Timber Forecast: Sawtimber Prices Expected to Recover in 2012-2013; Pulpwood Driven by Bioenergy and OSB

9 03 2011

Our team at Forisk just released its 2011 timber (stumpage) forecast for pine sawtimber and pulpwood for the US South and by state.  Overall, we show increasing demand for wood raw materials and higher pine stumpage prices for forest owners and investors beginning late this year.  Sawtimber prices for the US South strengthen 4.6% into 2012 and 5.5% into 2013 as lumber production increases with housing starts. Alternately, pine pulpwood – the lower valued raw material used for pulp, OSB and bioenergy – gains 1.4% and 2.7% into 2012 and 2013 South-wide, with high variance across the 11 states covered in our models.  This point is central to our analysis of timber markets and stumpage prices going forward: the ForiskFORECAST emphasizes the limits of regional or national forecasts for timber, and the critical importance of assessing timber prices locally.

In 2011, states such as Georgia, Louisiana and Mississippi show sawtimber prices exceeding $30/ton, and Florida and Louisiana surpassing $11/ton for pine pulpwood.  Prices change annually across and between states in the 10-year forecast as local mills adjust to end-market demands.

In 2010, the benefit to forecast users of this bottom-up approach was evident.  “In 2010, Forisk’s sawtimber forecast was within 4% of actual prices, and within 1% for key end-use markets such as paper and paperboard,” said Dr. Tim Sydor, our Forest Economist.  “The key is understanding and updating the local, state-specific relationship – the elasticity – between wood demand and prices.”

For more information, visit www.foriskstore.com and click “Stumpage Price Forecasts.”

In addition, two short courses on May 11th – “Applied Forest Finance” and “Forecasting Timber Prices” – teach techniques for evaluating forest investment decisions and pricing in local wood markets. To learn more about these Atlanta-based courses, click here.

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