Sunday, December 11, 2011

The burley market has been “extraordinary” so far

That is the only way to describe it, says Roger Quarles, a grower in Georgetown, Ky.The price actually seems to be going up at this time. Most years, that is not the case.” Another thing that is not usually the case: Prices at auctions have at times been higher than contract prices. Some of the demand on the auction market has come from farmers trying to buy other farmers’ tobacco to fill out their contracts, says Quarles. Some in fact seem to have a strategy of filling any underproduction from auctions rather than planting so much that overproduction is likely. But there wasn’t any overproduction this season. “We are going to be really short on weight,” says Brian Furnish of the Burley Tobacco Growers Cooperative Association. “We didn’t have any serious weather problems. The weight is just short compared to recent years.” The quality is better than the last two years, he says. Furnish estimates that prices have averaged $1.75 per pound to $1.80 per pound for most of the crop, with the best bringing $1.82 to $1.82 per pound.

For growers who had flue-cured to sell, this turned out to be a good market, says Rick Smith, leaf dealer from Wilson, N.C. Volume is still unclear, but he thinks about 380 million pounds entered the trade, at an average of perhaps $1.78 to $1.80 per pound. “We would have hoped to average a little more,” he says. “That is not going to be enough to keep some farmers viable. Insurance won’t make them whole either.”

Any shortfall in U.S. flue-cured has been more than made up by the big crop in Brazil, estimated by Universal Leaf at over 1.5 billion pounds.  This is the largest Brazilian crop since 2005. It is 200 million pounds higher than initial forecasts. Burley production in Brazil is up 30 percent, Universal says.

The above material is derived from the Tobacco Farmer Newsletter, scheduled for mailing December 12. If you are not already on the email list to receive the newsletter, send your name, email address, postal address what tobacco type you grow (if any) to chrisbickers@gmail.com. 

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