THE MYSTERY OF THIS TOBACCO MARKET: HOW MUCH U.S. LEAF WILL CHINA BUY?

Sharing a light: Two Chinese farmers take a cigarette break in the North China province of Hebei. Photo by Alamy.

THIS JUST IN:

Princeton AREC takes a direct hit from tornado. The Kentucky Research and Education Center in Princeton, Ky., was seriously damaged when it took a direct hit from a tornado Friday night. As much as 90 percent of the facilities at the station appear to be destroyed or unusable, says Bob Pearce, Kentucky Extension tobacco specialist. The center has has been headquarters for dark tobacco research and Extension activities in Kentucky and Tennessee...There may well be tornado losses in barned tobacco on farms in the western Kentucky countryside, but it will be some time before that can be ascertained.

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China is buying U.S. leaf again, making selections from the 2021 crop. It may buy more tobacco in 2022, but this is far from certain, says Blake Brown, N.C. Extension economist. “Relations between the United States and China are likely to remain strained,” Brown said at the recent N.C. State Tobacco Situation and Outlook webinar. “That is probably going to temper the Chinese appetite for U.S. products.” This may translate into some instability in sales to China. Potential problem: Most of the tobacco that China buys from the U.S. is bought by a state monopoly which is more sensitive to tensions between the U.S. and China than a commercial buyer would be.

 

Let’s not forget how U.S. flue-cured fared the last time a trade war affected U.S./China sales. Sales dropped to 238 million pounds, and the drop was entirely ascribed to the abandonment of our market by the departure of the Chinese buyers starting in the midst of the 2018 market and continuing through 2019 and 2020. They returned in 2021, and sales rebounded to 303 million pounds. Brown said a modest increase in contracted pounds may be possible in 2022.

 

Note: China bought about 60 millions pound from U.S.--or about 20 percent--in the most recent year. “So there is a bit of growth opportunity this year,” he says. But if we plan to sell to China, we should have a balanced portfolio and we should focus on countries other than China. We can always be optimistic. “It is still a growing tobacco market,” Brown says.

How to get through the current situation: Intense international competition coupled with concentration in the buying sector mean price growth at the farm level will be limited in the future, wrote Will Snell, Kentucky Extension agricultural economist, earlier in the year. “To survive, U.S. growers must be willing to

•    adapt to a changing product market,

•    produce high quality leaf with reduced health risks,

•   find ways to constrain the growth or ideally to reduce their cost structure.

“Improvements in labor efficiency, optimal input usage, and boosting yields will be critical to remain profitable,” he added.

Three burley auctions have taken place so far, all at the Farmers Warehouse near Springfield, Ky. (formerly Danville) in the Bluegrass. "Our first sale averaged $1.87, our second averaged $1.92 and the one last week averaged nearly $1.90," says Jerry Rankin, owner of Farmers Warehouse. "We have another coming up Tuesday, and we have some good tobacco on the floor for that." The highest price he has seen so far was $2.02...The quality of this burley crop has been very good, he says, but he continues to fear that the volume will be extremely short.

Deadline approaching: By January 11, members of the Burley Tobacco Growers Cooperative Association must submit amended materials that document that they are members of the settlement class in the legal action that is ending the cooperative. Note: If you are one of those members, BTGCA sent notices on November 12, so if you didn’t get a notice, don’t worry about it. But if you did, the clock is ticking. For information, please see the Important Documents page on the BTGCA website.

When does federal crop insurance end for a particular crop? Answer: With the earliest occurrence of one of the following (according to USDA-RMA):

 

• Total destruction of the tobacco on the unit; 

• Removal of the tobacco from the unit where grown, except for curing, grading, and packing;

 

• Final loss adjustment of the loss on the unit;

 

•  Abandonment of the crop on the unit.

N.C. growers approved once again their 30 year old assessment providing funding for the tobacco related research and Extension efforts of NCSU’s College of Agriculture and Life Sciences. This year’s vote, which provides for a 10 cents per 100 pounds checkoff on each pound of flue-cured and burley tobacco sold, continues the assessment through 2027.

In passing: Marion Hawkins Jr., founder of GoldLeaf Seed Co. passed away in November. He was a real visionary in the breeding of flue-cured. Good-bye to a True Tobacco Great.

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AUCTIONS END FOR FLUE-CURED, BEGIN FOR BURLEY

Buyers place their bids on the last few bales of flue-cured on sale at the last auction at the Old Belt Tobacco Sales warehouse in Rural Hall, N.C., in October. File photo by Christopher Bickers. Flue-cured auctions ended this past week. The market definitely slid. “The crop just fell off at the end of the season,” says Dennis White, owner of the Old Belt Tobacco Sales auction in Rural Hall near Winston-Salem. “It had gone through a lot of stress, and had been in the field a long time, six and a half to seven months and it just aged out.” But until that time it had been a good crop and a good market. Average at the Old Belt warehouse for the season was $1.64 pound, White says. The practical top was $1.85 for second grades, $2 on first grades. A lot sold for $1.45 to $1.75. Farmers were happy with the prices over the full season. “I had no complaint from any of my farmers about the price,” says White.

Burley close to extinction in still another moun-tain county. Just north of Asheville, Madi-son County, N.C., once had over 2,000 growers and led the state in burley production. It had a powerful effect on the economy. “The impact of this crop as an economic engine for Madison County was so strong I could write books [about it],” says Ross Young, county Extension director. “Now, there are only three burley growers in the county.” It might be a small consolation for those three, but Young says this was a decent crop, although it will be a few weeks before he has an accurate estimate of yield and production. The bitter lesson of the Eastern Belt this season: It's hard to make a good crop when you get 25 to 30 inches of rain in one month, in this case June. “Some of our leaf was hurt very badly by all that precipitation,” says Tommy Faulkner, auction manager at the American Tobacco Exchange in Wilson, N.C. At Faulkner’s warehouse, Leaf grades brought steady prices between $1.75 and $1.85 while lugs and cutters attracted bid of $1.45 to $1.55. Low quality leaf brought $.50 to $1. Sales remained strong till close to the end of the season. The first burley auction of 2021 took place last Tuesday. “We had a lot of very good tobacco,” says Jerry Rankin, owner of Farmers Warehouse. His sales have traditionally been held in Danville, Ky., but this year have been moved to the former JTI warehouse near Springfield, Ky. As best TFN can tell, the Farmers Warehouse is the only warehouse auctioning burley this season. Delivery in the Bluegrass has been slowed by very dry conditions. “We have had wind almost every day,” says Rankin. “That has prevented farmers from stripping their crops.” The leaf is so dry it crumbles, says Rankin. “On our farm, we have sprayed water in the barn and will wrap it in plastic when it gets wet.” Could Connecticut broadleaf replace burley in the mountains? “It could be a perfect crop for farmers who historically grew burley tobacco,” said Chad Moody, at the Mountain Research Station in Waynesville, N.C. “Due to our farms being smaller here in the western part of North Carolina, farmers are able to pay attention to the details, which is what it takes to grow good wrapper tobacco.” Research on cigar wrapper production by N.C. State University has been conducted at the Mountain and the Upper Mountain research stations and the Oxford Tobacco Research Station and the Central Crops Research Station in Clayton. A webinar on what the researchers have learned will be held on December 17. For more information on this and other webinars offered by the N.C. Extension, see: https://tobacco.ces. ncsu.edu/2021/11/december-webinar-series/. What to remember about crop insurance in 2021: All burley tobacco growers must have a bona fide contract with a manufacturer to obtain crop insurance. Dark air cured and flue cured tobacco producers have a two tier system. Those who have a bona fide contract will pay a different amount than those who do not have a contract to sell their tobacco crop. Contact your crop insurance agent to review your policy and make any needed changes and adjustments. New ITGA administrator: Mercedes Vasquez has been appointed new CEO of the International Tobacco Growers Association, replacing Antonio Abrunhosa, who has held the position since 1998. International report: Global cigarette sales declined by four percent in the past year, while illicit penetrations maintained their share of the market at 12 percent, said Shane MacGuill of Euromonitor International at the recent ITGA annual meeting. “The proportion of cigarettes in the total tobacco value sales mix continues to decline,” he said. “Alternatively, heated tobacco is getting established as the most important reduced-risk category.” Reasons for that include investment from companies and regulatory issues surrounding e-vapor.

 

THE LAST OF THE 2021 CROP MAKES IT OUT OF THE FIELD

 

Bales of burley await marketing in the Bluegrass of Kentucky. Photo courtesy of the Burley Tobacco Growers Cooperative Association. As best I can tell, all U.S. tobacco plus all Canada’s crop (see below) has been harvested since early this month. The last may have been some very late burley in Western North Carolina. But any still in the field on November 4 would have been killed by a frost event that day. Otherwise, almost all of this year’s tobacco seems to have escaped freeze damage. And it seems to have produced better than average quality almost all around. All types did well in Tennessee: In Middle Tennessee, yields f0r dark air-cured, fire-cured and burley are expected to be a little better than average and quality seems good, says Mitchell Richmond, Tennessee Extension tobacco specialist. “There have been some good seasons lately for order and case.” For East Tennessee, an average to slightly better than average yield is expected. The curing season was better than average and good quality is expected in this region as well, Richmond says.   The quality of the dark types in Kentucky and Tennessee keeps getting better. “This is the best dark tobacco crop since 2014,” says Andy Bailey, Kentucky-Tennessee Extension dark specialist. “I am seeing a remarkably consistent crop on the floor,” he says. The yield is good, too. “One farmer reported a yield of 3,600 pounds per acres,” he says. “We had some hard frosts around the end of October, but no damage was reported--all of our tobacco was harvested by that time.” Much of the two dark types is curing in the barn, but some has been stripped and taken to market. Flue-cured in Ontario was high quality too. “The quality is excellent,” says Maythern AL-Amery, Team Leader of the Canadian Tobacco Research Foundation in Tillsonburg. “[But] the yield was lowered by the heavy rains we experienced.” Harvest ended several weeks ago and there was no major problem with frost. Acreage had been estimated by some as 13,000, but AL-Amery says that may be subject to revision NOTE: Almost all tobacco grown in Canada is grown in the province of Ontario, and almost all Ontario tobacco is flue-cured. How do you har-vest Connecticut Broad-leaf? Sorting wrapper/ binder and filler grades in a crop of Connecticut Broadleaf takes about two to 2.5 times longer than stripping dark or burley. Leaf dealers have allowed their Connecticut Broad leaf growers to reduce the time spent sorting wrapper and non-wrapper leaves by using a ‘straight strip’ method: Growers strip off and segregate the trash leaves at the bottom of the stalk, then the obvious filler leaves in the lower stalk. All of the leaves in the top half of the stalk that have potential to be wrapper leaves are stripped together and oriented in cardboard boxes. At delivery, the dealer collects samples to determine the percent wrapper grades in the crop and set the price per pound accordingly. Higher prices are offered for crops with higher percent wrapper leaves. REPORT FROM OVERSEAS   Brazil: The 2020/2021 tobacco crop has come to a close and the 2021/2022 crop is now being transplanted, says ITGA’s Tobacco Courier. A survey of members of the growers association suggests a reduction of approximately five percent in area planted in tobacco. Zimbabwe: Sales of the 2021 crop were completed with clean up sales at the end of September with a higher than estimated crop to be sold, according to Tobacco Courier. Initial estimates were under 200 million kilograms, but by the end of the season it appeared that close to 212 million kilograms had been sold. Prices late in the market held around US $2.80 vs. 2.50 per kilogram at the same point in the previous market. Prices were firmer because of the better quality on offer. Malawi: The seasonal average price of all tobacco types on the recently ended market was $1.59 per kilogram, compared to $1.53 per kilogram recorded during the same period last year. DATES TO REMEMBER The annual TN/KY Tobacco Expo will take place on February 1 at the Robertson County Fairgrounds in Springfield, Tn., with speakers from the Universities of Tennessee and Kentucky and from GAP Connections.  The N.C. Extension tobacco team will hold a series of webinars for flue-cured growers in December. To learn how to participate, see https:// tobacco. ces.ncsu.edu/2021/11/december-webinar-series/. There will be no NC Tobacco Day this year. The Southern Farm Show will be held in Raleigh, N.C., on February 2-4.

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GROWING SEASON STAGGERS TO AN END--BUT THERE IS NO SIGNIFICANT FROST DAMAGE

 

Burley is enjoying a good curing season so far in Kentucky and Tennessee, like this burley near Lexington, Ky. But in North Carolina, some of the burley remains to be cut very late. Photo courtesy of Burley Tobacco Growers Cooperative Association. Dodging the bullet: There was a heavy frost in central Kentucky last night, and freezing weather is expected in the area over the next week, says Jerry Rankin, owner of Farmers Tobacco Warehouse in Danville, Ky. But he doesn't think there is any burley left in the field to be damaged. "The last crop I saw growing around here was cut two weeks ago," he says. Almost all of the 2021 burley and flue-cured was spared frost damage, although a few growths like the burley of the N.C. mountains and the flue-cured of the N.C. Piedmont still had tobacco unharvested at the beginning of this week. The first burley auction of the year will take place at Farmers Warehouse the last week of November, says Rankin. But the location will be different: Farmers Tobacco has moved out of its longtime home near Centre College in Danville, Ky. "This year we are selling out of a warehouse on Hwy. 55 between Springfield and Lebanon." For further information, call Rankin at PH 859 319 1400 or call the main warehouse number at 859 236 4932. Burley projection too high? Rankin is very skeptical about USDA's recent projection of 74 million pounds of burley in Kentucky. "It's been a wet year across the Burley Belt, and wet tobacco doesn't yield that good." Perhaps more damaging, many growers found it difficult to field a full harvest crew because of the labor shortage and didn't get the crop harvested in a timely manner, reducing yield. He thinks 50 million pounds is a more realistic estimate. "I hope I am wrong," he says. Flue-cured auctions have a few more weeks to go. “We will have two or three more sales,” says Dennis White, owner of the Old Belt Tobacco Sales auction in Rural Hall near Winston-Salem. “Just a little tobacco is still left in the field, and I understand that most of that will be harvested today (Wednesday).” The volume had been good on the last four sales, and White says there is plenty of tobacco remaining to be sold. Most top tobacco attracted bids of around $1.80, White says. “The weather in the Piedmont went well for farmers, and all our farmers made their contract and right much more.” A vote will take place 0n November 18 on whether to continue the North Carolina research and education assessment . Ballots will be available at county Extension offices that day. The check-off program allocates about $200,000 a year to research and extension projects at N.C. State University. A two-thirds majority of votes is needed to pass. Report from overseas: Malawi sold a total of 123.7 million kilograms of tobacco (all types) in the market season recently ended, compared to 114 million kilograms last season. That's an increase of 8.5 percent. A dynasty in tobacco tying? The Maple Hill Loopers won the N.C. Tobacco Looping Contest held October 15 at the State Fair. It was the team’s seventh victory in the annual contest. The team is made up of husband and wife Sandy and Ken Jones of Maple Hill and Michael Sunday of Hendersonville. Sandy looped the stick of tobacco in 58.8 seconds and earned 68 out of 70 points for quality. The team took home a $250 price. The second and third place finishers were the Barbour Vineyard Team of Benson and the Tiemasters of Kernersville.

HARVEST IS NEARLY FINISHED... AND SO FAR, NO KILLING FROSTS

Heat and humidity did a number on the flue-cured tobacco grown at the Tobacco Research Station in Oxford, N.C., this year, says Carl Watson, the station’s ag research manager. Watson (foreground) brought leaf to Raleigh for the the N.C. State Fair Tobacco Looping Contest on October 15 . It looked a little ragged. “The ends of the tip leaves were hard to get ripe and were difficult to sell,” says Watson. As one observer noted, the flue-cured had in effect gotten “cooked in the field.” But the yield wasn’t affected, at least not at the station, and a yield of as much as 3,000 pounds per acre may be obtained. The station is located about 40 miles north of Raleigh. Photo by Christopher Bickers.

FLUE-CURED

NORTH CAROLINA—There was a little flue-cured left at the end of last week, almost all of it in the western Piedmont of western N.C. While it was not a large amount, for some growers it could be the difference between profit and loss for this season. The growers will have a much better chance of success if frost will hold off for about seven more days, says Matthew Vann, N.C. Extension tobacco specialist. Maybe it will: There’s been no frost at all in North Carolina so far. “To date, we seem to have dodged that bullet,” he says. Vann had earlier estimated that the statewide average yield would fall in the range of 2,000 to 2,100 pounds per acre. “I see no reason to change it,” he says. USDA’s projection of 120,000 harvested acres still seems credible, so flue-cured production for the state might total 240,000 pounds, about what USDA projected in September and much more than was produced in 2020. Late in the season, there has been tremendous yield loss in the east, and some yield has been lost in the Piedmont because of drought. But the overall all yield will still be better than last year.

VIRGINIA—Flue-cured here still lagged somewhat behind schedule, and it was thought that it might take into early November to get this type harvested. The problem was too much rain combined with windstorms that blew over plants. Much of the crop had to be stood back up once, and some twice…To make matters worse, this has been an expensive crop to produce: Among many other things, farmers had to find additional labor, and fuel cost a lot…The crop was better in the eastern part of the tobacco area—Mecklenburg, Lunenburg and Dinwiddie counties—than in the west—Pittsylvania and Halifax counties, says one source. “We could still have a good crop but we need the frost to hold off,” he says…One odd note: There was a drastic difference in the distribution of rainfall during the season. “Some farms got 24 to 30 inches, while others got less than four,” the source says.

SOUTH CAROLINA, GEORGIA AND FLORIDA have completed harvest.

BURLEY

KENTUCKY--There might be a little burley left in Kentucky that has yet to be harvested but the vast majority of the state’s crop has been cut and barned, says Bob Pearce, Kentucky Extension tobacco specialist. “There are always a few stragglers.” Pearce expects the yields will be average and the color good. “I anticipate a quality burley crop.” But he hasn’t seen any stripped tobacco from this crop. The curing season has gone pretty well. “There were a couple of periods of wet weather that led to a touch of mold on some early cut tobacco, particularly on Connecticut broadleaf.” Other than that, the curing season has been mostly favorable. No killing frost yet: “A few areas experienced a very light frost on the 17^th,” says Pearce. “I saw some on a few roof tops but did not see any on the ground. There was no impact on plants still growing at that time.”

TENNESSEE--In the east, heavy rain slowed harvest last week. As of Oct. 17 , the USDA estimated that a small portion of the tobacco crops still needs to be harvest-ed, perhaps four percent. It may in fact be completely harvested by now. 

NORTH CAROLINA--Burley growers managed to make up some time by harvesting furiously, and by October 17, 85 percent of the crop was cut compared to 72 percent two weeks before. But their crop was still vulnerable to frost, which most years comes relatively early to farms here, many of which are in mountain locations. No killing frosts had been reported yet.

DARK

Dark fire-cured in the Black Patch will probably yield at least 3,300 pounds power acre and probably more, while dark air-cured will probably yield closer to 3,000 pounds. “We have a good dark crop out there,” says Andy Bailey, Kentucky-Tennessee Extension dark specialist. “It might not be the best we have ever had but it is certainly the best in the past six years.” Perhaps one percent of the dark tobacco in the Black Patch is still in the field, he says. “Harvest will be finished soon.”

WRAPPER

Connecticut and Pennsylvania cigar wrapper types in Kentucky and Tennessee were harvested six weeks ago. “It is all cured now and the Connecticut broadleaf type has been sold,” says Bailey. “Many growers have crops that averaged $4.50 to $5.00 per pound. I have heard of one crop that averaged $5.21 per pound” Pennsylvania 41 marketing doesn’t start till later…Connecticut yields were around 2,000 pounds per acre, he says, while 2,200 to 2,300 pound yields are expected for the Pennsylvania type.

WILL FALL'S FIRST FROST PUT A CHILL ON THE 2021 LEAF MARKET?

 

Buyers pore over flue-cured leaf at Old Belt Tobacco Sales in Rural Hall, N.C. File photo by Christopher Bickers.   A LOOK AT WHO'S FINISHED HARVEST ... AND WHO STILL HAS A WAY TO GO FLUE-CURED NORTH CAROLINA--A late first frost date would really help Piedmont growers. Frost can reasonably be expected in 15 or 20 days, and that could be a real problem. “This crop is definitely late—some farmers have just made their first pulling,” says Dennis White of the Old Belt Tobacco Sales auction near Winston-Salem. “It is coming off fast, and farmers are having a hard time getting enough barn space to cure it.” If the top crop is damaged by frost or freezing, it will be a shame. “The leaf that is still out there has plenty of body and is of good color, and it will be overripe,” he says... The Old Belt warehouse held its fifth sale yesterday (October 5). White says they are going well. “We are selling over a half million pounds per sale, and our price has been close to the contract price. The price and quality of lugs offered here was good while that of cutters and leaf were very good, says White. VIRGINIA—As in the N.C Piedmont, the Virginia flue-cured crop is way behind schedule and may take till early November to harvest completely. Too much rain was the main cause, but windstorms that blew over plants were also a problem. USDA estimated that 89 percent of the flue-cured in the state had been harvested by October 3. The quality seemed good at that point. “We could have a good crop if the frost will just hold off,” says one observer.   SOUTH CAROLINA--It’s all over for the 2021 crop except for selling it. And this crop turned out well: Even though it received more or less the same weather as eastern North Carolina, the crop fared much better. The state average yield was higher than in either of the past two years. William Hardee, S.C. area Extension agronomy agent, thinks the number may fall in the area of around 2,500 pounds per acre. Which would compare very favorably to the yields of the two previous seasons, neither of whose yield reached 2,000 pounds per acre…There were drought conditions in April and May which slowed crop development, followed by a wet June, says Hardee. Tropical Storm Elsa came at the beginning of July and had just enough wind to initiate a ripening response in the plant and put growers a little behind in harvesting. “But everyone is finished now. We completed harvest in the second or third week of September. By the beginning of October, the crop had been taken out and now the farmers just have to finish marketing it"…A change in S.C. tobacco Extension: TFN has learned that Extension tobacco specialist Matthew Inman has left to take a position in industry. No word yet on whether the position will be re-filled. (GEORGIA and FLORIDA are done.)  BURLEY

KENTUCKY-- Burley growers made strong headway in the week ended October 3 as the weather was conducive, says USDA’s Crop Progress and Condition Report. But that progress was stymied over the weekend because of widespread precipitation. Housed tobacco is in mostly good condition. House burn was reported as one percent moderate, eight percent light and 91 percent with none. TENNESSEE--Burley harvest is nearly finished, says Mitchell Richmond, Tennessee Extension tobacco specialist. Rain has caused some delays in cutting, but Richmond thinks the tobacco test plots at the Highland Rim Research Center in Springfield, Tn., will be completely harvested by Wednesday. “Maybe by a week from today harvest will be complete on the crop as a whole.” This won’t go down as a bumper crop, but the yield is good. Richmond doesn’t have an estimate of burley production in the state yet but still thinks the USDA figure of 4.5 million pounds is credible. The rain cut back a little the past week ending October 3 but this has been a very rainy season. Early rains had a negative impact on growth. “But since June 15 the rain has been more or less average,” he says. NORTH CAROLINA--As of October 3, only 72 percent of the burley had been harvested. Farmers were living on borrowed time: The predicted first frost date in Asheville was September 22. It hasn't come yet but farmers are cutting and barning as fast as they can.