FOREST MARKET PLACE SPRING 2008

One question I am guaranteed to receive from a landowner or friend is "how is the timber market?" As a buyer of forest products I must admit the current market place is totally different from any market that I have ever been exposed to. As a result of our years in the industry I have been able to maintain relationships with various markets. Because of these relationships all of the products that we produce are marketable; however some products are much more desired than others.

Recently I made five phone calls to industry leaders and simply asked them "if you owned any forest land that should be cut, would you do it now?" All them responded by saying "yes." If fuel continues to climb the cost of operations will follow the same path. I personally feel that now is as good as any to sell stumpage. The heavy snowfall combined with a long mud season has resulted in low inventories and end users have temporarily raised prices to try to correct the issue.

The slicer and rotary veneer log market pricing over the past few years has not changed much, allowing operators who separate these species a chance to maintain higher stumpage values to landowners. Until recent years the value of the oak rotary logs compared quite close to the value of high quality oak saw logs. With that in mind, I usually could negotiate a deal with a sawmill that resulted in a higher or matched return on the TOTAL oak component. This worked out well for us and the landowners as we saved time with sorting all the logs that we cut. In today's market place, the oak lumber value has dropped considerably, while veneer prices have not followed the same downward turn. We will start separating all of our oak logs much like I did years ago when saw log values didn't compare to veneer log values. This allows us to give an excellent return for the oak species that we harvest.

The hardwood saw log market has been steady all winter and demand will remain strong all spring and summer. The real issue with this product is pricing. We have seen sawmills temporarily increase their log prices trying to get more logs delivered in their yards. Red oak has dropped to prices that we dealt with back in the mid nineties. Industry leaders that I talked with, feel that the value of red oak will not recover soon, or if it does recover, it will not be to the prices that we saw three years ago. I say "hats off to landowners and foresters who sold oak stumpage at that time." Hard Maple pricing has had a slight correction; however the average price is still higher than what it was ten years ago. Red Maple pricing is pretty good. This is a sleeper species; prices for this product have remained steady with little to no price corrections at all. Black & Yellow birch is very much in demand. Pricing on the grade saw logs has remained constant and the value is higher than what it was five years ago. Cherry pricing is always good even when some species suffer market price corrections. White Birch and Beech is species that are not in demand as a saw log today, or as it was ten years ago.

The market for softwood saw logs has been changing due to the housing industry being down. Our White Pine log market, which consists of most of our saw log business, has remained strong for us, though. We have seen a slight price correction consisting of less than 10 percent since the peak of the market. Prices today are still higher than they where 7 years ago. The real issue with this species is what is what each mill calls a grade saw log today. The demand for rougher eight and ten foot logs has been altered considerably. Today the market place calls these saw logs softwood pallet logs. Softwood pallet logs are in demand, however stumpage prices for this product is a lot lower than the grade white pine saw logs. I personally don't think we will ever see a high value for this product as a saw log as we can import better lumber for less money. Spruce Fir pricing is down due to construction demands. Hemlock stumpage prices will be down a little due to the product suffering a high transportation fee to meet a good market. The value of this tree species has not changed much over the years. Two of our local markets for hemlock have stopped sawing, thus purchasing logs for a while.

The Pulpwood and Bio-mass markets are red hot. The demand for these products far supersedes the market place from three years ago. A tough winter and the value of the dollar have made a great market place for paper products over seas. As fuel prices increase, alternative energy sources have become much more desired. Stumpage Prices for these products will go up a little, however the cost of producing these products from the forest are skyrocketing. The good news about this situation is that if a landowner wants to accelerate the potential growth of desired high quality timber, markets for low grade species are the best they have ever been. If your forest is scheduled or in need of conducting timber stands improvement, now is the time to do it.

One concern I have as logging contractor is the lack of inventory our current markets have. Some loggers, landowners and foresters seem to be a little apprehensive to cut some wood. If these mills decide to close because they can't find the wood that they need, the future market place for trees growing today may not be around tomorrow. The long term effect of this will bring down future stumpage pricing for landowners who decide to hold onto their investment.

When to cut a forest crop is a very good question. Markets can play a huge role when to schedule a timber harvest, however always receive advice from a licensed Forester. A licensed Forester is similar to a financial planner and introduces other factors before harvesting timber. These factors include maturity, basic health, restocking, regeneration quality, and a few other items