Tobacco is a member of the nightshade family. It is commercially grown for its leaves and stems, which are rolled into cigars, shredded for use in cigarettes and pipes, processed for chewing, or ground into snuff. Christopher Columbus introduced tobacco cultivation and use to Spain after observing natives from the Americas smoking loosely rolled tobacco-stuffed tobacco leaves.
Tobacco is cured, or dried, after harvesting and then aged to improve its flavor. The four common methods of curing are: air cured, fire cured, sun cured, and flue cured. Flue curing is the fastest method of curing and requires only about a week compared with up to 10 weeks for other methods. Cured tobacco is tied into small bundles of about 20 leaves and aged one to three years.
Virginia tobacco is by far the most popular type used in pipe tobacco since it is the mildest of all blending tobaccos. Approximately 60% of the U.S. tobacco crop is Virginia-type tobacco. Burley tobacco is the next most popular tobacco. It is air-cured, burns slowly and provides a relatively cool smoke. Other tobacco varieties include Perique, Kentucky, Oriental, and Latakia.
Prices - U.S. tobacco farm prices in 2007 rose +1.1% to 168.3 cents per pound from 166.5 cents per pound in 2006. That is, however, far below the record high of 196.7 cents per pound posted in 2003.
Supply - World production of tobacco in 2004 (latest data available) rose by +6.7% yr/yr to 6.651 million metric tons, rebounding upward from the 18-year low of 6.232 million metric tons seen in 2003. The world's largest producers of tobacco are China with 36% of world production, followed at a distance by Brazil (with 13% of world production), India (10%), and the U.S. (6%). U.S. production in 2004 rose by +5.4% yr/yr to 397,347 metric tons, where it was down by more than half from the 2-decade high of 810,154 metric tons posted in 1997.
Tobacco in the U.S. is grown primarily in the Mid-Atlantic States and they account for the vast majority of U.S. production. Specifically, the largest tobacco producing states in the U.S. are North Carolina (with 46% of U.S. production in 2006), Kentucky (26%), Tennessee (7%), South Carolina (7%), Virginia (6%), and Georgia (4%).
Flue-cured tobacco (type 11-14) is the most popular tobacco type grown in the U.S. and U.S. production in 2006 rose sharply by +17.2% yr/yr to 446.510 million pounds. The second most popular type is burley tobacco (type 31), which saw U.S. production in 2006 rise +6.7% to 217.085 million pounds.
Total U.S. production of tobacco in 2006 rose +12.7% yr/yr to 727 million pounds, which is less than half of the 2-decade high of 1.787 billion pounds posted in 1997. U.S. farmers have sharply reduced the planting acreage for tobacco. In 2006, harvested tobacco acreage rose by +14.1% yr/yr to 338.950 acres which is up from the 2005 record low of 297,080 but still far below the 24-year high of 836,230 posted in 1997. Yields have been fairly constant and have averaged about 2,100 pounds per acre for the past 10 years. The farm value of the U.S. tobacco crop in 2006 rose by +14.7% yr/yr to $1.215 billion.
U.S. marketings of flue-cured tobacco (Types 11-14) in the 2006-07 marketing year rose by +18.5% yr/yr to 453.8 million pounds. U.S. marketings of burley tobacco (Type 31) in the 2006-07 marketing year rose by +6.9% yr/yr to 217.4 million pounds.
U.S. production of cigarettes in 2006 rose by +1.5% to 496.4 billion cigarettes, which was still down sharply from the record high of 754.5 million posted in 1996. U.S. production of cigars rose by +8.2% yr/yr to 3.977 billion in 2006. U.S. production of chewing tobacco in 2006 fell by -3.1% to 38.0 million pounds, which was a record low.
Demand - U.S. per capita consumption of tobacco products in 2006 was unchanged at 3.69 pounds per person but there appears to be a shift from cigarettes to cigars. The 3.69 pounds per capita consumption of tobacco in 2006 is less than half the record high of 9.68 pounds per person that occurred at the beginning of the series in 1970. Per capita cigarette consumption in 2006 fell -1.5% yr/yr to 1,691 cigarettes per person, which was a record low. Per capita consumption of cigars in 2006 rose +1.9% yr/yr to a record high of 47.80 cigars per person. Per capita consumption of loose smoking tobacco in 2006 fell -6.3% yr/yr to 0.15 pounds.
Trade - U.S. tobacco exports in 2004 (latest data available) rose +3.5% yr/yr to 354.0 million pounds, rebounding further from the record low of 325.8 million pounds seen in 2002. Meanwhile, U.S. tobacco imports in 2004 fell -10.9% yr/yr to 561.7 million pounds from the 11-year high of 630.1 million pounds see in 2003. The U.S. exported 111.3 billion cigarettes and 180 million cigars in 2006.