Key Points
● Market Divergence: Global tobacco leaf markets followed sharply different paths in 2026, with India cutting authorised FCV production amid oversupply while Malawi faced a supply shortfall against buyer demand.
● Grower Economics: Farmers in Brazil, Colombia, Tanzania and Zimbabwe faced pressure from prices, buyer access, rising costs and weather, showing that high production does not necessarily translate into stronger returns.
● Changing Demand: Shifts across nicotine products and regions are making leaf demand increasingly dependent on the end product, geography and type of tobacco required.
● 2027 Outlook: Supply adjustments, weather, Asian procurement and grower profitability will be key to whether global tobacco leaf markets move back toward balance.
2Firsts,
October 26, 2026
The global tobacco leaf market split sharply across regions and leaf types in 2026.
India's flue-cured Virginia (FCV) market faced oversupply and falling prices, according to a country report presented at the International Tobacco Growers' Association (ITGA) meeting, prompting sharp cuts to authorised production for the next crop. Malawi moved in the opposite direction, ending the season with an estimated supply gap against buyer demand. U.S. FCV showed firmer demand, while American Burley growers continued to struggle with yields and costs. In Brazil, high production did not prevent growers in parts of the south from protesting over prices, grading and purchasing conditions.
Together, those markets show why 2026 cannot be described as a single global tobacco supply or demand cycle. The dominant pattern was divergence.
The picture emerged from country reports presented by ITGA members at the association's 2026 Annual General Meeting, held during InterTabac in Dortmund in September. The reports covered major producing markets across the Americas, Africa, Europe and Asia. During the meeting, Euromonitor International also presented research on the global nicotine market, while 2Firsts, an ITGA partner, shared data and trends from China’s tobacco leaf market.
The country reports are not a single standardised statistical series. Crop years, reporting periods and data bases differ by market. They are more useful for identifying market direction, grower conditions and emerging risks than for making strict cross-country comparisons.
Founded in 1984, ITGA represents tobacco grower organisations and works on crop information, market conditions and issues affecting growers in national and international policy discussions.
India cuts supply as Malawi faces a gap
India provided one of the clearest examples of oversupply feeding directly into production decisions.
The India market report presented at the ITGA meeting described the 2025/26 FCV marketing season in Andhra Pradesh and Karnataka as difficult, with sluggish auctions and lower prices. It attributed the pressure to global tobacco oversupply and subdued domestic demand, and estimated that FCV prices had fallen by about 20% from the previous year.
According to the report, India's Tobacco Board reduced the authorised FCV crop in Karnataka from 100 million kg to 56 million kg, while Andhra Pradesh was cut from 142 million kg to 81 million kg. The stated aim was to correct oversupply, stabilise prices and protect grower incomes.
Whether those cuts improve grower economics will depend on the prices achieved for a smaller crop. The India report said the next season would hinge on whether better price realisation could compensate for lower sales volumes.
Malawi entered 2026 from almost the opposite position.
Earlier concerns about oversupply did not materialise. Weather and disease reduced the crop below expectations, and the country report estimated final production at 154.9 million kg, around 9% below buyer demand.
India and Malawi therefore enter the next production cycle from very different starting points: one is cutting authorised output after excess supply and falling prices, while the other ended the season below stated buyer requirements.
U.S. tobacco shows divergence within one market
The U.S. FCV report described an improving market despite difficult growing conditions.
Prices in 2026 were slightly above 2025 levels, while demand was particularly strong for clean, ripe lower-stalk tobacco. The report partly attributed that demand to Duty Drawback and said new Asian customers were participating in the crop, with discussions also under way with additional export buyers.
The report also expressed optimism that China could return to contracting significant volumes of U.S. FCV in 2027. That remains a U.S.-side market expectation: the AGM materials reviewed by 2Firsts contained no corresponding indication from Chinese buyers.
Burley and dark-fired tobacco were under different pressures.
Burley growers faced profitability problems linked to low yields, difficult weather and higher fuel and labour costs. Dark-fired tobacco maintained comparatively good quality, but the report identified declining long-term demand as alternative products expand.
The U.S. market therefore reinforces a point visible across the country reports: different leaf types can move through different demand cycles even within the same national market.
High production does not guarantee grower returns
In Brazil, high production did not prevent a dispute over grower economics.
The 2025/26 marketing season generated significant dissatisfaction among growers in Rio Grande do Sul, according to the Brazil report. Complaints centred on prices below expectations, disagreements over grading, the valuation of higher-quality leaf and slow purchasing.
Grower dissatisfaction led to mobilisation in several municipalities, including a major protest in Santa Cruz do Sul. Afubra, Brazil's tobacco growers' association, engaged tobacco companies and other stakeholders over demands for greater transparency, fairer grading, better valuation and more predictable marketing conditions.
Colombia exposed another risk: dependence on a narrowing buyer base.
According to the Colombia report presented at the meeting, Suntrust Group SAS planned to stop purchasing tobacco in the country from 2026. The report estimated that national production could fall by around 30%, with about 470 Burley and Virginia growers directly affected. It also said that BAT and Philip Morris had previously withdrawn from Colombian tobacco purchasing.
The report said some growers had invested in curing infrastructure and taken on debt after Suntrust entered the market in 2023, leaving them exposed as purchasing arrangements changed.
The Colombia case differs from oversupply in India or pricing disputes in Brazil. The central problem is access to a buyer at all.
Tanzania showed a further disconnect between production and returns. Tobacco output remained relatively high, but lower leaf quality and weaker prices reduced grower income. The country report said incomes were below those achieved during the previous three seasons and expected production to decline following the disappointing marketing season.
In Zimbabwe, growers faced lower yields and quality alongside high production costs and difficulties servicing loans from the previous season. The report said grower morale was low and expected production to decline, although growers hoped tighter supply could support stronger prices.
Across these markets, production volume alone says little about whether tobacco farming remains attractive. Grower returns depend on the price received relative to labour, fuel, agricultural inputs, financing, crop losses and the conditions under which tobacco is graded and purchased.
That helps explain why “living income” has moved higher on ITGA's agenda. The association said its work in 2026 included living-income research involving more than 700 growers. Detailed findings were not included in the AGM materials shared with 2Firsts, but the research marks a broader shift from measuring production alone towards examining whether tobacco farming remains economically viable.
Weather is affecting yield, quality and returns
Weather repeatedly changed not only how much tobacco was produced in 2026, but also the quality and economics of the crop.
U.S. FCV growers moved from exceptionally hot and dry conditions in June to record rainfall and severe storms in July, followed by renewed extreme heat and dryness in August and September. The report said harvesting was delayed by around two weeks and that lower-stalk tobacco had been particularly difficult to cure.
Malawi experienced both ends of the rainfall problem. Early drought reduced plant populations, while later heavy rains caused fertiliser leaching and waterlogging. Persistent rain also contributed to disease and created problems during harvesting and curing.
Brazil, Argentina, Zimbabwe, Zambia, Tanzania and several European markets reported different combinations of drought, excessive rainfall, high temperatures, hail or irregular precipitation.
Across those markets, weather affected crop weight, leaf quality, harvesting schedules and curing conditions. Those changes can feed directly into grading, marketability and grower returns.
Several country reports also cited El Niño or abnormal rainfall as risks for the next crop, particularly in parts of Africa and Latin America. Weather will remain one of the main variables shaping the 2027 crop.
The nicotine market is changing the demand equation
The demand side is becoming more fragmented as well.
In a presentation prepared for ITGA, Euromonitor forecast that legal nicotine-market volume, measured in stick-equivalent terms, would remain broadly flat between 2025 and 2030. Its forecast compound annual growth rate was -0.1% excluding China and +0.1% including China.
The more significant shifts are occurring inside that total.
Euromonitor described North America as a market where growth in what it categorises as reduced-risk products (RRPs) is struggling to offset the structural decline in combustible products. Europe is more mixed, with wider RRP adoption supporting total nicotine-unit growth in some markets. In Asia and Latin America, stronger combustible performance is keeping overall volumes steadier, while the Middle East and Africa show a different expansion pattern.
Consumer movement between products is also less linear than a simple shift from cigarettes to alternatives.
Euromonitor's consumer research found reciprocal switching between cigarettes, e-vapour products, heated tobacco, nicotine pouches and other tobacco formats. It also pointed to growing multi-product use, with consumers choosing different products in different situations.
For tobacco growers, growth in the nicotine market does not necessarily translate into growth in tobacco leaf demand. Heated tobacco products still use tobacco, while other nicotine categories have a much less direct relationship with leaf demand. Combustible cigarettes are declining structurally in some markets but remain resilient or continue to grow in others.
Leaf demand increasingly depends on the product, the geography and the type of tobacco required.
China remains an important variable for international FCV
China's tobacco leaf market operates under a different structure from many open agricultural commodity markets. Domestic production is managed through a planning and contracting system and remains large despite a long-term decline in planted area.
For international FCV, the more relevant issue is procurement.
A 2Firsts analysis of China Customs data presented at the AGM showed a notable change in sourcing between 2023 and 2025. Imports from Brazil and Zimbabwe increased, while imports from the United States declined.
Using China Customs data available through July at the time of the AGM, 2Firsts also found that tobacco leaf and related-material imports had fallen year on year in the first seven months of 2026. That partial-year decline was not sufficient to establish a structural change in Chinese demand.
Against that background, the U.S. report's hope for renewed Chinese contracts in 2027 should be treated as a market expectation rather than a procurement signal from China.
Whether China's international purchasing volume changes next year — and whether its sourcing mix shifts again — will remain an important variable for the international FCV market.
2027 will test whether markets can rebalance
Supply adjustment is already under way in some markets.
India's sharp reduction in authorised FCV production is the clearest example. Elsewhere, planting decisions will be shaped by the prices growers received in 2026, buyer commitments and the economics of the previous crop. Where supply exceeded demand, reduced planting could tighten the market. Where crops fell short, firmer prices may encourage production — if weather and costs allow.
Weather could quickly disrupt that adjustment. Several African and Latin American reports flagged El Niño or abnormal rainfall as risks for the next season. As 2026 showed, the effect is not confined to tonnes harvested: poor weather can change quality, curing performance and the price growers ultimately receive.
Buyer behaviour will matter just as much. The U.S. report pointed to participation from additional Asian customers, while China remains a major source of uncertainty for international FCV. Procurement shifts between origins can change the outlook for individual producing countries even when global nicotine consumption moves little.
But market balance alone will not determine the 2027 crop. Growers also have to decide whether tobacco remains worth planting.
The 2026 country reports repeatedly show the pressure from labour, fuel, agricultural inputs, financing costs, crop losses and grading outcomes. A higher leaf price does not improve grower income if costs rise faster or if a buyer disappears.
Regulatory and supply-chain requirements are adding another layer.
At the AGM's regulatory panel, ITGA framed the direct implications for growers around market access, cost of compliance and future production.
One concrete example is the European Commission's proposed revision of the Tobacco Taxation Directive. According to the regulatory materials presented at the ITGA meeting, the proposal would raise minimum excise rates, bring newer nicotine products into the EU tax framework and extend movement controls to raw tobacco. It still requires Council agreement, with application envisaged from 2028.
For growers and leaf merchants, measures of this kind can affect market access and compliance costs even without changing end-product demand.
The 2027 outlook therefore turns on two linked questions: whether supply and demand can move back towards balance, and whether the resulting prices are sufficient to sustain production after costs, weather and market-access requirements are taken into account.
ITGA enters a new leadership cycle
ITGA's leadership transition in Dortmund came against this backdrop.
Marcílio Drescher, president of Brazilian growers' association Afubra, was elected ITGA president, succeeding José Javier Aranda.
Drescher set out three priorities for the next mandate: grower voice and influence, economic viability and living income, and long-term sustainability.
Those priorities closely match the pressures visible in the 2026 country reports.
Grower representation matters as regulatory and supply-chain rules reach further into agriculture. Economic viability matters when high production does not guarantee satisfactory returns. Long-term sustainability increasingly depends on weather resilience, production costs, access to buyers and the changing structure of nicotine demand.
Drescher said ITGA wanted to ensure growers have “a seat at the table where decisions are made.”
Going into 2027, the more useful question is no longer whether the global tobacco leaf market is expanding or contracting as a whole. It is where supply and demand remain out of balance, where growers can produce profitably, and how quickly the market can adjust.
For further coverage of developments in the global tobacco leaf market, continue to follow 2Firsts.
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