Mediocre Demand And Aging Forests Weigh On Timber Markets

Despite the steady rise in housing starts, a primary driver of demand for wood products, timber markets are muddling, the head of one of the nation’s largest forest management firms writes in his firm’s quarterly newsletter.

Marshall Thomas, president of F&W Forestry Services, which operates across the major forested regions of the Eastern U.S., said in his firm’s summer newsletter that the current state of timber markets can be explained by the theory of supply and demand.

“Demand, in my opinion, still remains an issue,” Thomas said. “While housing starts have increased, they haven’t reached the magic level of 1.3 million units per year, which seems to be the accepted level at which demand begins to impact [timber] prices at normal supply levels.”

But Thomas also said there is an oversupply of softwood sawtimber, caused by the aging forest and the drop in the demand for wood during the recent recession.

“The aging forest means that we have a disproportionate amount of large trees, and the reduction in harvests has resulted in a buildup of supply,” Thomas added. “Prices will improve when all those factors balance.”

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