Alliance One International, reporting an operating loss for the first quarter, said world tobacco markets are tightening with some higher grades of leaf in short supply.

“Global markets are still tightening with undersupply developing in certain origins in higher quality,” said Chief Executive Officer Pieter Sikkel. “The strong US dollar, El Nino weather conditions, smaller crops in certain markets, as well as slowly correcting oversupply leaf trading conditions continue to be factors. In particular, El Nino driven increased rain-fall levels in Brazil this year related to the crop we are now buying and will sell later this fiscal year has reduced leaf weight. At the same time the reduced crop size has caused pricing to suppliers to increase in Brazilian Real terms versus last year.”
Alliance posted an operating loss of USD 5.3 million (EUR 4.8 million) on sales of USD 261 million in the quarter ended 30 June. Fraud in its Kenya operation, which prompted Alliance One to withdraw from the country, continues to weigh on operating profit, the leaf merchant said.