Tobacco volumes in significant recovery as season heads towards end

HARARE- Tobacco is having a difficult marketing season, which followed a not so good harvesting season, and yet volumes are showing a spirited comeback as the season nears end.

Latest data released by the TIMB shows that cumulative volumes as at day 58, which is 30 days shy of the season’s end, stood at 174,67 million kgs.

Although this compares less favourable to an outturn of 195.2 million kgs in the same period last year, it is indeed an improvement on earlier trades when looked at from a variance point of view.

At the end of the first quarter of the season, volumes traded lagged the same period last year by about 27%, the gap has however since been closed with trades now showing a variance of only 11% to last year as at day 58.

Given the present momentum, volumes of tobacco from the current season will perform ahead of the psychological 200 million kgs mark, but below the 253 million attained last year.

The 2018 performance was a record high in the history of Zimbabwe by volume terms. However the yields were not at their best level when compared to prior years.

Despite the impressive recovery in volumes after the first quarter, the value of produce grossly underperformed compared to last year. At $326.6 million the value realised from the sale of crop is 42% below the same period last year.

The huge variance in value of trade is largely an impact of lower obtaining prices which are mostly influenced by quality of crop.

The quality of tobacco leaf from the 2018/19 season was negatively affected by erratic rainfall and this has resulted in an almost 40% increase in rejected bales. For those bales which have been sold the average obtaining price has been lower at $1.87 from $2.91, a negative variance of 36%.

Farmers have bemoaned the lower prices and what they have termed as unfair pricing, in instances where their produce has been paid for at interbank equivalent of the USD prices on the market.

Tobacco is Zimbabwe is Zimbabwe’s second hard currency top earned after gold raking in an average of $600 million annually.

EQUITY AXIS NEWS

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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