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Betsy Bates

Mediocre Demand And Aging Forests Weigh On Timber Markets

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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.”

TO SEE THE FULL ARTICLE IN THE SUMMER 2017 F&W FORESTRY REPORT, SUBSCRIBE NOW

Betsy Bates

Timber Prices Remain Flat Despite Upward Trajectory Of Housing Starts

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Housing starts are finally approaching 1.3 million starts per year, a level that traditionally has led to upward pressure on sawtimber stumpage prices. However, there are factors at work that could undermine this pressure on prices, the head of one of the nation’s largest forest management firms reports.

Marshall Thomas, president of F&W Forestry Services, Inc., reports in his firm’s spring newsletter that while housing starts are approaching this milestone level, there is likely to be a delay in a corresponding increase in timber prices.

“It may be traditional wisdom doesn’t apply for two reasons,” Thomas writes. “First, we have too much standing inventory of pine sawtimber, and second, the houses being built today may not use the same amount of lumber that was used prior to the recent housing crisis.”

TO SEE THE FULL ARTICLE IN THE SPRING 2017 F&W FORESTRY REPORT, SUBSCRIBE NOW

Betsy Bates

Supply-Demand Issues Hold Timber Markets Flat

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The factors of supply and demand are at work in the timber markets, impacting stumpage (standing tree) prices paid to tree growers for timber products, from large lumber-size trees for home building and other construction projects to smaller pulpwood-size trees for the paper and packaging industry.

Marshall Thomas, president of F&W Forestry Services, Inc., one of the nation’s leading forestry management and consulting firms, wrote in his company’s quarterly newsletter, The F&W Forestry Report, that while the long term outlook for forestry remains good, in the short term tree growers should not expect much in the way of change from the timber markets.

“While housing starts continue to ease upward along with lumber prices during the third quarter, prices paid to landowners for pine sawtimber stayed flat—a condition that is unlikely to change until housing starts rise considerably,” Thomas said. “Even then, it is likely to take some real wet weather or another supply disturbance to put real pressure on pine sawtimber prices.”

Thomas also reports that while prices for pine pulpwood eased somewhat during the quarter, they “remain high enough to provide an economically viable alternative to sawtimber management in some regions.”

TO SEE THE FULL ARTICLE IN THE FALL 2016 F&W FORESTRY REPORT, SUBSCRIBE NOW»