# Tobacco: Correlation Prices it moves with, and why Source page: https://www.materialinsights.org/commodities/tobacco/correlation/ Leaf tobacco is sold through auctions in India, Zimbabwe and Malawi or on contracts with cigarette makers. Prices depend on leaf quality and type, crop size, and slowly falling cigarette demand, so they change slowly. Market price **World Bank Pink Sheet: Tobacco, US import u.v.** $/mt · monthly, Jan 2006 to Jul 2026 #### What its price moves with Selected link ##### Tobacco and Cotton Monthly changes 0.03 little or none correlation 12-month changes -0.08 little or none correlation Last 5 years -0.07 monthly changes Lead or lag none No clear lead or lag Price function, Jan 2006 to Jul 2026 Tobacco ≈ 4,077 × (Cotton)^0.17 R² 0.05 On this fit, a 10% higher cotton price goes with a 1.7% higher tobacco price over the long run. Units: $/mt and $/kg. The fit is loose, so treat the function as a rough guide. Chart: Tobacco and Cotton prices rebased to 100 at Jan 2006, log scale Both prices rebased to 100 at Jan 2006, on a log scale so equal percentage moves look the same size. Chart: Tobacco price against Cotton price, monthly, log scales, with fitted line Each dot is one month; paler dots are older (2006), darker dots recent (2026); the ringed dot is the latest month. The dashed line is the fitted price function. Both axes are logarithmic. Commodity [Ct Cotton](https://www.materialinsights.org/commodities/cotton/)Competing crop 0.03 In parts of India, China and Africa, farmers choose between tobacco and cotton on the same land. The data shows no link: monthly moves correlate at 0.03 and yearly moves at minus 0.08, because tobacco is sold on contracts and auctions with set grades. little or none co-movement month to month · 247 months Show charts Energy [Tc Thermal coal](https://www.materialinsights.org/energy/thermal_coal/)Energy cost −0.10 Flue-cured tobacco is dried in heated barns, often fired by coal in India and China. Coal is a real curing cost, but the US import value series shows almost no link, slightly negative: monthly moves correlate at minus 0.10. little or none co-movement month to month · 247 months Show charts Energy [FW Firewood and charcoal supply](https://www.materialinsights.org/energy/e_traditional_fuel/)Energy cost In Africa and parts of India, tobacco barns burn firewood, a cause of local deforestation. The fuel cost matters to farmers and rises as nearby forests are used up, but firewood has no public price series here. Not enough overlapping price history to measure. Chemical [Ins Insecticides](https://www.materialinsights.org/chemicals/insecticides/)Crop protection −0.02 Tobacco needs regular pest control, so insecticides are a growing cost. The US index shows no tie with leaf prices: monthly moves correlate at minus 0.02 and yearly moves at minus 0.13. little or none co-movement month to month · 247 months Show charts Commodity [K Potash](https://www.materialinsights.org/commodities/potash/)Fertiliser cost 0.01 Tobacco needs a lot of potassium for good leaf burn and quality, so potash is a key fertiliser. Prices do not follow it, with monthly moves correlated at 0.01, because leaf contracts and quality premiums set prices. little or none co-movement month to month · 247 months Show charts How to read these numbers **Correlation of monthly changes** (the number in the coloured pill) compares how much each price moved, month by month, since 2006 or the first month both series exist. It runs from −1 to +1: near +1 the two usually rise and fall in the same months, near 0 there is no link, and a negative number means they tend to move in opposite directions. Above 0.7 is strong, 0.4 to 0.7 moderate, 0.2 to 0.4 weak. **12-month changes** compare year-on-year moves, which shows whether two prices share the same cycles even when the month-to-month noise differs. **Price function** is a straight-line fit of the two prices on logarithmic scales: price ≈ k × (partner price)^β. β is how much this price moves, in per cent, for a 1% move in the partner over the whole period, and R² is the share of the variation the fit explains. Two prices that both drift up with inflation can fit well without any real link, so read it together with the monthly correlation. **Lead or lag** checks whether the monthly correlation is clearly higher when one price is shifted by 1 to 6 months. Correlation is not cause. The reasons on each card explain the economic link; the numbers show how strongly it has shown up in prices. Proxy series are US producer price indexes or related prices and can blur the real link. Data: World Bank Commodity Price Data (Pink Sheet), October 2026; US Bureau of Labor Statistics producer price indexes, IMF primary commodity prices and US EIA prices via FRED, Federal Reserve Bank of St. Louis, retrieved November 2026. Calculations by this site. ## Other sections - [Summary](https://www.materialinsights.org/commodities/tobacco/index.md) - [Overview](https://www.materialinsights.org/commodities/tobacco/overview/index.md) - [Extraction](https://www.materialinsights.org/commodities/tobacco/extraction/index.md) - [Production](https://www.materialinsights.org/commodities/tobacco/production/index.md) - [Stocks](https://www.materialinsights.org/commodities/tobacco/stocks/index.md) - [Cycles](https://www.materialinsights.org/commodities/tobacco/cycles/index.md) - [Trading](https://www.materialinsights.org/commodities/tobacco/trading/index.md) - [Movement](https://www.materialinsights.org/commodities/tobacco/movement/index.md) - [Criticality](https://www.materialinsights.org/commodities/tobacco/criticality/index.md) - [Characteristics](https://www.materialinsights.org/commodities/tobacco/characteristics/index.md) - [Emissions](https://www.materialinsights.org/commodities/tobacco/emissions/index.md) - [Relationships](https://www.materialinsights.org/commodities/tobacco/links/index.md)