TOBACCO YEARBOOK -- TEXT December 31, 2003 Month Year, ERS-TBS-2003 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This TEXT is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The summary was released on December 17, 2003. The complete report will be available electronically in about a month. ----------------------------------------------------------------------------- Flue-Cured Sales Slip 12 Percent in 2003 Summary After 56 sales days, the 2003 flue-cured marketing season drew to a close on November 6th. Wet conditions from Florida to Virginia delayed transplanting and created extremely wet growing conditions, making field work difficult through the spring. Producers' sales totaled 507.7 million pounds, about 95 percent of the effective quota for 2003. Carryover tobacco amounted to 55.3 million pounds. Overall price was 185.2 cents per pound. Last season, 571.3 million pounds sold for an average of $182.6 per hundredweight. Auction sales accounted for 16 percent of total sales. Thirty-eight warehouses held sales--with 14 of these acting as marketing centers for the Flue-Cured Stabilization Corporation. Auction sales totaled 95.6 million pounds and averaged $179.4 per hundredweight, a $3.72 increase over last season. Stabilization took 68.1 million pounds of tobacco sold at auction under loan this season or 71 percent of total auction sales. Thirty-seven contract centers purchased tobacco in 24 markets. Contract sales of 412.0 million pounds averaged 186.5 per hundredweight, up $2.09 from last season. The 2003-04 burley tobacco marketing season began Monday, November 10th as contract centers began accepting deliveries. Auction sales opened November 17th. Through the third week of sales, volume at auctions had lightened while contract centers faced moderate to heavy volume. Grade averages through the third week were higher than last season at $198.6 per hundredweight. Auctions accounted for 24 percent of sales and averaged $196.98 per hundredweight. Through the fourth week, 52 percent or 17.9 million pounds of leaf sold at auction went under loan, compared with 33 percent for the same period last season. Contract volume reached 92.5 million pounds averaging $199.1 per hundredweight. As of October 1st, the burley crop is estimated at 303.3 million pounds, slightly higher than last season's sales of 300.1 million pounds. Sales are expected to end on February 26, 2004. As of October 1, total tobacco acreage for the 2003 marketing year was estimated to have declined 4 percent from 2002 to 413,010 acres. Yields slipped, reaching 2,044 pounds per acre for all types of tobacco, compared with 2,055 in 2002. Wet weather reduced yields in many tobacco growing areas. Production of all types is estimated at 844.3 million pounds, about 36 million pounds below last season. Based on October 1 estimates, 93 percent of U.S. leaf were types used for cigarettes, unchanged from last season. Cigar leaf, also used for other products such as chewing and smoking tobacco, accounted for 2 percent of production. Other types, mostly dark air- and fire-cured leaf, accounted for 5 percent of production. The 2004/05 flue-cured marketing quota was announced on December 15, 2003. The basic quota has been set at 457.6 million pounds, 10 percent below 2003. The effective quota is expected to be close to 500 million pounds. During the 2003 season, producers marketed about 30 million pounds less than they were allowed. The 2004 burley marketing quota is to be announced by February 1, 2004, and acreage allotments for other types of tobacco under quotas are to be announced by March 1, 2004. Unmanufactured tobacco exports were down 3 percent during the January- September period, compared with 17 percent last year. Shipments were 235 million pounds compared with 244 million pounds during the same period in 2002. Value declined 8 percent due to lower volume, ending at $542 million. Flue-cured shipments fell 14 percent (similar to last year's decline) and burley increased 9 percent. Maryland, fire-cured, and cigar wrapper all declined in volume. Overall calendar year exports are projected down about 3 percent by year-end. Higher U.S. leaf prices continue to erode foreign demand for U.S. leaf. Total 2003 exports will probably be near 330 million pounds, compared with last year's 338 million pounds. Unmanufactured tobacco imports (consumption) for January-September 2003 declined slightly after last year's increase of 23 percent, reaching 452 million pounds. General imports slid 5 percent after gaining 8 percent during the same period last year. Stocks of imported cigarette leaf were 9 percent lower on October 1, 2003 compared with a year earlier at 756 million pounds. U.S. cigarette output in 2002 (the last year for which complete data are available) was 532 billion cigarettes, down 5 percent from 2001. For 2003, expected output is 505 million pieces, a 5-percent drop. Domestic consumption in 2003 is expected to slip 1 percent to 410 billion cigarettes. During the first 9 months of 2003, 93.6 billion cigarettes were exported, slightly fewer than the same period last year. Year-end shipments are expected to reach 120 billion pieces, less than half the 244 billion-piece peak of 1996. During January-September, cigarette imports advanced to 17.5 billion pieces compared with 15.0 billion during the 9- month period last year. Products U.S. Cigarette Consumption in 2003 Estimated at 410 Billion Pieces Cigarette consumption in 2003 is estimated at 410 billion pieces, compared with 415 billion in 2002. The decline of just over 1 percent is similar to declines during the previous 3 years. U.S. Department of Treasury data for output, taxable removals, and non-taxable removals are not yet available for 2003, so estimates of output and taxable removals are subject to revision. CPI for Cigarettes Slips The Bureau of Labor Statistics cigarette Consumer Price Index (CPI) for cigarettes decreased by 1.1 points from October 2002 to October 2003. In spite of widespread tax increases, smokers are paying less for cigarettes. The proportion of generic and discount cigarettes has increased (many produced by small manufacturers). Discount cigarettes are expected to account for at least 30 percent of sales during 2003. Wholesale prices have been unchanged since April 2002. There have been changes in the structure of rebate and other promotional programs which may effectively increase prices. Currently, the wholesale price for premium cigarettes is $138.20 per thousand ($2.76 per pack), including Federal excise tax and $118.70 per thousand ($2.37 per pack) without Federal excise tax. The Federal excise tax has been 39 cents per pack since January 1, 2002. Tax Increases Currently, State taxes range from 2.5 cents per pack in Virginia to $2.05 in New Jersey. Fourteen States increased excise taxes during 2003. The District of Columbia increased taxes 35 cents to $1.00 per pack on a temporary basis, effective January 1, 2003 through March 4, 2003. In March, Connecticut's tax jumped 40 cents to $1.51 cents per pack and South Dakota's tax rose 20 cents to 53 cents per pack. Arkansas increased its tax in May to 59 cents per pack from 34 cents. Also in May, West Virginia's tax rose 38 cents to 55 cents a pack. Idaho's tax is now 57 cents per pack after a 29-cent increase in June. Montana's tax rose 52 cents, the biggest increase in 2003, to 70 cents per pack on May 1. In July, Georgia's tax advanced 35 cents per pack to 37 cents per pack, Nevada increased its tax 45 cents 80 cents, and New Jersey's tax jumped 55 cents to $2.05, the nation's highest. Also in July, New Mexico increased its tax to 91 cents, Rhode Island boosted its to $1.71 cents, and Wyoming's tax became 48 cents per pack. As of August 1, Delaware' cigarette excise tax rose from 24 cents per pack to 31 cents. Cigarette Trade During the first 9 months of 2003, 93.6 billion cigarettes were exported from the United States. For the same period in 2002, exports reached 96.6 billion cigarettes. Total 2002 exports were 127.4 billion cigarettes compared to 133.9 in 2001. Exports during 2003 are expected to be around 123 billion cigarettes. To date this year, Japan, Saudi Arabia, the European Union, and South Korea are the major markets for U.S. cigarettes. Japan took two-thirds of U.S. shipments. Cigarette exports peaked in 1996 at 244 billion pieces. During January-September, cigarette imports reached 17.5 billion cigarettes, compared with 15.0 billion last year. Cigarette imports have surged as manufacturers not subject to Master Settlement Agreement payments have imported increasing numbers of cigarettes. Large Cigar Consumption Edges Downward, Exports Advance For 2003, insufficient data is available to forecast large cigar (weighing more than 3 pounds per 1,000 cigars) output, taxable removals, and consumption. Consumption in 2002 slipped to 3,833 billion cigars; a similar decline is likely in 2003. Exports of large cigars are expected to reach 163 million cigars in 2003, based on January-September shipments of 113.5 million cigars. During the same period in 2002, 85 million cigars were shipped. Canada, the Netherlands, and Japan accounted for more than half of U.S. shipments. Imports of cigars during January-September 2003 slipped 7 percent compared with the same period last year. Year-end imports are expected to be around 390 million cigars. The Dominican Republic, Honduras, and Nicaragua are the main sources for cigars, accounting for 95 percent of U.S. imports. Small cigar (those weighing less than 3 pounds per 1,000 cigars) production in 2002 was 2.5 billion pieces, up 4 percent from 2001. Taxable removals of small cigars reached 2.2 billion during the same period. Imports of small cigars reached 92.5 million pounds in 2002. During the first 9 months of 2003, 133 million small cigars were imported. Year-end imports are expected to approach 200 million cigars. Other Tobacco Products Output of chewing tobacco during January-September 2003 was 32.4 million pounds. Production slid 5 percent from the same period last year, continuing its steady decline. January-September output fell for all classes of chewing tobacco, firm, moist, twist, and leaf, with the greatest decline in moist and firm chewing. Estimated output for calendar 2003 is 41.7 million pounds. Taxable removals (domestic invoices) of chewing tobacco through September were 29.1 million pounds, 3 percent below the same period last year. Total taxable removals for 2003 are projected at 40.8 million pounds compared with 43.0 million in 2002. As with other smokeless and smoking tobaccos, taxable removals are very close to actual consumption. January-September smoking tobacco output has outpaced the same period last year by 22 percent. If this pace continues through the fourth quarter, output of smoking tobacco will reach 18.9 million pounds. Cut (used for roll-your-own cigarettes) output increased during the January-September period. Through September, 13.5 million pounds of smoking tobacco were manufactured compared with 11.1 million pounds the previous year. January-September taxable removals of smoking tobacco advanced 9 percent this year. Pipe smoking tobacco taxable removals declined while cut smoking advanced. As wit chewing tobacco, taxable removals are an indication of actual consumption. For some time snuff has been a consistent growth segment for the smokeless tobacco industry. Output during the first 3 quarters of 2003 advanced 3 percent, the same as last year. The 9-month total reached 55.4 million pounds compared with 55.1 million during the same period last year. Year- end output is expected to be about 74.7 million pounds, up 3 percent. Taxable removals for January-September gained 3 percent compared with a year earlier--totaling 55.4 million pounds. Year-end taxable removals are projected at 73.9 million pounds. U.S. Exports and Imports Leaf Exports Down Sharply This Year Unmanufactured tobacco exports slipped 3 percent during the January- September 2003 period to reach 235 million pounds. Last year, during the same period, 244 million pounds were shipped and exports were 294 million pounds during the same period in 2001. Value declined 32 percent and export unit values fell 7 cents per pound. All other categories fell at least 15 percent. Calendar year exports are projected down at about 5 percent by year end as higher U.S. leaf prices continue to erode foreign demand. Total 2003 exports will probably be near 330 million pounds, compared with last year's 338 million pounds. January-September exports of flue-cured leaf totaled 86 million pounds or 37 percent of total leaf shipments. Shipments were down 14 million pounds. Top destinations were Germany, Japan, Belgium, South Korea, and Malaysia. Together, these five countries purchased more than 48 million pounds during the 9-month period and accounted for 66 percent of shipments by volume. Forty-two countries bought U.S. flue-cured during January- September 2003. Burley leaf shipments advanced 9 percent in volume, reaching 85 million pounds during the 9-month period during January-September 2003. Burley shipments have been gaining as a component of total leaf exports, reaching 36 percent of total export volume during the January-September period, compared with 32 percent last year. Maryland leaf exports slid 60 percent during the January-September period compared with a year earlier. Shipments totaled .6 million pounds. Shipments of Kentucky-Tennessee dark fire-cured declined, reaching 6.9 million pounds. During the same period last year, shipments were 9.7 million pounds. The Netherlands, Egypt, and Sri Lanka were the top buyers of Kentucky-Tennessee fire cured leaf. Connecticut wrapper shipments slipped. Virginia fire- shipments were nil. Cigar binder, sun-cured leaf, and "other tobacco" all gained. Shipments of stems advanced slightly. Among major markets, volume to the European Union (EU) slipped by 15 percent during the January-September period, accounting for 44 percent of export volume, slightly less than last year. Overall, Germany was once again the largest purchaser at 39 million pounds, and Japan followed with 33 million pounds. Switzerland, Belgium, Denmark, Taiwan, and France were the next largest buyers, accounting for 64 percent of U.S. leaf exports. There have been no exports under U.S. Department of Agriculture (USDA)- financed programs since 1993. Imports for Consumption Nearly Steady Unmanufactured tobacco imports (consumption) for January-September 2003 was within 10 million pounds compared with the same period in 2002, at 452 million pounds. Last year, imports fell 23 percent during the same period. Imported leaf use in U.S.-manufactured cigarettes continues to advance, driving increased imports. During January-September 2003, Oriental leaf imports slipped 8 percent to 95 million pounds compared with 104 million pounds the previous year. Flue-cured imports advanced 23 percent to 123 million pounds during the 9- month period. Imports of stemmed 'not specifically provided for' leaf (mostly burley) fell 13 percent to 92 million pounds. Cigar leaf shipments gained 28 percent. Imports of stems slid 19 percent to 79 million pounds. General imports of unmanufactured tobacco fell 5 percent during January- September 2003, reaching 419 million pounds, compared with 408 million pounds last year. General imports of Oriental leaf rose by 10 percent and flue-cured gained 28 percent. Burley leaf imports (as indicated by the stemmed 'not specifically provided for' category which is mostly burley) fell 22 percent compared with the same period last year. General imports of stems fell 20 million pounds to 63 million pounds. January-September 2003 cigar wrapper shipments fell 25 percent to 1.8 million pounds. Cigar filler imports gained 29 percent to reach 50 million pounds during the same period. Imported Leaf Stocks Stocks of imported cigarette leaf were nearly unchanged on October 1, 2003, compared with a year earlier at 756 million pounds. Flue-cured and burley stocks were equal. Flue-cured leaf stocks were about 5 million pounds lower at 279 million pounds. Burley leaf stocks were 4 million pounds higher, at 279 million pounds. Stocks of Oriental leaf slipped 8 million pounds to 191 million pounds. Cigarette leaf stocks are lower than traditional levels. During the 1999s, cigarette leaf stocks were usually over 1 billion pounds. Overall, cigar tobacco stocks were within a million pounds of last year's at 96 million pounds. Tariff Rate Quota The tobacco TRQ year begins on September 13 and runs through September 12 the following year. The tariff rate quota (TRQ) for 2003-04 on cigarette tobacco leaf imports (excluding Oriental) was 32 percent filled (105.2 million pounds) as of December 15, 2003. The total quantity allowed under the TRQ is 332.2 million pounds. During the 2002-03 TRQ year, 71 percent of the quota, or 235.6 million pounds, were imported under the quota. U.S. Tobacco Leaf Situation and Outlook * Based on October 1 estimates, tobacco acreage for the 2003 marketing year slipped 4 percent to 413,010 acres, compared with 428,660 acres in 2002. Yields fell, reaching 2,044 pounds per acre for all types of tobacco, compared with the 2,055-pound yield of 2002. Wet weather affected many tobacco growing areas, lowering yields and reducing quality. Production of all types is estimated at 844.3 million pounds, about 36 million pounds below last season. Ninety-three percent of U.S. leaf produced was used for cigarettes. Cigar leaf, also used for other products such as chewing and smoking tobacco, accounted for 2 percent of production. Other types, mostly dark air- and fire-cured leaf, accounted for 5 percent of production. U.S. Industry Submits Purchase Intentions of 254.3 Million Pounds for 2004 Crop Flue-Cured Tobacco U.S. cigarette manufacturers submitted purchase intentions of 254.3 million pounds for the 2004 flue-cured crop (July 2004-June 2005), yet again the lowest since intentions were first submitted in 1986. Purchase intentions were 10 percent below last year's 283.3 million. Burley purchase intentions are due by January 15, 2004. The Agricultural Adjustment Act of 1938 requires each major domestic cigarette manufacturer to purchase an amount equal to at least 90 percent of its stated purchase intentions to avoid the assessment of a penalty. In past years, purchases have declined due to lower cigarette production and increased use of imported tobacco leaf. Purchase intentions are added to the 3-year average exports, the reserve stock adjustment, and the Secretary's discretionary adjustment, if any, to determine the basic flue-cured marketing quota. Marketing Quota and Allotments in 2004 The five domestic cigarette manufacturers (those with more than 1 percent of U.S. production and sales) are required to submit a statement of flue- cured and burley purchase intentions to the Secretary of Agriculture 15 days before the national quota announcement deadline. The flue-cured quota is announced by December 15th. Manufacturers submitted 2004 purchase intentions for flue-cured tobacco totaling 254.3 million pounds, 10 percent below 2003. Burley purchase intentions are due by January 15, 2004. Marketing quotas for flue-cured and burley in 2004 are set by totaling (1) intended purchases by domestic cigarette manufacturers from the 2003 crop; (2) average exports for the 2001/02, 2002/03, and 2003/04, marketing years; and (3) an adjustment to maintain loan stocks at the lower of either 10 percent of the basic quota, or 60 million pounds of flue-cured or 50 million pounds of burley. The Secretary of Agriculture may adjust this three-part total by up to 3 percent, up or down. Legislation passed in 2000 and 2001 excludes 1999 crop loan stocks from the quota calculations by forgiving Commodity Credit Corporation (CCC) loans for this tobacco. The national marketing quota for the 2004 flue-cured crop is 457.6 million pounds, down 10 percent from the 2003 quota of 526.3 million pounds. The quota is based on the following: (1) purchase intentions by domestic cigarette manufacturers of 254.3 million pounds (2) unmanufactured exports of 228.7 million pounds, and (3) a reserve stock adjustment of –25.4 million pounds (after some last-minute purchases from loan stocks). The Secretary of Agriculture made the maximum discretionary adjustment that added 13.7 million pounds to the quota. The effective quota is expected to be about 500 million pounds, a little more than 50 million pounds less than 2003. About 30 million pounds of undermarketings from 2003 boosted the effective quota for 2004. The national average yield goal remains unchanged at 2,088 pounds per acre. The price support level for the 2004 crop is $1.69 per pound, up 2.7 cents per pound from 2003. The national acreage allotment for the 2004 crop is 225,730 acres, 10.4 percent below the 2003 allotment of 252,059 acres. For each farm, the 2004 basic quota will decrease approximately 10.8 percent from 2003. By February 1, 2004, USDA will announce the 2004 burley poundage quota, and by March 1, USDA will announce the 2004 acreage allotments for other kinds of tobacco under the quota program. Price Supports in 2004 The 2004 price supports for flue-cured and burley (set at the same time quotas are announced) are the preceding year's support adjusted by changes in the 5-year moving average of prices, excluding the highest and lowest years (two-thirds weight) and changes in a cost-of-production index (one- third weight). Costs include variable expenditures, but exclude costs of land, quota, risk, overhead, management, marketing contributions, and other items not directly related to tobacco production. The Secretary of Agriculture has discretionary authority to adjust the price support between 65 and 100 percent of the calculated increase or decrease. The 5-year moving average of prices and changes in a cost-of- production index increased the price support for flue-cured. For supported types other than flue-cured and burley, maximum increases in supports will continue to be based on changes in the average parity index during the 3 previous years compared with 1959. Loan associations can request reduced support if market conditions warrant. Flue-cured Tobacco After 56 sales days, the 2003 flue-cured marketing season drew to a close on November 6th. Wet conditions from Florida to Virginia delayed transplanting and created extremely wet growing conditions, making fieldwork difficult through the spring. October 1 estimates set the crop at 476.1 million pounds. Carryover tobacco amounted to 55.3 million pounds. Producers' sales totaled 507.7 million pounds, about 95 percent of the effective quota for 2003. Overall price was $185.2 cents per cwt. Last season, 571.3 million pounds sold for an average of $182.6 per cwt. This season, auction sales accounted for 16 percent of total gross sales. Thirty-eight warehouses held sales--with fourteen of these acting as marketing centers for the Flue-Cured Stabilization Corporation. Auction sales totaled 95.6 million pounds and averaged $179.4 per cwt, a $3.72 increase over last season. Stabilization took 68.1 million pounds of tobacco sold at auction under loan this season or 71 percent total auction sales. Thirty-seven contract centers purchased tobacco in 24 markets. Contract sales of 412.0 million pounds averaged 186.5 per cwt, up $2.09 from last season. The tobacco that made it to market was of better quality than last year's drought-stricken crop. Once again, major cigarette manufacturers bought little tobacco at auction. As a result, loan taking comprised 71.2 percent of gross auction sales compared to 49.9 percent last season. High-volume grades showed price declines at auction. Leaf and smoking leaf slipped $1 to $4 per hundred and cutters lost $2 per cwt. Lugs declined $1 to $4. Priming and nondescript grades fell the most, from $10 to $26 per cwt. Both auctions and contract centers saw increases in ripe tobacco marketed. Very little poor quality tobacco was sold in the flue- cured belt this season. Flue-cured Supplies Slip in 2003 For the 2003/04 crop year, flue-cured supplies are estimated at 1,343 million pounds, 9 percent below last year's 1,481 million pounds. Marketings and stocks both fell. Disappearance in 2003 was 599.3 million pounds, 7 percent below 2002. Both domestic disappearance and exports declined. Foreign producers, primarily Brazil, are competing with U.S. leaf both in the domestic market and overseas. Ending stocks in 2003 are expected to be around 744 million pounds. Burley Tobacco The 2003-04 burley tobacco marketing season began Monday November 10th as contract centers began accepting deliveries. Auction sales opened November 17th. Through the third week of sales, volume at auctions had lightened while contract centers faced moderate to heavy volume. Grade averages through the third week were higher than last season at $198.6 per cwt. Auctions accounted for 24 percent of sales and averaged $196.98 per cwt. Through the third week, 47 percent or 17.9 million pounds of leaf sold at auction went under loan, compared with 33 percent for the same period last season. Contract volume reached 92.5 million pounds averaging $199.1 per cwt. As of October 1st, the burley crop is estimated at 303.3 million pounds, slightly higher than last season's 300.1 million pounds. Sales are expected to end on February 26, 2004. Price supports for the 2003 crop average $1.849 per pound, up 1.4 cents per pound from the 2002/03 season. Loan rates by grade range from $.85 to $2.08 per pound. Pre-holiday sales ended on December 19th and sales are scheduled to resume on January 5, 2004. Final sales are set for February 26, 2004. There were 19 auction sales days during the pre-holiday period, the same as last season. Contract sales prior to the holiday break amounted to 151.7 million pounds, averaging $198.8 per cwt compared with 158.6 million pounds last season averaging $198.6 per cwt.. Before the break, gross auction sales totaled 45.6 million pounds averaging $196.4 per cwt. Last season, pre-holiday auction sales totaled 59.1 million pounds averaging $196.14 per cwt. Pre-holiday loan receipts totaled 25.7 million pounds, or 58 percent of net sales, compared with 18.7 million pounds or 33 percent last season. In 2001, loan takings were 7 percent of net sales before the break. Total gross burley sales (auction and contract) before the holidays reached 197.3 million pounds averaging $198.3 per cwt. Net sales totaled 196.0 million pounds, or 65 percent of the October crop estimate. Last season, gross sales prior to the holidays were 217.7 million pounds selling for $197.9 per cwt. Net sales were 215.2 million pounds, or 72 percent of the crop. Disappearance Declines During 2002/03 During the marketing year beginning October 1, 2002, and ending September 30, 2003, disappearance of burley leaf slipped 4 percent or 16 million pounds from the previous season. Domestic use was 221 million pounds. Exports of 149 million pounds were 9 million pounds greater than the previous season. Carryover on October 1, 2003 (not including on-farm stocks) is 70 million pounds lower than the previous season. Expected marketings of about 290 million pounds will result in supplies of about 870 million pounds, about 80 million pounds less than the previous year. USDA To Announce 2004 Quota by February 1 USDA must announce the 2004 burley quota by February 1, 2004. The three components of the quota, manufacturer's purchase intentions, previous 3 year's exports, and reserve stock adjustment, can be further adjusted up or down 3 percent at the discretion of the Secretary of Agriculture. Southern Maryland During the year ending September 30, 2003 (crop year 2002), disappearance of Maryland tobacco is estimated at 5.7 million pounds, compared with 6.7 million pounds during 2001-02. In 2000, disappearance was 17.1 million pounds. Exports advanced slightly and domestic use declined. The rapid decline is the result of the tobacco buyout in Maryland. Production in Maryland fell from 8.3 million pounds in 2000 to 2.1 million in 2003. During the same period, production in Pennsylvania has slipped by nearly half. January 1, 2003 stocks were 8.2 million pounds, compared with 9.7 million pounds the previous season. Supplies in 2003 have plummeted to 12.0 million pounds, 3 million pounds below 2001 and are expected to be close to that level in 2004. Production in Maryland in 2003 is expected to be 2.1 million pounds compared with 2.6 million in Pennsylvania. Fire-Cured Auctions for Virginia fire-cured (type 21) opened December 2nd. Prices during the first week of sales fell $13.72 per cwt to $157.12 per cwt from last year's first week sales. Demand was strong during the first week but lessened during the second week of auctions. Acreage this season is forecast at 700 acres, compared with 730 acres last season. Yields slipped due to wet weather in the spring. Disappearance in 2002 (October 2002-September 2003) was 2.0 million pounds, compared with 1.6 million pounds last season. Supplies for 2003 are estimated at 5.3 million pounds, compared with 6.3 million pounds in 2002. Both marketings and beginning stocks were lower, resulting in smaller supplies. Total beginning stocks were 4.3 million pounds on October 1, 2003. Auctions for Kentucky-Tennessee fire-cured (type 22-23) open in mid- January. Production in 2003 is estimated at 33.0 million pounds compared with 33.4 million pounds in 2002. Acreage increased by 160 acres but lower yields diminished gains. Loan stocks on October 1, 2003, were 4.4 million. Total beginning stocks of 97.6 million pounds are 1.9 million pounds higher than last season. Projected supplies in 2003 are down 2.5 million pounds due to lower production. Estimated supplies in 2003 of 130.6 million pounds represent 3.5 years use, based on the past five seasons. Disappearance Slips Disappearance of fire-cured (types 22-23) slipped 2 million pounds to 35.3 million pounds during the 2002-2003 season. Domestic use increased to. 24.70 million pounds and exports slipped to 10.7 million pounds. Dark Air-Cured October 1st estimates indicate dark air-cured (types 35-36) tobacco production will increase by 2 percent to reach 10.7 million pounds. Last year, production was 10.6 million pounds. Stocks of dark air-cured equal about 3.5 years of use, based on recent trends. Disappearance in 2002 increased to 11.5 million pounds, the highest level in a decade. Domestic use advanced. Resulting beginning stocks on October 1, 2003 were 37.3 million pounds. With production at 10.7 million pounds, supplies in 2003 are expected to be within a million pounds of last years, at about 48.0 million pounds. The 2003-2004 One Sucker (type 35) tobacco marketing season began Monday, December 1st in Springfield, Tennessee. Heavy leaf dominated sales. After two weeks, volume appeared weak. Cooperatives took 7 percent of gross sales through the second week. Prices averaged $159.99 per cwt compared with $170.40 last season. Most grade bid averages declined. Producers' sales last year amounted to 1.3 million pounds and averaged $143.28 per cwt, with 7.7 percent of net sales placed under loan. Based on the latest crop estimate, the Type 35 production is expected to be around 7.7 million pounds. The 2003-2004 Green River (type 36) Tuesday, December 2 in Owensboro, KY, the only Type 36 market. Through the second week of sales, demand was weaker and price, at $193.68 per cwt, was $8.25 less than last season after the same number of days. At auction last year, producers' sales amounted to 1.9 million pounds averaging $194.81, with 2.5 percent of net sales placed under loan. Quality improved, with choice and fine tobacco making up 31 percent of auctions. By the latest crop estimate, the Type 36 production is expected to be around 3.0 million pounds, slightly higher than last season. Cigar Tobacco Disappearance Advances For the second consecutive year, U.S. cigar tobacco disappearance advanced during the 2003 marketing season (July-June for cigar wrapper leaf and October-September for other cigar types). Disappearance of 16.3 million pounds was 20 percent higher than the previous season's 14.0 million pounds. Exports recovered, reaching 2.1 million pounds while domestic use increased to 14.1 million pounds. According to October 1 crop estimates, 2003 production is projected at 15.3 million pounds, 15 percent greater than last season. Beginning stocks are 21.6 million pounds, again the lowest on record. Low production continues to force manufacturers to draw down stocks. Supplies in 2003 are estimated at 36.9 million pounds compared with 37.9 million pounds in 2002. According to October 1 crop estimates, 2002 production of Pennsylvania filler (type 41) will be 5.3 million pounds, compared with 4.4 million pounds last season. Lower stocks of 10.7 million pounds, result in supplies of 15.9 million pounds, less than a million pounds below last year's supply. Disappearance of Pennsylvania filler during 2002 advanced to 6.0 million pounds after reaching only 4.0 million pounds in 2001. Exports were negligible. Many growers of Pennsylvania filler tobacco often grow Maryland type 32 instead. Pennsylvania growers are also growing low- nicotine tobacco under contract. As of October 1, binder production for 2003 is estimated at 8.1 million pounds compared with 7.7 million in 2002. Acreage has increased from 3,610 to 4,200 acres. Although yields will be slightly lower this season, higher acreage will result in a projected harvest of 8.1 million pounds. Connecticut Valley binder (type 51) will increase by 150 acres. Production of Connecticut Valley Binder is estimated at 4.5 million pounds. The 2003 Wisconsin binder crop is projected larger at 4.1 million pounds, compared with 3.8 million pounds last season. Acreage totals 1,750 acres, up 16 percent from 2002, about the same increase as last season. For the 2002 marketing year, ending September 30, 2003, binder leaf disappearance slipped, reaching 8.0 million pounds, compared with 9.0 million pounds in 2002. Binder use is still at historically low levels. The October 1 crop estimate sets wrapper leaf production at 1.4 million pounds compared with 1.2 million last season. Acreage gained 50 acres to reach 1,000. Production is set at 1.4 million pounds, about 235,000 pounds more than last season. With beginning stocks at .7 million pounds, supplies of cigar wrapper leaf should be 2.1 million pounds in 2003. For the 2002 season (July 2002-June 2003), disappearance advanced to 2.3 million pounds compared with 1.1 million the previous season. Domestic use increased slightly and exports slipped. --- * All quantities in this section are in farm sales weight unless otherwise noted. Years refer to marketing years; July-June for flue- cured and cigar wrapper (type 61) and October-September for all other types, unless otherwise noted.