Saturday, December 24, 2016

PRODUCTION WAY DOWN FOR BURLEY AND DARK


Piles of sawdust rest outside a fire-curing barn near Clarksville, Tn. Growing conditions were abysmal in much of the dark tobacco area of central Tennessee and western Kentucky.

Burley sales sagging: About 65 percent of the burley crop has been marketed, and
auction warehouseman Jerry Rankin of Danville, Ky., says the market hasn't been
strong so far. At his warehouse, through his sale on Tuesday, December 20, he had
sold about a million pounds for an average of about $1.72 per pound. He calculated
that at about 10 cents per pound less than contract prices. None of these numbers
make him optimistic about the end of the season. He expects to hold his last sale
sometime in February. "We sold 3.1 million pounds last season. I can't see us doing
that this year."
Will there be 100 million pounds of burley? Tremendous mid-season rains followed
by a dry curing season crippled yields. Most reliable sources say that USDA's last
estimate of burley production was way too high at 143 million pounds. Estimates 
of 110 to 120 million pounds have been suggested, but Rankin doubts it will reach
as high as 100 million. "This may be the shortest burley crop ever," he says.
Dark tobacco is very short too. In response to a very poor growing season, dark 
air-cured and fire-cured production is expected to total 53.3 million pounds in 
2016, says Kentucky Extension agricultural economist Will Snell. That would be about
20 million pounds less than in 2015, or 27 percent. Prices for dark tobaccos had
already hit record average levels in 2015 of nearly $2.70 per pound for dark fire-cured
and $2.37 per pound for dark air-cured. "Prices are expected to remain relatively
strong for the 2016 crop [now being marketed] with the potential of expanded contract
volume in 2017 to account for the significantly smaller crop this past year," says
Snell.
China's demand for imported tobacco from all sources seems to be
dropping off. Fortunately for U.S. tobacco producers, a growing share of
Chinese consumers can now afford to upgrade to higher quality cigarettes.
"Consequently, sales in China of premium brand cigarettes are still
growing," says A. Brown, N.C. Extension economist. "This increases
the demand for U.S. tobacco: Chinese manufacturers use more flavor style tobacco
in premium brands." But the benefit is much more likely for flue-cured
growers than burley, since most Chinese cigarettes are all Virginia blends
A tough year for world tobacco production. Nearly all the countries that produce
flavor style  leaf  had a hard time in the most recent growing season. And for 
some, that problem is exacerbated by currency problems and political instability.
The situation is listed in the following report, based on the analysis of Dr. Iqbal
Lambat, c.e.o. of Star Tobacco International.

--ZIMBABWE--Chinese enthusiasm for Zimbabwe leaf has been the bright spot on this 
market. Prices for top "Chinese styles" can reach US$10 per kg or more, and small
scale farmers are hungry to cash in. However, China can take only about 50 percent
of the crop. The remainder--made up of mostly non-Chinese styles--has to compete
with Brazil and U.S. flavor styles, resulting in considerable pressure on prices.
Downward pricing has been experienced at all of the four trading floors recently.
Farmer   disaffection has been so great at times that the army has been needed to
maintain order. Zimbabwe's flue-cured 2015/16 crop (i.e, the last one) was the smallest
in the past five years. Based on seed sales to farmers, the crop next year crop 
is projected at 150 million kgs.

--BRAZIL--Brazil's currency has depreciated by almost 50 percent in the last 12 months,
to 3.1 to the US dollar. At over six percent, unemployment is the highest it's been
since 2008. Borrowing interest rates are close to 20 percent. In such an environment,
it's been extremely difficult for farmers to obtain financing for crops, not to 
mention for leaf processors to engage in large-scale purchases for production. What's
worse for the Brazilians, the impact of all this will be even more severe for the
2016/17 crop, as financing dries up. Now, marketing of the crop is just beginning.
The current volume estimate is 550 million kgs of flue-cured and 80 million kgs 
of burley. There are virtually no uncommitted stocks available in Brazil.

--ARGENTINA--The smallest of the "flavor" flue-cured producers appears to be the hardest
hit of all, with a currency that has depreciated by over 100 percent since a year
ago and has reached a level of close to 15 to the U.S. dollar. Inflation ran at 
three percent per month, and borrowing interest rates that peaked at 40 percent 
per annum made cash flow management difficult. The leaf situation in Argentina appears
more desperate than that of Brazil. The 2015/16 crop closed at 70 million kgs of
flue-cured and 15 million kgs of burley. Uncommitted inventories are at an all-time
low. The four major producing regions are all holding relatively low levels of inventory
at around 10 million kgs. The current 2016/17 crop is earmarked to return to the
level of 90 million kgs of flue-cured and 20 million kgs of burley.

DATES TO REMEMBER
* January 11-12. S.C. Agribiz and Farm Expo. Florence (S.C.) Civic Center.
* February 1-3. Southern Farm Show. N.C. State Fairgrounds, Raleigh, N.C.
* February 3. Annual Meeting, Tobacco Growers Association of N.C., Holshouser Bldg.,
N.C. State Fairgrounds. 10 a.m. to 1 p.m., ending with lunch (during Southern Farm
Show).

GAP RECERTIFICATION MEETINGS
North Carolina (Flue-Cured)

* January 4, 9 a.m. Martin County Farmers Market, 4001 West Main St., Williamston
NC. Lunch will be provided. DOL and WPS presentations will be at beginning of meeting.
Need 75 labor posters. Contact Al Cochran at al_cochran@ncsu.edu at 252-789-4370.
* January 6, 9 a.m. The Farmer's Market, 1006 Peachtree St., Rocky Mount NC. Contact
Art Bradley at art_bradley@ncsu.edu at-252-614-7815.
* January 10, 9 a.m. Johnston County Extension Center  2736 NC 210 Highway, Smithfield
NC. Contact Bryant Spivey at bryant_spivey@ncsu.edu or 919-989-5380.
* January 11, 9 a.m. Wilson County Ag Center, 1806 Goldsboro St. SW, Wilson NC. 
Contact Norman Harrell at norman_harrell@ncsu.edu  or 252-237-0111.
* January 12, 9:30 a.m. Forsyth County Extension Center, 1450 Fairchild Rd., Winston
Salem NC. Lunch provided. Contact Tim Hambrick at tim_ hambrick@ncsu.edu or 336-703-2857.
* January 13, 8:30 a.m. Granville County Expo Center, 4185 US Highway 15, South 
Oxford NC. Contact Gary Cross at gwcross@ncsu.edu or 919-603-1350.
* January 18, 9 a.m. Wayne County Extension Center, 208 Chestnut St., Goldsboro 
NC. Contact Tyler Whaley at tyler_whaley@ncsu.edu or 919-731-1527.
* January 19, 9 a.m. Lenoir County Shrine Club, 1558 Hwy 70, East Kinston NC. Registration
begins at 8 a.m. Contract Mike Carroll or mike_carroll@ncsu.edu - 252-633-1477.
* January 20, 9 a.m. McSwain Extension Center, 2420 Tramway Rd., Sanford NC. Contact
Zack Taylor at zrtaylor@ncsu.edu. or 919-775-5624  3455.
* January 23, 8 a.m. Caswell County Civic Center, 536 Main St., East Yanceyville
 NC. Registration opens at 8 a.m. Meeting will start at 9 a.m.. Lunch will be served.
Contact Joey E. Knight, III at joey_knight@ncsu.edu or 336-694-4158.
* January 24, 9 a.m. Harnett County Government Complex Commons Area, 309 W. Cornelius
Harnett Blvd., Lillington NC 27546. Registration begins at 8 a.m. Contact Brian 
Parrish at brian_parrish@ncsu.edu or 910-8937530.
* January 25, 9 a.m. Sampson County Ag Expo Center 414 Warsaw Rd. Clinton NC. Contact
Della King at della_king@ncsu.edu or 910-592-7161.
* February 3, 1:30 p.m. Holshouser Bld., NC State Fair Grounds, Raleigh NC (in conjunction
with TGANC Annual Meeting during Southern Farm Show). Lunch will be provided. Contact
Matthew Vann at matthew_vann@ncsu.edu or 919-513-0904.

Virginia (Flue-cured)
* January 17, 9 a.m. Southern Piedmont Center, 2375 Darvills Rd., Blackstone VA 
Registration at 8:30 a.m. Contact Lindy Tucker at tucker07@vt.edu or 434-696-5526.
* January 18, 4 p.m. Meherrin River Hunt Club, 435 Dry Creek Rd., South Hill VA.
 Registration at 3:30 p.m. Contact Taylor Clarke at clarke@vt.edu or 434-738-6191.
* January 19, 4 p.m. Olde Dominion Ag Complex  19783 U. S. Highway 29, South Chatham
VA. Registration at 3:30 p.m. Contact Stephen Barts sbarts@vt.edu 434-432-7770.
* January 25, 10 a.m. Scottsburg Volunteer Fire Dept., 3050 Scottsburg Rd., Scottsburg
VA. Registration at 9:30 a.m. Contact Rebecca Slabach at cbrown04@ vt.edu 434-476-2147.
* February 15, 10 a.m. Midway Baptist Ch., Midway Rd., Phenix VA. Registration at
9:30 a.m. Contact Bob Jones at rojones2@vt.edu or 434-542-5884.
Editor's note: If you you would like to receive the newsletter at your email address (or change an existing address), please click on "Join our mailing list" below and follow the prompts. For more information, you can call me at 919-789-4631 or email at chrisbickers@gmail.com.--Chris Bickers







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