crop report august 2016
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CROP REPORT
AUGUST 2016
2
CONTENT
BRAZIL BAHIA - FILLER PAGE 3
BRAZIL BAHIA - MATA FINA WRAPPER PAGE 4
BRAZIL ARAPIRACA - WRAPPER PAGE 5
BRAZIL CUBRA - WRAPPER PAGE 6
BRAZIL - FLUE CURED PAGE 7
BRAZIL - BURLEY PAGE 9
CANADA - DARK FIRE AND DARK AIRCURED PAGE 10
COLOMBIA - CARMEN CUBITA PAGE 11
DOMINICAN REPUBLIC - PILOTO CUBANO/OLOR/CRIOLLO PAGE 12
INDONESIA - BESUKI/NO-NORTH UTARA PAGE 13
INDONESIA - JATIM/VO PAGE 15
INDONESIA – BESUKI/VO PAGE 16
PARAGUAY - CRIOLLO PAGE 17
PHILIPPINES - ISABELA PAGE 18
US - FLUE CURED PAGE 20
US - DARK FIRE AND DARK AIR CURED PAGE 21
US - BURLEY PAGE 22
3
BRAZIL BAHIA – FILLER
HISTORICAL PRODUCTION
2015/2016 CROP STATUS
Current operational activity:
We started packing in June, as planned. Quality is good, and in accordance with previous
estimates.
HCIG/CdF Volume (packed weight) 2015/2016 crop: 500 MT
2016/2017 CROP STATUS
Farmer contracting occurred without major problems and we were able to contract a sufficient
number of farmers.
Growing season started a bit slow due to lack of rainfalls at the end of May and beginning of
June. By early July weather conditions had improved and almost all farmers were able to
transplant their seedlings within the regular timing.
Rainfalls are still below average at the moment and some growing areas will have reduced
productions volumes as a result. Due to the reduced incidence of foliar diseases we expect the
reduction in volume to be partially offset by improved quality in practically all areas.
HCIG/CdF Volume (packed weight) 2016/2017 crop (target): 500 MT
ECONOMIC DATA
Exchange Rate August 23: USD 1,00 = 3,20047 BRL
Inflation: 8,74 % July 2016
2000
1400
1100
800
0
500
1000
1500
2000
2500
2013/2014 2014/2015 2015/2016 2016/2017 est.
Vo
lum
e M
T
Crop Year
Bahia Production (Packed weight MT)
4
BRAZIL – BAHIA MATA FINA WRAPPER
HISTORICAL PRODUCTION
2015/2016 CROP STATUS
Current operational activity:
Sorting process started in June, in our Bahia operation. Overall quality is good. We expect to
finish sorting by end of November.
HCIG/CdF Volume (Packed weight) 2015/2016 crop: 55 MT
2016/2017 CROP STATUS
Growing conditions:
General weather conditions have been excellent so far. Even though rainfalls have been below
average for the period we managed to prevent major problems by use of irrigation.
Development in the field has been excellent with much less foliar diseases and plagues than
usual.
Current operational activity:
About 70% of the crop has been harvested by now. Tobaccos are curing well in the barns and
part of the crop has been transferred to the factory, undergoing fermentation.
Quality is very promising; due to the many sunny days during the crop tobacco has plenty of oil
and this will help to produce a bigger amount of darker wrapper material.
HCIG/CdF Volume (Packed weight) 2016/2017 crop (expected): 80 MT
60 58 55
80
0
10
20
30
40
50
60
70
80
90
2013/2014 2014/2015 2015/2016 2016/2017
Vo
lum
e M
T
Crop Year
Bahia Mata Fina wrapper Production (Packed weight MT)
5
BRAZIL – ARAPIRACA WRAPPER
HISTORICAL PRODUCTION
2015/2016 CROP STATUS
Current operational activity:
All wrapper tobaccos have been shipped to our operation in the DR for final sorting and
grading. Fillers have been shipped to customers.
HCIG/CdF Volume (packed weight) 2015/2016 crop: 60 MT
2016/2017 CROP STATUS
Growing conditions:
Rainfalls have been much less than normal this year and we expect a considerable reduction of
the overall crop volume. This will mainly affect the local twist tobacco market and we already
see a price increase for this kind of tobacco. Due to a broad contract farmer base our wrapper
production will only be slightly affected. Quality is very good due to good oil and the absence of
foliar diseases in most areas.
Current operational activity:
We have bought about 90% of our target volume so far. Tobaccos are curing well and overall
quality is very good.
HCIG/CdF Volume (packed weight) 2016/2017 crop (expected): 40 MT
95
65
120
80
0
20
40
60
80
100
120
140
2013/2014 2014/2015 2015/2016 2016/2017 est.
Vo
lum
MT
Crop Year
Arapiraca wrapper Production (Packed weight MT)
6
BRAZIL – CUBRA WRAPPER
HISTORICAL PRODUCTION
2015/2016 CROP STATUS
Current operational activity:
We started the sorting in April, in our factory in Bahia. General quality is good and we expect
to finish sorting by the end of October.
HCIG/CdF Volume (packed weight) 2015/2016 crop: 85 MT
2016/2017 CROP STATUS
Growing conditions:
General weather conditions have been excellent so far. Even though rainfalls have been below
average for the period we managed to prevent major problems by use of irrigation.
Development in the field has been excellent with much less foliar diseases and plagues than
usual.
Current operational activity:
We have harvested about 85% of the crop so far. Tobaccos are curing well in the barns and part
of the crop has been transferred to the factory, undergoing fermentation.
Quality is very promising; due to the many sunny days during the crop tobacco has plenty of oil
and this will help to produce a bigger amount of dark wrapper material from the Viso and
Ligeiro grades.
HCIG/CdF Volume (packed weight) 2016/2017 crop (expected): 75 MT
88 88
85
75
65
70
75
80
85
90
2013/2014 2014/2015 2015/2016 2016/2017
Vo
lum
e M
T
Crop Year
Cubra wrapper Production (Packed weight MT)
7
BRAZIL SOUTH – FLUE CURED As of August 8th, 2016 Summary:
Seedling production is following regular schedule and with no major diseases
occurring. This will assure that the contracted area will be effectively transplanted.
Favourable weather conditions during the second half of July are speeding up seedling
development and consequently the transplanting, especially in the Old Belt Area.
Transplanting will also be intense during September in all other areas.
Up to the end of July, around 20% of the Flue Cured tobaccos have been transplanted.
Rio Grande do Sul Central Area - Old Belt
Already transplanted 42% of the crop.
Highlands
Seedlings development phase. Started transplanting late August.
South
Seedlings development phase. Start transplanting by mid of August.
Santa Catarina Coastal Area
Santa Catarina’s coastal area has already transplanted 83% of the crop.
Itajai Valley
Already transplanted 18% of the crop.
Highlands North
Seedlings development phase. Start transplanting late August.
Paraná Irati Area
Seedlings development phase. Start transplanting late August.
8
Volumes: Total Brazil Flue-Cured
Planted area:
Hectares
Yield: Kgs/Hectare
Volume: Kgs
2017 (Estimated) Source: Afubra
265,909 2,200 585,000,000
2016 Estimated
Source: Afubra 252,000 1,826 460,000,000
2015 Final
Source Afubra 263,620 2,257 595,000,000
Crop Status: Estimate
Region Transplanting Topping Harvesting Curing Purchasing
Rio Grande do Sul
30% 0% 0% 0% 0%
Santa Catarina 25% 0% 0% 0% 0%
Parana
0% 0% 0% 0% 0%
9
BRAZIL SOUTH – BURLEY
As of August 8h, 2016 Summary:
Seedlings production is following regular schedule.
Burley and Galpao Comum transplanting will start during the month of August.
Rio Grande do Sul Highlands
Seedlings development phase. Start transplanting by mid of August.
Santa Catarina and Parana West SC/PR
Seedlings development phase. Start transplanting late August.
AIR CURED GALPÃO West SC/PR
Seedlings development phase. Start transplanting late August.
Volumes: Total BRL Burley
Planted area:
Hectares
Yield: Kgs/Hectare
Volume: Kgs
2017 (Estimated) Source: Afubra
35,122 2,050 72,000,000
2016 (Estimated)
Source: Afubra 28,572 1,924 55,000,000
2015 Final
Source: Afubra 40,090 2,070 83,000,000
Crop Status: Estimate
Transplanting Topping Harvesting Curing Purchased
0% 0% 0% 0% 0%
10
CANADA - DARK FIRE AND DARK AIR CURED As of August 12th, 2016 Summary:
Crops are good to very good in yield potential and quality. Eastern Region has adequate rainfall and looks good. No reports of disease pressure. Some weather fleck reported. DAC should begin harvest within 2 weeks. DFC harvest starts beginning of September.
Volumes: Total Canadian DFC and DAC
Type Planted Area Yield: Lbs./acre Volume: Lbs.
2016 DFC 441 3,050 1,345,050
(610,104 kgs)
2016 DAC 111 2,800 310,800
(140,976 kgs)
Crop Status: H&C Estimate
Transplanting Topping Harvesting Curing Purchased
100% 95% 0% 0% 0% DFC
100 % 95% 0% 0% 0% DAC
11
COLOMBIA – CARMEN CUBITA
HISTORICAL PRODUCTION
2016 CROP STATUS
Growing conditions:
All the farmers finished seedbeds. For the moment the weather is ideal, plants develop well
and show good growth.
Current operational activity:
We finished the new STP program and continue to work with our farmers applying good
agricultural practices and emphasizing the NTRM program and all other important programs
such as Green Tobacco Sickness, Biodiversity etc.
ECONOMIC DATA
The Colombian economy has slowed down due to oil prices, inflation increases.
Exchange Rate August 23: USD 1,00 = 2890 COP
Inflation: 8,97 % July 2016
1500
2200
1100 11501250
0
500
1000
1500
2000
2500
2012 2013 2014 2015 2016 est.
Vo
lum
e M
T
Crop Year
Carmen Cubita Production (Packed weight MT)
12
DOMINICAN REPUBLIC
HISTORICAL PRODUCTION
2017 CROP STATUS
Growing conditions:
Within 6 weeks seedbeds will commence for new crop. There will be a low volume being
planted. This has to do mainly with the market conditions, but also with the weather forecast.
After a few years of heavy drought, it is thought to be a wet year. As market is demanding
heavier tobaccos, it seems that the conditions will not be optimal to reach this.
Other remarks:
Market continues to be slow. New legislation in both Europe and USA has a negative effect on
buying plans.
Elections have passed and the previous president, Danilo Medina, was chosen again. He took
office with his new cabinet last Tuesday.
ECONOMIC DATA Exchange Rate August 23: USD 1,00 = 46,15 DOP
Inflation: 1,85 % July 2016
6200
2800
6100
7000
4500
0
1000
2000
3000
4000
5000
6000
7000
8000
2013 2014 2015 2016 2017 est
Vo
lum
e M
T
Crop Year
Piloto Cubano/Olor/Criollo Production (Packed weight MT)
13
INDONESIA – BESUKI/NOTA – NORTH UTARA
HISTORICAL PRODUCTION
2015 CROP STATUS
NOTA crop current activities:
All tobaccos from crop 2015 are 100% sorted and packed.
General stock situation old crops:
Overall, stocks in the market are decreasing due to the situation of the 2015 NOTA crop.
Expectation is that there will remain some stocks of affected tobaccos with some exporters.
Fillers remain readily available, although overall quality is relatively low.
35003000
5200
3000
2000
0
1000
2000
3000
4000
5000
6000
2012 2013 2014 2015 2016 (est)
Vo
lum
e M
T
Crop Year
Besuki NOTA (Packed Weight MT)
3000
5000
3100
4000 4000
0
1000
2000
3000
4000
5000
6000
2012 2013 2014 2015 2016 (est)
Vo
lum
e M
T
Crop Year
Besuki North Utara (Packed Weight MT)
14
2016 CROP STATUS
Weather conditions:
The 2016 crop has been heavily affected by adverse weather conditions. Continuous rains are
the cause of many diseases in the crop and a high incidence of Cercospora. Crop is also delayed
due to prolonged transplanting/replanting periods. Hard winds cause additional damage to the
already difficult crop.
Crop activities NOTA:
We have started receiving the contracted farmers’ crop since beginning August and the lower
stalk positions are coming in slowly. Overall quality is much lower than normal and leaf size is
slightly shorter than normal. Cercospora, curing disorders, glassy and papery material are the
main causes for concern. Besides these negatives, luckily there are areas that perform well,
especially in the far south where there has been less rain. Early buying prices have been high due
to the fact that some exporters are in need of tobacco and this drives up the price. Besides this,
farmers are trying to recover their negative results of previous years now that demand has
increased, even though quality is low.
NOTA purchasing is expected to continue until the end of September and will quickly be
followed by the Semi-Utara and Utara crops as there has not been a break between plantings.
We have 150 hectares of NOTA and Semi-Utara under direct farmer contracts, expected yields
will be slightly short of the forecasted 270 MT green.
Crop activities Utara: Most farmers have transplanted for the second crop, the Utara. Expectations are high for this
crop since weather has improved somewhat and expectations are that most of the pickings will
be in the curing barns by October before the new rains will start again. We have another 150
hectares under direct contracting for this crop which expects to yield around 270 MT. All direct
farmers of NOTA and Utara are following our approved CPA application and 100 % of these
tobaccos are strung with cotton rope in the curing barns to eliminate the risk of plastic
contamination.
Construction:
The construction is going as planned and we have moved our main office to our Mayang
compound. The guesthouse is also completed and we have been able to receive the first guests.
New sorting warehouse is ahead of schedule and completion is due for Mid-September which is
ahead of the new grading season.
HCIG/CdF Volume (packed weight) 2015 crop: 1,600 MT
HCIG/CdF Estimated volume (packed weight) 2016 crop: 1,100 MT
ECONOMIC DATA
Exchange Rate August 23: USD 1, 00 = 13219 IDR
Inflation: 3,21 % July 2016
15
INDONESIA – JATIM/VO
HISTORICAL PRODUCTION
2016 CROP STATUS
2016 crop situation:
Quality expected to be poor overall, many foresee BC to be the highest available grade in
quantity. Purchasing of the new crop will start in September when we will have a clearer picture
of the situation. Overall quality is lower because of the same adverse weather conditions as in
the rest of Java, continuous rains with a high disease occurrence which also makes it difficult to
sun cure. Prices are expected to be relatively high considering the overall quality will probably
be low. Crop size expected to fall to about 5,000 MT from 7,000 MT last year. Madura quality
will be similar and quantity less than 2,000 MT. Overall expectation is that there will be little to
no AB and AC material available and this will for sure be expensive.
30000
1200014000
10000
6000
0
5000
10000
15000
20000
25000
30000
35000
2012 2013 2014 2015 2016 (est)
Vo
lum
e M
T
Crop year
Jatim VO (Packed Weight MT)
16
INDONESIA –BESUKI/VO
HISTORICAL PRODUCTION
2016 CROP STATUS
Growing conditions:
Overall quality of the Kasturi is also expected to be lower than normal and expected quantity
will be down to about 5,000 MT for this season. This quantity could go up significantly since
there are many late plantings but still too early to forecast what will become of this. Like the
Besuki/NO and Jatim/Madura crop, the Kasturi is affected by the weather which is expected to
leave its marks on the quality.
Lately some previous crop stocks are being bought but still some old stocks remain with the
dealers.
25000
13000 12000
75005000
0
5000
10000
15000
20000
25000
30000
2012 2013 2014 2015 2016 (est)
Vo
lum
e M
T
Crop year
Besuki VO (Packed Weight MT)
17
PARAGUAY – CRIOLLO
HISTORICAL PRODUCTION
2017 CROP STATUS
Crop 2017 is now at the seedbed/transplanting stage. Tobacco growers suffered a poor crop in
2016, caused by El Ninõ effects in the region. Actual planting intention is excellent and farmers
are eager to produce quality/healthy tobacco but, as usual, this will greatly depend on the
weather. At this moment it is still too early to gauge what the production will be.
Normal crop production range between 2.000/2.500 tons for export. Considering that there is
no unsold tobacco in the field and that exporters only carry unsold low grades, we expect some
competition during the buying season, to start by the end of 2016. This situation will generate
higher buying prices hence, higher costs.
General comments:
So far, winter progresses normally and forecasts are optimistic. Exchange rate remains pretty
stable and so does inflation.
ECONOMIC DATA
Exchange Rate August 23 USD 1,00 = 5550 PYG
Inflation: 2,90 % July 2016
2500
3200
2600
750
0
500
1000
1500
2000
2500
3000
3500
2012/2013 2013/2014 2014/2015 2015/2016
Vo
lum
e M
T
Crop Year
Criollo Production (Packed Weight MT)
18
PHILIPPINES – ISABELA (DAC & BURLEY)
HISTORICAL PRODUCTION
2015/2016 CROP STATUS
Isabela DAC:
Receiving of the 2015/2016 crop started on May 16 and ended on July 28.
All farmers have delivered 100% of their tobacco and the overall crop quality was good.
Thanks to the improved quality compared to last year, farmers received much better return of
their crop this year.
72007900
580 720
0
2000
4000
6000
8000
10000
2012/2013 2013/2014 2014/2015 2015/2016
Vo
lum
e M
T
Crop Year
Isabela & Cagayan Province Production DAC (Packed Weight MT)
7560
9135
8000 7800
0
2000
4000
6000
8000
10000
2012/2013 2013/2014 2014/2015 2015/2016
Vo
lum
e M
T
Crop Year
Isabela & Cagayan Province Production Burley (Packed Weight MT)
19
Growing Conditions:
Started good for the 2015/2016 crop, with close to normal weather conditions.
Especially for the early planted tobacco the quality was very good and yields higher than
normal. In some lower areas the quality and yield was affected by flooding.
Temperatures during time of harvesting and curing was favorable and only a few incidents of
diseases was detected during the growing season.
Current operations:
The DAC crop is now under fermentation and initial sorting and packing will start early
December.
Agronomy:
We are now planning for the 2016/2017 crop. Identifying farmers for recruitment.
Fertilizer recommendations will be based on soil test analyses of growing areas.
Fertilizers and CPA’s will be supplied by HCIG/CdF. Application and methods will be directed
by the HCIG/CdF agronomy department.
HCIG/CdF Production:
2015/2016 crop final DAC production was 85,000 kg (green)
2016/2017 crop estimated DAC production 200,000 kg (green)
ECONOMIC DATA
Exchange Rate August 23: USD 1,00 = 46,54 PHP
Inflation: 1,90 % July 2016
20
US - FLUE CURED As of August 18th, 2016 Summary:
Receiving stations throughout the entire belt have opened.
Lower stalk tobaccos that have been received appear average to above average in colour
and quality. Middle and upper stalk tobaccos in the field continue to appear average to above
average. Above average rainfall in isolated areas of Eastern North Carolina during July has
adversely affected a small portion of the crop.
Volumes: Total US Flue-Cured
Planted area: Acres
Yield: lbs./acre
Volume: lbs.
2016 (Estimated) Source: H&C
216,700
2,100
455,070,000
(206,416,525 kgs)
2015 Final
Source: USDA
220,000
2,210
486,250,000
(220,559,552 kgs)
Crop Status: H&C Estimate
Transplanting Topping Harvesting Curing Purchasing
100% 98% 16% 16% 8%
21
US DARK FIRE AND DARK AIR CURED As of August 18th, 2016 Summary:
Excessive rain has continued into August. July and August saw more rain than average. Wet conditions in the dark belts of Tennessee and Kentucky have slowed down the
harvest of the crop. Reports of disease issues and spotting. There is still good to average tobacco, overall crop is below average.
Volumes: Total US DFC and DAC
Planted area: Acres
Yield: lbs./acre
Volume: lbs.
2016 DFC
(Estimated) Source: H&C
15,748
2,857
45,000,000 (20,411,656 kgs)
2015 DFC
Final
Source: USDA
17,500
3,157
55,240,000 (25,057,000 kgs)
2016 DAC
(Estimated) Source: H&C
5,274
2,465
13,000,000 (5,896,700 kgs)
2015 DAC
Final
Source: USDA
6,200
2,750
17,050,000 (7,733,749 kgs)
Crop Status: H&C Estimate
Transplanting Topping Harvesting Curing Purchased
100% 98% 20% 0% 0%
22
US BURLEY As of August 18th, 2016 Summary:
Western and Central Kentucky and Middle Tennessee have continued to be plagued
with heavy rains since early July. Those areas received the most damage.
Diseases like target spot and black shank have affected some areas of surviving tobacco
in the field. Wind damage has affected a portion of the remaining tobacco.
Harvest has begun throughout southern portions of the belt.
Volumes: Total US Burley
Planted area:
Acres
Yield: lbs./acre
Volume: lbs.
2016 (Estimated) Source: H&C
79,150
1,604
126,956,600
(57,586,613 kgs)
2015 Final
Source: USDA
78,900
1,834
144,675,000
(65,623,554 kgs)
Crop Status: H&C Estimate
Transplanting Topping Harvesting Curing Purchased
100% 75% 15% 5% 0%
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