Monday, November 6, 2023


The supply at flue-cured auctions was short, but not as short as shown at the annual "mock auction" at the N.C State Fair on October 20, auctioneered by Ted Hinson. Photo courtesy NCDA&CS.


SHORT SUPPLY OF FLUE-CURED

KEEPS LATE-SEASON PRICES STRONG


Buyer demand is definitely keeping the price up at the American Tobacco Exchange auction warehouse in Wilson, N.C. “We are seeing the best prices since we started conducting live sales here years ago,” says Tommy Faulkner, auction manager. “Prices are high for all grades. The range is about $1 to $2.30 per pound. Averages per grade have remained about the same since the beginning of auctions”…Now, volume is down, he says. “Our sales are running about two thirds the volume they were earlier.” But ATE will continue to sell as long as there is tobacco that needs a home. “I suspect we will sell right up till Thanksgiving,” says Faulkner.


The situation is a little different in Western North Carolina. The crop is just about complete, and Old Belt Tobacco Sales of Rural Hall, N.C., will hold its final sale on November 7. “Our sales volume is down from last year,” says Dennis White, owner of the Old Belt warehouse. “It was a short crop: There weren’t enough plants, then considerable replanting was needed. And it ended up being late.” Another factor was that receiving stations made very few rejections, at least from the Piedmont crop. So there wasn’t that much to sell but demand was strong as in the East, so prices were very good, says White. . “Good orange Leaf brought $2.30 a pound, bale after bale. Good second quality went for $2.20 to 2.25, and third quality brought $2.10.” The last little bit of flue-cured in the area was harvested by October 29, White says.


In fact, it appears that all of this crop in N.C. had been harvested by Halloween, says Matthew Vann, N.C. Extension tobacco specialist. "In fact, I'm willing to bet that north of 90% was finished by the time the State Fair ended [October 22]." Intense cold the night of November 1 probably killed any plants that were still in the field. Growers continue to report favorable marketing opportunities for their tobacco, Vann says. 


Tobacco specialists appointed: The N.C. Extension tobacco team has two new members--Daisy Ahumada, plant pathologist who will cover corn and cotton, along with tobacco; and Jeff Dorffman, agricultural economist, who will be providing expertise in the area of tobacco forecasting and outlook, similar to the recently retired Blake Brown.


SPOTLIGHT


WHAT THE COMING YEAR HOLDS FOR BURLEY


Derived from 2023 Tobacco Update (with some editing)

By Will Snell, Kentucky Extension Ag Economist



While burley demand is shrinking worldwide as blended-cigarette sales decline, the August 2023 Universal Leaf estimated that Africa will go from a burley crop totaling 278 million pounds in 2022 to 379 million pounds in 2023 and 445 million pounds in 2024.  World burley production is forecast in that same report to increase by more than 40% in 2024 vs. 2022, with U.S. burley production remaining stagnant in 2024 vs. 2023.



On the trade front, tight global supplies are moving limited supplies of U.S. burley overseas. But U.S. burley exports nevertheless will remain at negligible levels (13 million pounds in 2022). Imports of foreign burley into the U.S. remain a challenge for the domestic burley sector (73 million pounds in 2022). So far in 2023 (through June), U.S. burley imports are 57% higher compared to the same period last year.


In recent years, U.S. manufacturers and dealers have imported more burley leaf than U.S. burley growers have actually produced, resulting in import use by domestic manufacturers remaining at over 50%.  Tobacco organizations are re-viewing policy options to address this trade imbalance.


On the product side, U.S. cigarette sales continue to slump as consumers switch to alternative nicotine products. After falling 8.7% in 2022, U.S. cigarette production is down 8% so far in 2023 with consumers shifting to non-premium brands amid inflationary pressures on smoker purchasing decisions.


Sidebar: Competing with imports for the

domestic market


In recent years, U.S. manufacturers and dea-lers imported more burley than U.S. burley growers have produced. This has resulted in import use by domestic manufacturers remain-ing at over 50%. One possible solution: Im-port quota restrictions were put in place in 1996 when U.S. ciga-rette production hit re-cord levels. These im-port quotas have never since been adjusted, and American cigarette production dropped by 75%.

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