tobacco--Down seven percent from last year at 5,100 acres. Kentucky acreage is projected down five percent, while Tennessee acreage in is expected to decrease 18 percent. Cigar tobacco--Down 21 percent at 4,410 acres. Among the individual types, cigar filler is down 19 percent, cigar binder is down 25 percent and cigar wrapper is down 12 percent. Southern Maryland--Up 36 percent from 2010 at 3,000 acres. Note: This information  is drawn from the April issue of The Tobacco Farmer Newsletter. To get on the mailing list to receive it directly, email chrisbickers@gmail.com and say "Subscribe."

Note 2: A farmer reader took me to task shortly after I mailed the newsletter, saying I was too skeptical about the USDA estimates, at least in his area. "Chris, I’m going to say that in far west Kentucky, burley will be more like 10-15 percent down;.dark fired, no change, and air cured, no change."

How much flue-cured was contracted? A preliminary assessment

Blake Brown, North Carolina Extension ag economist, wrote in a "U.S. Flue-Cured Tobacco Update" earlier this month that traditional buyers have completed contracts with growers. "As anticipated, some buyers increased intentions and some held intentions at 2010 levels," he said. "Unfortunately, at least one buyer decreased intentions. Consequently, the net change in contracted pounds from 2010 is difficult to gauge." The most likely scenario seems to be that contracted pounds were up perhaps 10 million pounds, he said. It might have been more but a larger than expected Brazilian flue-cured crop dampened demand for US tobacco. According to early reports, the 2011 Brazil flue-cured crop was up 200 million pounds from the 1.3 billion pounds that was expected. This likely would have displaced more U.S. flue-cured in 2011 than it did, but the Brazil crop is reportedly not the best quality, and exchange rates still favor U.S. products over Brazilian ones.For more details from this very informative report, go to the Tobacco Growers Information Portal. (www.ncsu.edu/project/tobaccoportal).

More market optimism

The leader of the Lexington, Ky., tobacco organization--the Burley Tobacco Growers Cooperative--is "cautiously optimistic" that there will be considerable opportunity to sell the coming US crop in the growing markets of Eastern Europe and Asia. Brian Furnish, general manager of the BTGC, said China continues to be the best target of opportunity for American burley. “Even a small piece of that market would be great for us,” said Furnish. Indonesia would be the next leading target after China, he said.

How to subscribe to The Tobacco Farmer newsletter

Just a reminder: If you would like to receive The Tobacco Farmer, the email newsletter that forms the basis for this blog, please feel free to write me at chrisbickers@gmail.com. Or you can use the comment mechanism of this blog. Say "Subscribe" and let me know what type you grow, if any, and what state you live in. I don't have anywhere near the the number of readers I had the last two years, so I would be glad for any interested farmer to write in. And there is more editorial material in the newsletter than in the blog.

Burley tobacco outlook 2011

There are grounds for optimism about the upcoming US burley toacco crop. Daniel Green, chief executive officer of the Burley Stabilization Corporation in Springfield, Tn., told me, “We had a very challenging curing season [in 2010], especially in the central and northern parts of Kentucky.” The leaf cured quick, and much of it turned out yellow. It wasn’t very desirable. “Many farmers had large quantities of unmarketable tobacco, causing financial losses that may cause them to exit tobacco production,” said Green. But as the contracting period for U.S. American burley begins in earnest, the leader of the cooperative is optimistic. “We are looking at pretty strong contracting,” said Green. “Our cooperative will increase its contracts substantially this year, and I would anticipate we will see burley acres up 10% or more based on what growers are telling me.”

More on the outlook for dark tobacco

Dark tobacco growers are expected to fare much better in 2011 than other types as prices and contract volume should stay relatively constant in response to domestic sales of smokeless tobacco products, said Will Snell, Kentucky Extension ag economist in a recent publication. Dark tobacco producers have benefited from growing domestic snuff sales as consumers respond to smoking restrictions and perceptions of lower health risks for smokeless products relative to cigarettes. That has translated into increased planting opportunities

Tobacco Farmer Newsletter

Dark tobacco outlook still bright. The good performance of moist snuff products relative to cigarettes has lead to a continued strong market for the dark tobacco types. Todd Harton of Cadiz, Ky., had the largest acreage of fire-cured tobacco in the country last year at 260 acres, and he is increasing again this year to 300 acres or more. "All my tobacco goes for snuff, and the snuff industry is strong right now," he says. Two new practices have helped a lot in recent years, he says. "I began strip tillage eight years ago," he says. "I didn't want the soil to wash. Now, ground preparation is quicker, tobacco stays clean and I can get back in quicker after a rain." Harton started using SoySoap midway through the season in 2009. It has given a yield increase of 250 to 300 pounds, but the main benefit is increased quality, he says. "We can get the finish we want, and with one less firing."


How to test your flue-cured barns: The Tobacco Growers Association of N.C. (TGANC) is providing barn testing certification services for flue-cured barns to growers in all flue-cured states. The fee per barn is $48, and all growers in all states may utilize the service. If interested, contact TriTest Inc. at 919-834-4984 in Raleigh. Say you are interested in the Tobacco Barn Testing Service. "Barn certification for nitrosamine issues has become a critical part of contracting agreements," said Graham Boyd, TGANC executive vice president, in a statement. "Some companies are now shifting the burden of proof to the tobacco grower." For more information, contact Boyd at 919-614-0099.

The 100-million-pound Asia tobacco sale is still doable, claims Grower Direct exec

The effort to sell U.S. tobacco directly to Asian buyers was slowed briefly earlier this year by questions over funding and other issues. Jimmy Lee, vice president of U.S. Growers Direct, says those issues have been resolved. "We are resuming the process," Lee says."On Monday (March 21), we will write to the farmers who have signed contracts with us, giving them a contract letter with a confirmation number." USGD already has contracts for most of the 100 million pounds of flue-cured that were originally planned. Lee rejects the notion that there is not enough barn space to cure a crop this size, although that question is frequently asked. "The traditional buyers appear to be looking for 420 million pounds," he says. "Add 100 million pounds from USGD and we are only talking about 520 million pounds. That is about what we produced in 2009, and there were enough barns then!" Note: Lee says now that some of the USGD leaf will go to other Asian markets rather than just China.

Tar Heel trade office for agriculture opens in Beijing

North Carolina is now one of the few U.S. states to have an agricultural trade office in China. Agriculture Commissioner Steve Troxler and a trade delegation set it up on a trade mission earlier in March. “I think this puts us at the top of the heap so to speak,” Troxler said. “The idea is to have a representative there who can assist agriculture and agribusiness companies and help them navigate international trade there. This sends a signal to China tobacco and other companies over there about our commitment to trade with their country.” For more information on this and other tobacco topics, watch for the Mid March issue of the Tobacco Farmer Newsletter later this week.

Which way burley 2010?

Burley plantings in the U.S. could increase about 10% or more this spring, according to one burley cooperative executive. “There is a concern about world oversupply, but there doesn’t seem to be too much good-quality flavor burley,” he says. There wasn’t a whole lot of top quality burley in the 2010 U.S. crop. “We had a very difficult curing season, especially in parts of Kentucky. There were some really low prices for this crop, and some farmers will have to exit tobacco.” Read more about this and other tobacco developments in the next issue of the Tobacco Newsletter, out later this week.

Some changes in the works

Our primary sponsor for the last two years has elected to go a different direction with his communications resources and will no longer be associated with this newsletter. But please be assured that this blog will continue to provide timely news and management information for management-oriented tobacco farmers and anyone else who shares their concerns. I may change the name of the blog-newsletter. I haven't decided, but I will keep you posted. FYI: I am researching the direct sale to China story now and will have a report here soon, probably next week. --Chris Bickers, Editor