By: Steve Bowers, Extension Forester, Oregon State University Extension Service
Under normal circumstances, the Spring edition of Prices & Trends is the leading indicator as to how small woodland owners are going to fare if they decide to harvest their timber this summer, and the “circumstances” are indeed “normal” for the 2012 season. Without any significant movement in the general economy during the first quarter, housing in particular, log values are going to be at their highest prior to dry weather, then begin a gradual descent through the summer.
In a previous report, mention was made as to a slowly improving economy, below average housing starts, above average foreclosures and high fuel costs. Today, the economic recovery is near moribund, housing starts “unexpectedly” below seasonal averages and foreclosures remain a concern. But fuel prices have moderated, leading some economists to forecast a positive effect on the overall economy, although it was these same individuals who previously stated fuel a small enough component of the equation as to have
minimal effect. But for reasons not to be discussed here, fuel costs in the Pacific Northwest have increased substantially at the time of this report: augur ill for viable trucking distances in consideration of exports and an increase in all logging costs regardless of market selection.
But enough rueful reporting. How ‘bout some numbers? We begin with the China market, not because of value, but as a teachable moment. There is an inverse correlation to the speed at with the value of a commodity increases and the knowledge of those values disseminated by the public, leading interested individuals to “move” on the market. This is why woodland owners need to constantly monitor log markets, because if they wait for information to find them rather than seek it out, it will be too late. Better luck next time.
China peeked last spring at near $700, started a steady decline to the current time, and now many are ready to capitalize on those values...at around $500. These values remain slightly higher than domestic, but when considering export length requirements, proximity to delivery points and the price of fuel, domestic versus export may well turn-out to be a “wash.”
Although it does require a better log and of a different species: Douglas-fir. $600 and better is possible for woodland owners if they have a log along the lines of a quality #2 sawlog. Minimum ring count, rings per inch, for Japan export is generally considered to be a 4 rpi, measured on the outter third of the log. And, ceterus parabis, better ring count correlates to better money. But when comparing China whitewoods versus domestic markets, the same issues exist for Japan Doug-fir sorts and domestic buyers.
On the domestic front and Douglas-fir values, figure on a #2 sawlog on the better side of $550. There are some log reports that are saying the farther north one travels, the higher the price. In the case of 2saw Doug-fir, values appear to be as high, or even slightly better in Douglas County versus buyers in the Willamette Valley. The #2 sawlog is in slightly better demand, with demand and value increasing with quality, than the 5” to 11” log. Another teachable moment: even though most purchase orders are based on length and diameter breaks versus grade, the concept of quality remains. When comparing values between buyers, recognize a #2 sawlog that can generate C quality veneer or timbers versus 2 x 4s, 2 x 6s and veneer “cores and backs” can, and should, be bring a higher $/MBF. And with just about all buyers, larger diameter material is more sought-after than the 5 to 11” log.
Looking at the chart, the current year closely resembles those of 2011, both in terms of trends and values. Will the remaining year continue to follow those of last year? We hazard a guess they will, with possibly an even greater decline.
Poles is one of the bright spots in current log markets. 40 to 60 foot material is worth over $700 and 65+ material is in large demand and worth $1000/MBF. But remember, before any cutting occurs, get the buyer out on your site! And conifer chips are bringing in the low $30/ton range and hardwood chips another $3 to $5/ton less.
We have been somewhat negligent in reporting on incense cedar as of late. Local buyers are in the $550 range for long logs, 6” and up. Short logs, expect at least $100/MBF less. Redcedar values are all over the place: wormy wood is as low as $350, while worm-free can bring as much as $1000. Redcedar values increase as one travels north and the probability of worm increases as one travels south. In general, look for cedar and pole values to remain steady while Doug-fir and whitewoods begin their annual decline these coming dry months.
If you are web savvy, you can keep an eye on changes in the log market on-line.
The Oregon Department of Forestry posts quarterly log prices on their website http://www.oregon.gov/ODF/STATE_FORESTS/TIMBER_SALES/logpage.shtml
The US Forest Service PNW Research Station has a lot of publications and articles to peruse. You might find this report helpful (and hopeful, it seems exports are up). http://www.fs.fed.us/pnw/news/2012/02/log-lumber.shtml
Northwest Forest Services also posts monthly log reports. http://www.nwforestryservices.com/logs.html
Random Lengths has several publications, books, and subscription options, including a free weekly update that you can have sent to your email address (this is one Nicole has been receiving for several years).