Tobacco outlook 2006: Flue-cured acreage up, burley down

Look for a large increase in plantings of flue-cured tobacco this year, said the U.S. Department of Agriculture in its Prospective Plantings report for 2006.

But acreage of burley, the No. 2 U.S. tobacco type, will be down substantially.

Little change is expected in plantings of the dark and cigar types but the light air-cured type Southern Maryland is teetering on the verge of extinction.

For all tobacco types, plantings will be up 3 percent at 306,630 acres compared to the record low 2005 plantings of 298,020 acres, USDA said in its report. But that acreage would still be 25 percent below 2004.

Projected plantings among the individual types are:

• Flue-cured — 201,100 acres, 15 percent above a year ago but down 12 percent from 2004.

• Burley — 83,500 acres, 17 percent below 2005 and down 45 percent from 2004.

• Fire-cured--11,780 acres, down 1 percent from 2005 but up slightly from 2004.

• Dark air-cured — 4,250 acres, 2 percent above 2005 but down less than 1 percent from 2004.

• Cigar types — 4,900 acres, down 1 percent from last year and 32 percent below 2004.

• Southern Maryland (Pennsylvania only) — 1,100 acres, down 27 percent from last year and 50 percent below 2004.

The state of Maryland did not participate in the survey so the USDA had no figures on plantings there.

But the Maryland state tobacco agronomist said fewer than 100 acres of Southern Maryland will probably be planted, compared to about 100 acres in 2005.

So it would seem that Southern Maryland Type 32 tobacco will not completely disappear from the state of Maryland this year, as was feared. But plantings are expected to be very small as growers there are generally turning to burley.

“Some Type 32 will be grown this year,”said Dave Conrad, Maryland Extension tobacco specialist. “I doubt it will be more than 100,000 pounds, which would be roughly a third of the 2005 crop.”

The 2005 crop was sold in three bitterly disappointing days of auctions in Hughesville Md., in late March. The supply was very small, with a record-low sales of 321,107 net pounds. Before the auction, observers thought the average price might return to an acceptable level after the weak sales of the 2004 crop.

The price of $1.53:7 per pound was in fact 11 cents a pound higher than in 2004, but that still wasn’t enough. Farmers felt they needed a price closer to the $1.73 per pound average they enjoyed in 2003 to make Type 32 competitive.

So only those farmers who feel personally committed to Type 32 are likely to grow it in 2006. Even then, it is no sure thing there will be an auction for this type a year from now. Bailey’s Cigarettes of Keysville, Va., the only domestic manufacturer who has bought Type 32 in recent years, was reportedly offering contracts for production of this type earlier in the year.

But burley is going to be the hot tobacco type in Maryland in 2006 as it was in 2005. Bailey’s and Philip Morris USA are both contracting burley in the state.

“This is a golden opportunity,” said Conrad. “I understand that Philip Morris was quite pleased with its purchases of the burley grown in Maryland.“

Conrad estimates 2005 burley production in Maryland at 800,000 pounds. “I expect we will have more than one million pounds in 2006,” he said.

Although contracting has been the dominant method of selling burley in recent years, a very successful auction season was conducted for burley in 2005-06.

Sales volume differed drastically among the burley auction markets this year. Danville Ky., and Asheville N.C., each sold over two million pounds, while none of the other markets sold as much as one million pounds. Several sold less than 100,000 pounds.

It was no surprise that Danville performed well since it is in the heart of burley country. But the performance of Asheville turned quite a few heads. Western North Carolina has been declining in burley production. Asheville had not been a strong performer back in the pre-contracting days, and in fact it was only through strong action by the state and grower groups that the market stayed open at all in 2002-04.

Now, on a relative basis, Asheville was one of the best burley auction markets around. So why the good showing in 2005-06? Observers pointed out that the nearest contract receiving stations are quite a long way from most North Carolina burley growers, so that transportation costs would discourage contracting and favor a much closer auction. Also, mountain growers are noted for their independent spirit and might find an auction philosophically more appealing than a contract.

“We were very pleased and a little surprised that Asheville sold over two million pounds,” said Charles Finch, managing director of Burley Stabilization Corporation. “And we have been very pleased with how the auctions turned out.

“We feel strongly that farmers still need an alternative market: We are looking at a short supply of burley tobacco going into the 2006 growing season.”

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