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Australia passes illegal logging laws, joins EU, US

Australia passes illegal logging laws, joins EU, US | Timberland Investment | Scoop.it

Australia's parliament on Monday passed laws to ban the import and trade of illegally logged timber, joining the United States and European Union in clamping down on a global trade in stolen timber that Interpol says is worth about $30 billion a year.


The laws, five years in the making, impose fines, jail and forfeiture of goods and oblige importers to carry out mandatory due diligence on timber and timber products sourced from overseas.


"The illegal timber trade is a trade that benefits no one. It risks jobs, it risks the timber industry, and it risks the environment," Forestry Minister Joe Ludwig said.

***

Illegal timber depresses prices, slashes margins and can deter firms from investing in better due diligence.


There were sound commercial and environmental reasons to support the laws, said Ross Hearne, general manager of corporate services for Kimberly-Clark Australia and New Zealand, which makes various products from paper.


"We face cheap paper imports in Australia and one of the factors in cheap imports is illegally harvested timber," he told Reuters, adding supporting the bill had helped protect the firm's brand.


Telling illegal and legal wood and wood products apart is impossible by sight alone, making it relatively easy to mislabel origin and forge import documents.

***

Winners from the laws, apart from forest communities, will be firms that provide timber legality and verification services and timber importers that have already put in place tougher timber sourcing and tracking rules.


One potential winner is DNA testing and timber tracking technology developed by Singapore-based Double Helix Tracking Technologies and used by Australian client Simmonds Lumber, one of the country's largest timber importers.


DNA tests can pinpoint the species and origin of a piece of timber. DoubleHelix, as it is known, can also track timber and timber products from forest to shop to ensure clients' shipments are legal.

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Sponsored by...

Sponsored by... | Timberland Investment | Scoop.it

Prentiss & Carlisle  is one of the largest timberland asset managers in North America. P&C provides ongoing management services on approximately 1.75 million acres of timberland located in Maine, Michigan, New York, Vermont, Wisconsin, Ontario and Quebec. Nearly every acre under management is certified by the Forest Stewardship Council through either our clients or through P&C itself, which holds FSC certificates for both Forest Management and Chain-of-Custody.

 

P&C provides turnkey land management from long-range forest planning through on-ground forestry, marketing of forest products, harvesting, transportation, road construction and maintenance, stump-to-mill accounting and reporting, client cash management, administration of third-party relationships, public advocacy/representation and strategic asset planning. P&C also provides specialized consulting services in related areas of expertise:

  • Timber inventory design, execution and analysis
  • G&Y modeling and timber harvest scheduling
  • GIS mapping and data management services
  • Timberland valuations and appraisals
  • Acquisition and disposition due diligence
  • Market studies
  • Timber supply modeling

 

About this magazine

Our aim is to provide a gathering place for news and opinion about timberland investing. We cover both publicly traded issues including listed timber companies, real estate investment trusts (REIT's), and exchange traded funds (ETF's), and the more private world of institutional investing in timberland. Our focus is on: the rationale for investing in timberland; performance of publicly traded timber investments; timberland deals and transactions; timber supply, demand and prices, and; public policy issues that impact timberland investing. Not interested in all of these topics? You can easily filter the stories by using the Tags button above.

 

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These links take you to customized Google Finance pages for timber REITS, indexes and other publicly traded companies of interest:

 

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Timber Mart North 

Lake States price reporting service published by P&C

 

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Maine company seeks to produce innovative wood-fiber insulating boards

Maine company seeks to produce innovative wood-fiber insulating boards | Timberland Investment | Scoop.it
Maine’s glut of softwood fiber created by closed paper mills makes the state an ideal location for a factory that can produce insulation board from wood, a Belfast architectural and construction firm says, and it’s trying to find a European manufacturer that shares that vision.

GO Logic, which specializes in energy-efficient buildings, says it’s negotiating with undisclosed companies that make wood-based insulation board in Europe, where the product already is in commercial use. The goal is to have a plant operating here within two years.

Two of GO Logic’s executives also attended an affordable housing conference Aug. 3 and 4 in Philadelphia. One of them, GO Logic co-founder Matt O’Malia, was an invited speaker and discussed the company’s efforts. They also planned to line up commitments from a retailer in the New York City area to carry the product, as well as some contractors and a prefab builder. That’s crucial to attracting financing.

GO Logic also has been in discussions with a Maine lumber company that could be a source of sawmill waste, as well as a family-owned lumber yard with nine stores in Maine’s midcoast.

Taken together, these actions are another example of how businesses are looking at Maine’s abandoned paper mill sites and surplus capacity in wood harvesting to create new opportunities. Other efforts involve biofuels, agriculture and electricity generation.
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Tall Timber: A Global Audit

In the past few years, the tall building industry has become increasingly interested in the use of timber as a major structural element in skyscrapers. This has resulted in in a now-worldwide wave of research, built projects, and ever-more daring speculative proposals using "mass timber" – engineered wood products that are just as robust as their concrete and steel counterparts. In 2008 there was one mass timber building over eight stories tall. Today, there are nearly 40 complete, under construction, or planned.

This map highlights several notable examples of tall timber buildings currently built, under construction, or proposed around the world. Click on the map to discover the name, photo, and other interesting information about each highlighted timber building.

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Canadian Lumber Stocks Tumble On Report US-Canada Timber Trade War To Escalate

Canadian Lumber Stocks Tumble On Report US-Canada Timber Trade War To Escalate | Timberland Investment | Scoop.it

Canadian lumber stocks are diving this morning following a report from BMO analyst Mark Wilde who writes that "prospects for a near-term settlement of the U.S./Canadian lumber dispute have faded", prompting him to downgrade the main players in the space. The report has sent the stocks of West Frasier Timber (WFT), Canfor (CFP) and Interfor (IFP) as much as 6%, 4.6% and 6.2% lower, respectively.

***

So with no near-term resolution to the ongoing lumber dispute between the two NAFTA neighbors, the alternative is a steadily progressing trade war. As a result, as Wilde writes, "we anticipate a period of  countervailing and anti-dumping duties on Canadian lumber imports as well as continued litigation around those duties." As regards the 3 abovementioned stocks, the analyst notes that at current stock price levels, "we think the big risk is downside disappointments. Thus, we are downgrading West Fraser, Canfor, and Interfor to Market Perform. We are also downgrading Weyerhaeuser and Rayonier ratings to Market Perform. The key issue in timber is continued soft pricing on southern sawlogs. We are not making any changes to our price targets."

 

 

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First U.S. Hardwood CLT Project in Development

First U.S. Hardwood CLT Project in Development | Timberland Investment | Scoop.it
If Yugon Kim realizes his dream, the new office building or housing complex going up in your city may be made out of large hardwood panels called cross laminated timber (CLT). The technology behind CLT has been used for decades in Europe, and it is just beginning to take root in the United States with softwood CLT leading the way. Kim’s Boston-based, architectural design firm IKD just won a $250,000 grant from the Forest Service for designing, developing and constructing the first hardwood CLT demonstration project in the United States.

The aim is to take low-value hardwoods and turn them into a high-value CLT construction project as a proof of concept. Kim explained, “Over 50% of every hardwood log in the region goes to low-value materials like pallets and cants. Our idea is to utilize this material and to upcycle it.”

Kim along with his design partner Tomomi Itakura have created an outdoor CLT construction project that is titled the Conversation Plinth and will be integrated as circular discs that provide a platform for viewing a sculpture at the Cleo Rogers Memorial Library.

Kim suggested, “The ultimate goal is to construct buildings in the United States using hardwood CLT. Our research hopes to lead toward hardwood mass timbers being used for U.S construction projects.”
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Plan to log forest near Ely pits hikers, skiers vs. timber industry

Plan to log forest near Ely pits hikers, skiers vs. timber industry | Timberland Investment | Scoop.it

A state plan to harvest a section of beloved old-growth forest near Ely has riled some of the thousands of hikers and skiers who use it each year to experience northern Minnesota as it once was.

Foresters for the Minnesota Department of Natural Resources (DNR) describe the plan as routine forest management that would improve the long-term vitality of the woods.

 

Nearby residents, cross-country skiers and other forest ecologists question the project’s necessity and are urging the DNR to hold off; the parcel includes an extensive trail system that is one of the few ways to get into the Boundary Waters Canoe Area Wilderness (BWCA) on foot.

 

But there is more at stake than one small parcel of forest. Conservationists see it as an early test of how the state will manage Minnesota’s northern forests now that Gov. Mark Dayton, at the urging of the forest products industry, has directed the DNR to increase timber harvests from state lands.
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Last fall, representatives from Minnesota Forest Industries met with Dayton and came away with a promise that the DNR would increase its annual harvest this year from 800,000 cords to 900,000.

 

Dayton also directed the agency to put together a group of forest industry officials and conservationists to study whether the state could raise the annual harvest even further — to 1 million cords. The analysis is expected by March.

 

Driving that review is the high cost of timber. Wayne Brandt, executive vice president of Minnesota Forest Industries, said the price for cutting an aspen tree — the most commonly harvested species in Minnesota — has gone from $25 to $35 in recent years, and appears headed to $40.

 

The supply from private landowners, who control a bit more than half of the forest in Minnesota, has plummeted in the last decade. Brandt and others say severe staff cuts during the state budget crunch took out most of the DNR foresters assigned to advise private landowners on how to manage their trees. As a result, the supply of wood dwindled.

 

This year, the Legislature appropriated money to hire back some of the DNR staff. But in the meantime, increasing the supply of timber from state-owned lands could help suppress prices. And Minnesota’s forest industry needs all the help it can get to compete globally, Brandt said. During the recession, the state lost three major mills and many smaller ones.

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New York, Vermont, Masschusetts Forestland Preserved In Purchase

New York, Vermont, Masschusetts Forestland Preserved In Purchase | Timberland Investment | Scoop.it
The Conservation Fund will purchase 23,000 acres of working forestland in New York, Vermont and Massachusetts.

The Conservation Fund will buy sections of the Cowee Forest for $25 million in an effort to preserve the forestland and protect wildlife habitats.

Parcels of land include sections in Rensselaer and Washington counties, New York, Bennington County, Vermont and Berkshire County, Massachusetts – some of which are already protected.

The Fund says it will work with the forest economy to benefit local mills and manufacturing in the region.
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West Fraser Acquisition of Gilman Continues Trend of Canadian Expansion in the U.S. South

West Fraser Acquisition of Gilman Continues Trend of Canadian Expansion in the U.S. South | Timberland Investment | Scoop.it

On July 26, 2017, West Fraser announced an agreement to acquire Gilman Companies, a major producer of southern yellow pine lumber with six sawmills in South Georgia and North Florida comprising 700 million board feet (MMBF) of capacity. The acquisition continues the trend of consolidation of softwood sawmills and strengthens the growing position of Canadian lumber producers in the U.S. South. The deal will allow West Fraser to overtake Weyerhaeuser as the largest lumber producer in the region.

The total capacity for operating softwood lumber mills in the South currently stands at 19.6 billion board feet. West Fraser owns 15 southern mills with total capacity of 2.4 billion board feet, or 12% of the region’s total capacity. Once the acquisition is complete, West Fraser will control 3.1 billion board feet, or 16% of the region’s capacity. If we look at the two other major Canadian companies in the South, Interfor and Canfor, the total portion of southern softwood lumber supply that is produced by Canadian companies is 27% (5.2 billion board feet) and will increase to more than 30% after the deal is complete. Canada’s significance to the South will increase further after Conifex opens its refurbished sawmill in El Dorado, Arkansas later this year.

The influence of small and mid-sized regional sawmill companies has diminished in recent years, but they still account for more than 40% of the South’s softwood lumber production. With the acquisition of Gilman, Westervelt (560 MMBF) and Hood Industries (555 MBF) will take the lead as the largest regional lumber producers in the South, with Rex Lumber (400 MMBF) and Jordan Lumber (345 MMBF) not far behind.

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Potlatch Corporation's (PCH) CEO Mike Covey on Q2 2017 Results - Earnings Call Transcript

Potlatch Corporation's (PCH) CEO Mike Covey on Q2 2017 Results - Earnings Call Transcript | Timberland Investment | Scoop.it

Ketan Mamtora - BMO Capital

First, I just want to go back to the lumber dispute. There was a lot of discussion over the past couple of weeks at a settlement that was likely. Any thoughts on that, what you guys are hearing. And then, if you don't get a settlement over the next few weeks, do you think lumber gets rolled into the broader NAFTA negotiations? And that could mean, it could take a pretty long time to get the settlement?

 

Mike Covey - Chairman and CEO

Well, there had been rumors that Secretary Ross and his Canadian counterpart had made some kind of a handshake deal on the Canadian lumber settlement, but I don’t think that there is any -- no substantiation to that those rumors that we’re not aware an agreement. As far as we know, the two governments continue to discuss the lumber trade case separate in the part from NAFTA, although as understanding that the administration would like to get this result before January of 2018 and kind of the commencement of NAFTA discussions. I have no idea of lumber will get rolled into NAFTA But I guess, we all say as hopeful as we are that we can see a solution, in our quarter based solution over the next few months. I’d also go back to 2006 in the last trade case, I think it took five years from imposition of duties in 2001 until the agreement was signed in ’06. So, this is not necessarily going to be quick.
***
Paul Quinn - RBC

And then, just overall, we're seeing in the South here, a sort of the continued discipline on the sawlog side. It looks like supply is going to be plentiful in the pulp long side. Just wondering why timberland pricing in the U.S. South continue to trade upward or trading in? And why you wouldn't see a lag down in those -- given the rising interest rate environment?

 

Jerry Richards - VP and CFO

So there is a lot of, that timberland pricing in U.S. South is justified by a forward price curve that anticipates price is moving higher. What would drive those prices higher, obviously increased consumption of sawlogs. Where we’re going to get that increased consumption? The increase still going in the U.S. South and we’ve talked about in prior year, but there is something like 12 million tons of incremental capacity going into our three states Arkansas, Alabama and Mississippi, a total of I don’t know 15-16 projects. So eventually that first quarter price curve will be realized, it’s just a question of when, I think not if.

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Wisconsin: Logging operations deal with season of soggy weather

Wisconsin: Logging operations deal with season of soggy weather | Timberland Investment | Scoop.it
Many crews in the logging industry are hard at work, trying to make up for lost time.

Recent rain-free days are providing a break from soggy conditions that bogged down many operations in parts of the Northwoods.

Deep in the woods of the Chequamegon-Nicolet National Forest, Matt Huempfner says four-wheel drive is the only way to go.

"The worst is yet to come I think," he said.

Huempfner is a forester with Wild Rivers Forestry. He says treads are needed so a 50,000-pound tractor called a forwarder can move around a job site near Lakewood.

But he says getting the timber out of the woods is a different story.

"The trucks come in weighing about 98,000 pounds on their way out. So, it's really it's pretty hard for them to get in and out of jobs where if you have any type of moisture in the ground," said Huempfner.

Huemphfner says logs are stacked up wherever there is room.

"The longer our product our wood sits in a pile, the longer it's drying out. And we get paid by the weight, so it really affects our bottom dollar that way," he said.

And it's more than just Northeast Wisconsin. Timber experts say the soggy conditions stretch across much of the Northwoods, affecting the bottom line of many logging operations in the region.

"I've actually checked with a few and I'm hearing 25-30 percent, they're down in their gross income from a year ago even," said Henry Schienebeck, Great Lakes Timber Professionals Association Executive Director.
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N.H. loggers struggle as low-grade wood loses its value

N.H. loggers struggle as low-grade wood loses its value | Timberland Investment | Scoop.it

As owner of a logging company, Matt Magoon possesses huge, dangerous equipment weighing hundreds of tons that can chew up entire trees in a few minutes. But the most alarming tool at his disposal during a recent job in Northwood may have been a cheap handheld calculator.

“Twelve dollars a ton,” he shouted over the noise of 50-foot pine trees being dragged behind a skidder, after calculating how much he makes for a truckload of wood chips. “That’s it. And I still have to pay my crew, insurance, fuel; pay the landowner ... and my family.”

This quick calculation – $750 for 30 tons of chips, minus a $390 trucking fee – was alarming because of what it says about the business model that has long sustained New Hampshire’s hundreds of small, independent loggers.
***
They depend on making money not just from the sawmill-grade logs they cut and remove from woodlots but also from low-grade wood: the smaller, crooked or damaged trees that can be turned into chips for the paper industry and biomass power plants.

The market for this low-grade wood is collapsing, and taking some loggers down with it.
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The New Hampshire logging industry has been hit by the closure of paper mills and biomass power plants, including Concord Steam, that traditionally bought the parts of trees that can’t be turned into lumber.

Without a market for low-grade wood, loggers say they often don’t bid on jobs because they can’t make a profit from just high-grade wood. That cuts off a source of income to landowners.

The alternative is to stoop to “high grading” the job, an industry term that refers to cutting every single one of the high-grade, sellable trees on a property, instead of leaving some good trees behind to produce seeds for the next generation.

Magoon said high-grading is a recipe for long-term decline.

“We’re looking 30-40 years down the road, and we want to leave it better than we found it,” Magoon said, noting that “if a tree is junk, 30 years from now it’s still going to be junk.”

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Canadian Wildfires Choke Lumber Supply to U.S. Home Builders

Canadian Wildfires Choke Lumber Supply to U.S. Home Builders | Timberland Investment | Scoop.it

Wildfires in Canada are pushing up the price of lumber, threatening the supply to U.S. home builders.

 

Lumber futures have soared in July as blazes spread across the province of British Columbia, leaving many U.S. wholesalers short-handed. Lumber dealers ran down their inventories this year as a trade spat between the administration of President Donald Trump and Canadian officials sparked wild price swings. Then Canada’s wildfires, a threat every summer, turned out to be the hardest on the lumber industry in more than a decade.

 

Now home builders in the U.S., which gets around a third of its lumber from Canada, fear prices might climb even higher as wholesalers try to restock amid the price surge. British Columbia produces nearly half of all Canadian lumber, according to Statistics Canada.

 

“People need wood now,” said Paul Harder, a timber trader at wholesaler Dakeryn Industries in North Vancouver, which sells to U.S. lumber yards. “Little lumber is being offered out there.”

Lumber futures at the Chicago Mercantile Exchange, an indicator of price expectations for the months ahead, rose above $400 per 1,000 board feet in mid-July. That was near a 12-year high reached in April before the Trump administration accused Canada of unfairly subsidizing its forestry industry and started slapping tariffs as high as 30% on some timber imports to the U.S. Canadian officials deny the allegations

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Timber, agriculture cycles forcing firms to examine new avenues

Timber, agriculture cycles forcing firms to examine new avenues | Timberland Investment | Scoop.it

Managers in a number of real asset sectors — with the possible exception of infrastructure — are having a tough time raising capital. And that is only the leading edge of the storm buffeting them.

 

Some timber funds are nearing the end of their lives with managers expected to bifurcate into the haves and have-nots when they go out to raise new funds;
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Also hurting fundraising is that, at least in the U.S., few investors are expecting either inflation or deflation, which is one of the reasons many investors invest in real assets.
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Harvard Management Co., which manages Harvard University's $37.6 billion endowment, is reviewing the investment strategy for its $2 billion natural resources portfolio, sources said.
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Officials at the $323.6 billion California Public Employees' Retirement System, Sacramento, are in the process of re-examining the role of forestland in its portfolio and restructuring its domestic forestland portfolio.

***

CalPERS officials are considering the sale of its Crown Pine Timber portfolio, sources said. CalPERS had committed $1.25 billion to the Crown Pine Timber/Campbell Opportunity Fund-A in October 2008 to invest in 1.5 million acres in eastern Texas and western Louisiana.
***
Whether a manager makes money on a timber investment often depends on how much the manager paid, Eaton Partners' Mr. Martenson said, more so than in some other asset classes. "In timber, if you didn't buy cheap or smart, performance comes out because trees grow only so fast," Mr. Martenson explained. There is not much a manager can do to enhance a timber investment and so the purchase price is even more important in timber than in most other investments, he said. "There will be a group of five TMOs (timber management organizations) that will be rewarded because of their performance. The others will have to figure it out" by finding an acquirer or an investment partner.

 

Bob Ratliffe, Seattle-based president of hedge fund, private credit and real asset manager Silver Creek Capital Management said this is "an historic" time for the timber industry, involving a confluence of factors, which could result in a number of timber assets coming to market. "Timber funds ... are coming to the end of their lives," he said. The people who started timber management companies also are getting to the end of their careers, Mr. Ratliffe said. And the timber markets have not recovered as anticipated.
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Silver Creek has $6.3 billion in assets under management, with approximately $1 billion in timber assets and about $400 million in dry powder, Mr. Ratliffe said.
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"I think timber is a great asset class when priced at the right level," said Barry Blattman, vice chairman and a senior managing partner at real asset manager Brookfield Asset Management, New York. "We've struggled to find opportunities that meet that goal," he added.
***
A few managers are offering open-end timber funds that are longer term and more liquid than the traditional 10-year closed-end funds. The $22.1 billion New Mexico State Investment Council, Santa Fe and the $16 billion Kansas Public Employees Retirement System, Topeka, have committed capital to RMS Evergreen U.S. Forestland Fund, an open-end timber fund is managed by Resource Management Service LLC.

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The Softwood Imports to U.S. from Europe flourish thanks to U.S. Duties on Canadian Industry

The Softwood Imports to U.S. from Europe flourish thanks to U.S. Duties on Canadian Industry | Timberland Investment | Scoop.it

RBC Capital Markets analyst Paul Quinn estimates Canadian lumber producers have plunked down $500 million so far in countervailing and antidumping duties since the spring.

The U.S. alleges Canada unfairly subsidizes its softwood industry and has slapped on import taxes averaging 26.75 per cent as punishment.

Jerry Howard, CEO of the National Home Builders Association in the U.S., said: “When Canadian lumber is more reasonably priced it’s not that viable of an option. The Germans this time were poised to take advantage of it and I think that they have.”

In the first six months of this year, German softwood imports into the U.S. soared more than 900 per cent over the same period last year.

Germany’s share of imports rose from 0.35 per cent in the first six months of 2016, to 3.6 per cent this year.

It seems that Germany wasn’t the only beneficiary. Austrian softwood imports were up 178 per cent, Romania was up 141 per cent, Russia 42 per cent and Sweden 41 per cent.

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Anti-clearcut group wants to buy Weyerhaeuser timberland at Lake Wenatchee

Anti-clearcut group wants to buy Weyerhaeuser timberland at Lake Wenatchee | Timberland Investment | Scoop.it

A group of Lake Wenatchee residents concerned about clear-cutting on a highly visible ridge near here has begun negotiations with Weyerhaeuser to buy the land tagged for logging.

The group of mostly property owners from Lake Wenatchee housing developments and lakeshore homes met with Weyerhaeuser execs last week to forge a deal to buy the 206-acre piece on Nason Ridge and halt a proposal to clear-cut much of the land.

“It’s a case of buy it or lose it,” said Rob Shurtleff, co-editor of the website Lake Wenatchee Info and a coordinator of the community effort to end Weyerhaeuser’s plans for the clear-cut. In the last two weeks, Shurtleff, a 20-year part-time resident, helped gather more than 1,500 signatures on a petition opposing the logging plan.

The petition helped convince Weyerhaeuser to pause the launch of logging operations, said Shurtleff. Weyerhaeuser began last weekend to build logging access roads on the property but voluntarily halted all work Monday after purchase discussions got underway. The company did not confirm the pause.

Weyerhaeuser also agreed — for the time being — to reopen the Nason Ridge Trail, which cuts across the proposed logging area.

“Support from residents and people who love the Lake Wenatchee area have driven the dialogue (to buy the property),” said Shurtleff. “Now, things are coming together fast.”

Weyerhaeuser acknowledged Tuesday that the company was open to purchase discussions but, depending on the outcome of those discussions, had plans to begin harvesting the parcel sometime later this fall or early next year.

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Invasive earthworms at the root of sugar maple decline

Invasive earthworms at the root of sugar maple decline | Timberland Investment | Scoop.it

A new study suggests that non-native worms are eating up the forest floor, causing sugar maples to die back and perhaps harming other forest dwellers. The worms crawl in, the worms crawl out, and corpses aren't the only casualties. A Michigan Technological University scientist has fingered non-native earthworms as a primary culprit in the decline of an iconic American tree.

 

 

Sugar maples are prized as much for their valuable lumber as for their sugary sap and dazzling fall colors. In Michigan alone, they are the basis of a multi-million-dollar industry. But several years ago, foresters began noticing that the crowns of the big trees appeared unhealthy, with bare limbs and little new growth.

 

"They were losing trees before they could harvest them," said Tara Bal, a research assistant professor of forest resources and environmental science. "We wondered what was causing it." Her findings were published July 26, 2017, in the journal Biological Invasions.

 

Drought was a suspect—the traditionally damp northern Great Lakes region was in the midst of a dry spell. Other potential causes were forest management practices, soil types, climate change and the mix of species in the area.

 

From 2009 to 2012, Bal made annual visits to more than 100 sites in Michigan's Upper Peninsula, northern Wisconsin and Minnesota. She found one factor that stood out: the condition of the forest floor. And nothing affects a forest floor quite like earthworms.
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Before worms invade, the soil in a typical northern forest is blanketed by a thick layer of leaf litter and other organic material. When worms arrive, they quickly gobble it up and expose bare dirt. "And earthworms really like sugar maple leaves," Ball said. "They are sugary, soft, and have fewer tannins than other trees, like oaks."

 

Sugar maples have a particular characteristic that makes them even more vulnerable to earthworms. Ninety percent of their roots are in the top few inches of soil, so the trees rely on the litter to keep the soil from drying out. With the litter gone, maples can slowly die of thirst.
***
That could mean a return to diversity; sugar maples did not always dominate northern hardwood forests. "We have pure maple stands because it's a valuable wood," she said. "If some of the sugar maple dies back, you could have the return of other species, like basswood, birches and ironwood.
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The study was conducted in the Hiawatha, Ottawa, Superior and Chequamegon-Nicolet National Forests; Baraga State Forest; and commercial forestland owned by the Boston-based investment firm GMO.

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Deal said to be closer in Canada and U.S. lumber dispute

Deal said to be closer in Canada and U.S. lumber dispute | Timberland Investment | Scoop.it

Canada would cap its U.S. market share at 30 percent, in an effort to settle the softwood lumber trade dispute, with the U.S. supplying the remainder. But resolving what happens if it can't make up the balance may be keeping an agreement from being reached.

 

The U.S. Lumber Coalition has rejected the quota so far, Bloomberg News is reporting. And Canada's Ambassador to Washington David McNaughton told Canadian Press that discussions continue on whether other lumber suppliers from Europe or elsewhere would be invited to fulfill that gap. The U.S. wants to settle the agreement as it begins renegotiating NAFTA, on August 16.

 

On July 25, a bi-partisan group of U.S. Senators from lumber producing states - Senators Michael Bennet (D - CO), Mike Crapo (R - ID), Mike Enzi (R - WY), Johnny Isakson (R - GA), Debbie Stabenow (D - MI), Mark Warner (D - VA), and Ron Wyden (D - OR) of the Senate Finance Committee - urged Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer to negotiate a softwood lumber trade deal with Canada that sets a maximum market share quota for Canada
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The National Association of Home Builders opposes the interim tariffs on lumber that have been levied as the agreement is reworked. This has caused an 18 percent rise in lumber prices for builders, who are seeking cheaper sources in Russia and Europe, according to a New York Times report. The U.S. imported US$5.7 billion in softwood lumber from Canada in 2016.

 

Richard Garneau, CEO of Resolute Forest Products in Montreal, told Bloomberg that the U.S. at best can supply 68 percent of the market. Resolute has extensive lumber capacity on both sides of the U.S.- Canada border, which affects its business continuously.

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Largest natural resources investors have $115 billion in asset class

Largest natural resources investors have $115 billion in asset class | Timberland Investment | Scoop.it

The 100 largest natural resources institutional investors had combined investments of $115 billion in the asset class as of July 3, according to Preqin's first Natural Resources Top 100 report.

Those investors have a mean allocation of 7.4% to the asset class as of July 3, compared with an average of 4.4% for all investors. Some 94% of the 100 largest investors have energy investments as part of their natural resources portfolio, 52% have timber, 50% have agriculture and 46% have mining fund investments.

The largest institutional investor on Preqin's list is Toronto-based insurance company Manulife Financial with $7.2 billion of its $328.2 billion investment portfolio in natural resources, followed by the $11.1 billion Department for International Development, London, and the $40.3 billion University of Texas Investment Management Co, Austin.

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The Rohatyn Group to Acquire GMO Renewable Resources

The Rohatyn Group to Acquire GMO Renewable Resources | Timberland Investment | Scoop.it
The Rohatyn Group (“TRG”), a specialized asset management firm focused on emerging markets, global investment management firm Grantham, Mayo, Van Otterloo & Co. LLC (“GMO”), and GMO Renewable Resources, LLC (“GMORR”), a joint venture between GMO and the GMORR principals that invests in forestry and agriculture opportunities, today announced that they have entered into a definitive agreement whereby TRG will acquire the GMORR business from GMO and the GMORR principals. Under the agreement, the team from GMORR is expected to move, intact, to TRG. GMO, which currently owns 51% of the GMORR joint venture, with the GMORR principals owning 49%, will retain its investments in funds managed by GMORR.

Founded in 1997, GMORR provides investment opportunities in forestry and agriculture investing. The team, led by founder and Managing Director Eva Greger, manages sustainable investments in hardwood and softwood forests of various species, as well as direct investments in rural land, crop, and livestock assets that produce food, fiber, and energy. GMORR manages approximately $2.1 billion in rural real estate assets across eight countries and 600,000 hectares. Thirty-four percent of GMORR’s assets under management are invested in emerging markets.

Since TRG’s inception in 2002, the firm has opportunistically expanded its expertise, both organically and through strategic acquisitions, to encompass a full range of emerging markets investment strategies, including private equity and credit, real estate, infrastructure, fixed income, and hedge funds. The firm’s sophisticated, international investor base includes several of the world’s most respected sovereign wealth, pension funds, and financial institutions. The addition of GMORR will further enhance TRG’s investment capabilities and product offerings and complement its institutional investor relationships. Following the transaction, the firm will have more than $6.6 billion in total assets under management and a global footprint of 18 offices worldwide, including new offices in Boston and New Zealand.
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Oregon Timber Report: Lumber and log prices are high in July

Oregon Timber Report: Lumber and log prices are high in July | Timberland Investment | Scoop.it

Lumber and log prices are both at 12-year July highs. Log prices are unprecedented for summer and may continue to climb as fire season kicks in. Other statistics remain strong or recovering.

The lumber price at $405 has broken $400 per thousand board feet (MBF) for only the second time in the last 12 years. The last time was during the latter part of true lumber market “spring” season — March and April, 2013.

So, why are lumber prices surging beyond already-healthy levels in midsummer? The answer is always supply and demand. This month the new boost in lumber prices is caused by extensive wildfires in British Columbia, accompanied by Canadian mill closures.

Logs also set a new 12-year record with this July’s report of $733 per MBF. (The July report covers June log prices.) In 2005, the second strongest July report in 12 years, the price only reached $679 per MBF. Only fall-winter prices, reported in November, December, January and February, have surpassed $733 in the last 12 years. This strong log price in the summer is truly unprecedented and results from the current log shortage, relative to log demand for lumber production in this highly concentrated and thoroughly modern mills region, the Southern Oregon and Willamette Valley. For all owners of forest land — private, state, and federal — this is a very good time to be conducting harvest and then reforesting.

These strong prices for logs and lumber are finally joined by an uptick in housing starts and building permits, reversing a three-month decline. Not since the beginning of 2017 have the building rates exceeded 1.2 million units per year, seasonally adjusted. The cost of lumber products in a home is small enough that it does not dampen home building. Interest rates do that, and they, too, are now very low, although the recent week price has ticked upward, compared to last month.

Portland’s unsold inventory of homes remains below two months and home prices continue to climb. This month, the national median home price (half of homes above the median, half of homes below) in the U.S. surpassed $200,000, according to Zillow. This is another milestone. The median price of a home surpassed $100,000 21 years ago, in May 1996.

The wildfire effect on lumber prices combines with the effect of log shortage on log prices to create very favorable conditions for log producers, which could continue. The summer fire season in the U.S. is just getting going in earnest.

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Here's Why Timber ETFs Are on Fire

Here's Why Timber ETFs Are on Fire | Timberland Investment | Scoop.it
Lumber futures have been soaring of late as wildfires in British Columbia have forced three big lumber producers to suspend operations.

About a third of total lumber supply in the US is imported from Canada and the province of British Colombia produces about half of Canada's lumber.

Lumber prices have also been rising this year this year due to ongoing trade dispute between the US and Canada over import duties on softwood lumber. The US government alleges that Canada improperly subsidizes lumber, giving Canadian producers an unfair advantage. The US government has started slapping tariffs as high as 30% on some lumber imports from Canada.

A stronger Canadian dollar also has impacted lumber shipments. The loonie has gained almost 10% against the U.S. dollar over the past six weeks.

Earlier this month, NAHB reported that builder confidence fell to its lowest level since late last year thanks to concerns about rising material prices, particularly lumber.

Timber companies benefit from rising lumber prices . Investing in timber makes sense from long-term perspective as well since timber has low correlation with other major asset classes. Timber also acts as an inflation hedge.

Another reason to be positive on timber ETFs is that Vanguard is planning to change the index for its ultra-popular REIT ETF-the Vanguard REIT ETF ( VNQ )--to a different index that includes timber REITs. Timber REITs are some of the top holdings in timber ETFs.
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Phaunos Timber Fund To Realise Assets In Orderly Way

Phaunos Timber Fund To Realise Assets In Orderly Way | Timberland Investment | Scoop.it
Phaunos Timber Fund Ltd set out plans to sell of its assets on Tuesday following a shareholder vote in June against continuing the group's operations.

Phaunos Timber said its assets will be realised "in an orderly way" using third-party sales agents and, consequently, the new board will need to decide whether a new manager is required as part of the process to maximise the value of its remaining assets.

Earlier in July, Stafford Capital Partners resigned as Phaunos Timber's manager.

Phaunos Timber said on Tuesday the principal reason for the resignation is that Stafford's business is to build and manage funds for the longer term, and is not a dissolution specialist.

Until its month notice period expires, Stafford, in conjunction with the board, will oversee the selection process of sales agents. Stafford will also continue its involvement in the day-to-day management of the company's assets, and will assist the new board in the preparation of the annual accounts for the year to December 31.

Phaunos Timber and Stafford said at this stage, the best way to realise shareholder value is to appoint a single lead sales agent for the sale of all of the company's assets.
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Timber REITs, Like Weyerhaeuser, Could Get Boost from Vanguard ETF Swap

Timber REITs, Like Weyerhaeuser, Could Get Boost from Vanguard ETF Swap | Timberland Investment | Scoop.it
Michael Underhill, chief investment officer of Capital Innovations, has long been a fan of timber real estate investment trusts. He sees these companies, which own forest land, benefitting from higher lumber prices, growing demand due to housing market growth and shrinking supply due to wildfires and damage from the mountain pine beetle.

In mid-July, there emerged a new reason to like the asset class. Vanguard is asking shareholders to swap the index it uses for its $35 billion real estate exchange-traded fund, Vanguard REIT ETF (VNQ) (plus a $1 billion insurance-related real estate sector fund) to a different index that includes timber REITs.

Vanguard's goal is to broaden the fund's mandate and bring it more in sync with other sector funds that use related indices. Hundreds of millions in capital could flow into timber REITs with that change, says Underhill.

A REIT that could benefit the most is Weyerhaeuser (WY). That one company makes up 80% of the timber allocation, which makes up 3% of the new index, points out Goldman Sachs analyst Brian Maguire in a note published last Friday.

"While still pending shareholder review, we view both of these proposals as possible positive catalysts for WY shares, and we reiterate our Buy rating," writes Maguire.

Timber REITs are among the top holdings in a fund Underhill subadvises, Oak Ridge Global Resources and Infrastructure (INNAX). Plus, he has a separate listed fund just for timber investments.

"You get some income, inflation protection and it's an alternative asset class that's not correlated to common stocks," he tells Barron's.
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LePage takes aim at alleged abuse of woodland tax breaks

LePage takes aim at alleged abuse of woodland tax breaks | Timberland Investment | Scoop.it
Gov. Paul LePage has ordered the Maine Forest Service to work with municipal officials to review properties enrolled in the state’s tree growth tax program to root out potential abuses.

The program offers landowners property tax breaks when they promise to actively manage their woodlands with regular harvesting activities. The law was originally created to help keep timber flowing to the state’s wood products industries including lumber and paper mills but LePage and others have said they believe the program is being misused or even abused by some woodland owners.

“… the failure of some woodland owners to follow their forest management plan under the Tree Growth Tax Law Program jeopardizes the credibility of the program and creates perennial uncertainty about the program’s stability among the large percentage of woodland owners who are fulfilling their responsibilities under their forest management plans;” the governor’s executive order reads in part.

Under the order, forest service foresters will help municipalities review the properties benefiting from the program in order to help identify landowners who may not be following adequate management plans.

There are about 11 million acres of land in the program statewide, according to LePage’s order.
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Molpus Woodlands Group Announces Offering of 45,850 Acres of Timberland and Real Estate in Alabama, Georgia, Mississippi, and North Carolina

Molpus Woodlands Group Announces Offering of 45,850 Acres of Timberland and Real Estate in Alabama, Georgia, Mississippi, and North Carolina | Timberland Investment | Scoop.it
The Molpus Woodlands Group (Molpus), a timberland investment management organization headquartered in Jackson, Mississippi, announced today, on behalf of a client, an offering for sale approximately 45,850 acres located in four states: approximately 15,300 acres in North Carolina, 4,850 acres in Georgia, 12,300 acres in Alabama, and 13,400 acres in Mississippi. This investment-grade timberland and real estate offering can be purchased in its entirety or in individual packages.
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Smelly wood will cost Weyerhaeuser lots of loot to fix homes

Smelly wood will cost Weyerhaeuser lots of loot to fix homes | Timberland Investment | Scoop.it

Seattle-based Weyerhaeuser has an expensive problem with smelly wood.

The company said it’s going to spend $50 million to $60 million to replace some framing in new homes and halt manufacturing of parts because customers have complained about an odor omitted by some wooden I-joists.

The problem began in December, when Weyerhaeuser started using a new formula to make its Flak Jacket coating, which covers the I-joists and helps prevent the wood — commonly used in floor and roof framing — from burning.

The new coating includes formaldehyde-based resin, and has been used in the basements of about 2,200 new homes that are under construction or have been recently completed. Most of the homes haven’t been lived in yet.

Videos posted by the company show the new coating can prevent wood from burning at 1,000-degree heat for 7 minutes. But formaldehyde has been linked to issues in other products, like laminate flooring made in China. Consumer Reports says the substance has a “pickle-like” smell.

In a statement, the company said it’s halted production of the new coating and will replace or fix any effected joists already in homes.

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