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CROP REPORT – GLOBAL PERSPECTIVES APRIL 2012

BRAZIL

The 2012 FCV crop is projected at 560MM Kgs, significantly below the projected reduced target of 600 MM Kgs and well below 2011 by as much as 20%. The Burley crop is also projected 25% lower than 2011 to an output of 80 MM Kgs. The short crop has been attributed to poor weather coditions occuring at the end of the growing season. Prices for processed tobaccos are projected to be at least 20% above 2011 levels. The short (dry weather crop) has resulted in a crop with higher nicotines and lower sugars.

CHINA

Full year 2012 FCV tobacco production in China is projected down to 2,150 MM. The major reason for this has been extreme drought throughout the growing season in general, with the Guizhou region witnessing as much as a 30% decline. As a result tobacco quality associated with the lower stalk is considered thrashy and lacking in oils.

INDIA

The Mysore Crop Marketing season is has closed in March with total crop size of 102 MM Kg. This is down circa 30% versus 2011 and is broadly in line with the reduced crop size advocated by the Tobacco Board. The top price paid was Rps 125 with an overall average price of 98 Rps for the season.

The 2012 Andra Pradesh crop (Traditionals) is projected at 163 MM Kgs, approximately 25% below 2011 and broadly in line with the reduced crop size advocated by the Tobacco Board. The Northern Light Soil (NLS) crop is also expected to come in at 47 MM Kgs.

Despite a short crop in India, pricing is broadly expected to mirror 2011 although price reductions in $US terms may decrease by as much as 5 to 7% as the dollar has strengthen against the Indian rupee to 49 Rps.

INDONESIA

All Leaf tobacco varieties, with the exception of Lombok FCV and Kasturi, have witnessed output declines.This has placed pressure on traditional Indonesian Air cured varieties Madura, Jatim and Besuki in terms of pricing and reduced the quantity of leaf available for export.

MALAWI

Burley tobaccos in 2011 have traded well below the Government recommended rate of $US 1.80 and by as much as 47%. Tobaccos have been trading in a range of $US 0.88 to $US 1.00 due to an excesive crop size in excess of 200 MM Kgs. As a result the Burley crop 2012 is projected to be short to an estimated output of 130 MM Kgs and FCV to a level of 15 MM Kgs. Pricing is yet to be determined as the marketing season has not yet commenced.

PHILIPPINES

The National Tobacco Administration has announced that the 2012 crop will decline by as much as 2.5% to an output level of 78 MM kgs in 2012. The decline has been blamed on the adverse impact of La Nina phenomena on the crop. As a result the average price for FCV is projected to spike upwards to P 68 per Kg versus the average 2011 price of P 64.

ZIMBABWE

The overall crop for 2012 is projected to be 125 MM Kgs, well short of theTIMB projected target of 170 MM Kgs. The average opening purchase price for the season which commenced in February was $US 3.67 well above the 2011 average opening price of $US 2.37 . Prices are expected to average above $US 3.25 for the season.

GENERAL TRENDS

A level of equilibrium is creeping back into Global Tobacco Leaf markets following the explosive growth in output fuelled by the acute shortages of 2008. Many producing countries have now voluntarilly scaled back on tobacco plantation sizes. The short crop sizes in Brazil, China, India, Malawi and Zimbabwe should help drawdown and absorb uncommitted accumulated inventories and thereby strengthen pricing overall.

Crop Reports