Timber Markets Off To Uncertain Fall Season

The economic recovery in the forestry sector got off to an uncertain start in the fall season, with timber prices softening and prospects for a wet El Nino winter looking less certain.

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 a sharp drop in housing starts in August was “disturbing” for timber growers and the housing industry.

“At the same time, inexplicably, lumber prices based on the Random Lengths Framing Lumber Index, rose from $377 in early July to $409 in late August.

“One positive (or negative, depending on your perspective) indicator is the ratio of the Framing Lumber Index to sawtimber stumpage prices.  From 1997 to 2011, this ratio ranged from 8 to 10 (meaning lumber prices were 8 to 10 times stumpage prices).  For the last two or three years, the ratio has been in the 12 to 14 range.  If we can get back to the “normal” ratio (and keep lumber prices up) it looks like we could expect to get back up to $40 to $50 dollars per ton for southern pine sawtimber—a figure everyone would be happy with.”

Other less promising developments for timber growers, noted by Thomas, was the decline in the chances of an “El Nino” event this fall and winter, which would normally bring more rainfall that would likely bolster timber prices because difficult logging conditions.

TO SEE THE FULL ARTICLE IN THE FALL 2014 F&W FORESTRY REPORT, SUBSCRIBE NOW