Thursday, December 4, 2014

An early report on burley deliveries


Wet

Wet weather followed by cold snaps caused some quality loss on burley in central Tennessee and other areas served by the Burley Stabilization Corp. George Marks (photo), president of BSC, is shown standing in front of some of the last tobacco he harvested this year, a fire-cured field that he hung on October 20.


Some very good quality burley has come in so far, but overall quality is down from last year, says Daniel Green, chief executive officer at Burley Stabilization Corporation. "The top quality is better than last year, but we are seeing much more variation, even across burley coming from the same growing regions." Wet weather followed by cold snaps near the end of the curing season contributed to quality loss. But it remains to be seen how much of the crop was affected since most of the impact will be on the later tobacco. Green says there is quite a bit of houseburn, occasional "blacktails" and some green tobacco in this crop. On the bright side, the crop seems to be yielding very well for most producers.

A 200-million-pound burley crop seems very unlikely to Steve
Steve PrattPratt,Pratt,
Pratt, general manager of Burley Tobacco Growers Cooperative Association, Lexington, Ky. "We lost too much in the cold." The most recent USDA burley projection was 211.5 million pounds. But weather late in the season delivered a double whammy on growers: Many had to cut and hang their tobacco wet because of the rains during harvest. Then the tobacco was water-laden when the intense cold set in at the beginning of November. It froze, affecting yield and quality. "The quality was a little better than when we began receiving, but it is still decent," says Pratt... Most farmers want to know if BTGCA will take in excess pounds, says Pratt. "We do not have any plans at present to do that," he says. Auction markets have opened for the season in Kentucky, and that is a marketing option. "But I don't believe they will be able to obtain contract prices at auction."

Production in the Deep South: Georgia growers, who fared relatively well with the late-season weather, averaged 2,400 pounds per acre with an average price in the range of $2.06 per pound, says J. Michael Moore, Georgia Extension tobacco specialist. Florida growers averaged perhaps 2,700 pounds per acre with an average price of about $2.07. Georgians planted about 14,000 acres, Floridians planted 1,500.

Mystery black shank: The season in Georgia and Florida will be remembered for an aggressive form of black shank, which was especially intense early in the season and sometimes appeared in fields that appeared to have good rotations. Control recommendations will be developed over the winter.

Dark escapes the cold: None of the dark air- and fire-cured tobacco in Kentucky and Tennessee was still in the field when the frost/freeze occurred at the beginning of November, says Andy Bailey, Extension dark tobacco specialist. "We had some very late crops, but from what I heard, the last went into the barns on October 29." This season will be remembered for very heavy rains late in the season, he says. "There was nine to 10 inches in August in some places." Bailey estimates fire-cured production at 48 to 49 million pounds, four or five percent less than the USDA projection. He pegs dark air-cured at 15 million pounds, the same as USDA's projection. Much of the increase from last year was produced in the Green River area, he says. It didn't get the torrential rain that other areas received.

OUTLOOK REPORTS
FLUE-CURED
A very wet 2013 growing season which curbed yields, coupled with already short global supplies of flavor-style flue-cured tobacco, led to a record high average price per pound of $2.11 for the 2013 U.S. flue-cured market. Wet conditions in part of the Brazil flue-cured area limited attempts to increase production for the 2014 market, with the 2014 crop estimated at 1.344 billion pounds, down from 1.38 billion for 2013. Zimbabwean growers increased production for the 2014 market 29 percent to 474 million pounds, up from 367 million pounds for 2013. Average price per pound for the 2014 Zimbabwe crop was US $1.44, down 14 percent from US $1.67 in 2013. With increased production, prices for the 2014 U.S. crop are down and may average below $2 per pound. The October USDA Crop Report estimated production rose at an estimated 557.4 million pounds for 2014, up from 454.3 million pounds in 2013. If that forecast is correct, the 2014 crop is the biggest since 2001 when U.S. production was 579 million pounds.
(Derived from a report by Blake Brown, N.C. Extension ag economist.)

BURLEY
Domestic burley use is being hampered by acceleration in the decline in U.S. cigarette consumption (down 5.8 percent in 2013 with similar trends so far in 2014) and the availability of cheaper foreign leaf. Accounting for both slumping exports and domestic use, it certainly appears a 2014 U.S. burley crop near or more than 200 million pounds will exceed anticipated use, leading to more critical grading and prices falling from their record high of $2.06 per pound for the 2013 crop. Demand for low quality leaf and non-contract pounds could be challenged in this marketing environment if current forecast production levels prevail. Unless the global supply/demand balance improves, look for burley contract volume reductions in 2015.
(Derived from a report Will Snell, Kentucky Extension ag economist.)

DARK
Unlike burley, dark tobacco growers saw contract pounds remain similar and in some cases increase for 2014. Higher yields are projected to increase the U.S. dark fire-cured crop to slightly above 50 million pounds and a U.S. dark air-cured crop totaling around 15 million pounds - just slightly above last year's levels. Prices for the 2013 crop averaged a record $2.63 (compared to $2.58/lb in 2012) for dark fire- cured, while the 2013 dark air-cured crop averaged $2.35/lb (vs $2.29/lb in 2012). Look for dark tobacco prices to remain relatively strong for quality leaf. Stagnant/declining product sales may cause the industry to reevaluate additional acreage expansion in 2015. Nevertheless, the outlook for the U.S. dark tobacco growing sector remains very favorable given projected sales for smokeless tobacco products in the United States.
(Derived from a report by Snell.)

Editor's note: After I published an item in my second November issue hypothesizing as to why Philip Morris International (PMI) is ending its direct contracting program with farmers and arranging instead with Universal and Alliance One to acquire leaf, I got a call from a spokesman for PMI. He took issue with the fact that I suggested that "the details of complying with the GAP program may have been problematic" for the company. He insisted that PMI maintains its commitment to the GAP process, both financially and through personal involvement. I have no reason to doubt the financial part, and I have learned that the company has maintained its presence on GAP's board, which is the way you would expect a company like PMI to participate. PMI's member of the GAP board is David Conner of Virginia. So I am convinced: PMI is maintaining its commitment to GAP plans to continue to do so. More on the shifting on leaf-buying responsibilities in a future issue.


UPCOMING GAP RECERTIFICATION MEETINGS



NORTH CAROLINA (Flue-cured)  
  • January 13, 10 a.m. Martin County Farmers Market, 4001 West Main St. Williamston, N.C. Contact: 257-789-4370 or al_cochran@ncsu.edu.
If you haven't signed on to receive it regularly or need to change an address, you can call me at 919-789-4631 or email me at chrisbickers@gmail.com. Thanks--Chris Bickers


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