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Climbing Hardwood Prices Floor Home-Building Industry

Climbing Hardwood Prices Floor Home-Building Industry | Timberland Investment | Scoop.it

The U.S. housing market is facing a new headwind — a jump in the cost of hardwood prices. The hike also is escalating the price of wood pallets.

Against the backdrop of rising raw materials prices, most of the American hardwood flooring manufacturers have been forced to raise prices on finished goods. Some announced hikes at the beginning of the summer, while others increased prices in September.

Hardwood prices actually began their long climb in early 2013. Since then, they have reached record highs. According to the Bureau of Labor Statistics, hardwood prices are now over 40 percent higher than they were in 2009. Several factors have fueled this dramatic surge in prices.

First, overseas demand, particularly from China, has swelled over the past few years. Second, the U.S. housing recovery has helped boost domestic hardwood demand. Although annual housing starts are well below their demographically driven normal level of 1.5 million units, they’re still twice as high now compared to 2009.

Finally, on the supply side, the Great Recession upended the lumber industry. Mills closed and workers struggled to find employment in other professions. Although demand is returning, it takes time to reopen mills and attract workers back to the industry.

At the same time, adverse weather conditions have taken a bite out of supply. Also, there was a wetter-than-normal spring this year, and lastly, access to timberland has been limited. As a result, hardwood availability is struggling to match the swelling tide of demand, said Charlie McCarren, economist with the Pricing & Purchasing Service at IHS, in an interview with My Purchasing Center.

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US timberland prices gain, despite lumber slowdown

US timberland prices gain, despite lumber slowdown | Timberland Investment | Scoop.it


Timberland in the US accelerated its price growth, despite some lumber market concerns centered on China and the domestic market, which prompted one of the top forestry groups to warn on profits.


US timberland prices were 7.2% higher in the April-to-June quarter than a year before, nudging 0.2 points higher than the rate of annual appreciation recorded for the January-to-March period, the National Council for Real Estate Investment Fiduciaries (NCREIF) said. Factoring in income of 2.6%, the total return from forestry land over the year was 9.9%, the highest figure in nearly six years, although still behind the 17.2% achieved from farmland.


The performance "reflects a combination of strong export demand from China for logs and lumber and a healthy domestic demand in the US for timber products", said Mary Ellen Aronow, chair of the Ncreif timberland committee. However, Ms Aronow, a senior forest economist at Hancock Timber Resource Group, acknowledged some challenges to these factors, saying noting "some hurdles still facing the recovering US housing market, and a cloudy outlook for Chinese demand".


Earlier this week, Plum Creek Timber, which controls 6.7m acres of US forestry, cut its forecast for full-year earnings to $1.05-1.25 a share, from $1.30-1.50 a share, citing a market recovery in 2014 which "has been more muted than we and other industry participants initially expected".
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Wood Resources International reported earlier this month that US lumber markets began falling in the spring, with "lumber prices falling over 10% so far this year", with "weaker log export markets in Asia" a big factor.


"Demand for wood in China has declined somewhat because of a slowing in the construction sector, which has increase log inventories in the ports and on vessels waiting to unload logs," Hakan Ekstrom, principal of Wood Resources International, told Agrimoney.com. However, he added: "I see this as a temporary blip on the long-term upward trend in demand for wood raw material - logs, lumber and wood chips."


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US Lumber Prices To Rise As Increased US House Building Offsets Effect Of Decreased Chinese Construction

US Lumber Prices To Rise As Increased US House Building Offsets Effect Of Decreased Chinese Construction | Timberland Investment | Scoop.it

An increase in U.S. housing construction is expected to raise significantly the price of lumber by the end of the year, offsetting the depressing effect China's recent downturn in property investment has had on lumber demand.


Capital Economics, a London-based financial research consultancy group, expects prices to increase almost 30 percent, from $313 per 1,000 board feet to $400, by the end of 2014. The group attributes the expected rise to increased demand in the U.S. housing market.

Lumber's recent price weakness stems partially from China slowing down property investments. China’s “reduction in commodity-intensive activity” had a hand in the fall in lumber prices, as well as construction metals, because Chinese demand accounts for roughly 10 percent of North American production exports, Capital Economics said in a note Friday.


Lumber prices fell in May for the first time in two years.  Construction is revving back up in the U.S. but slowed considerably because of the unusally cold winter, hitting a nearly two-year low in March.


While the report states the future of the U.S. housing sector looks positive and a quarter of the mills that closed in 2004 have reopened, “a significant amount of capacity is likely to have been permanently lost, as mills fell into disrepair and skilled labour moved onto other jobs. This will prevent output quickly ramping back up to 2004 levels.”

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Sharp rise in timber prices in Ireland and UK

Sharp rise in timber prices in Ireland and UK | Timberland Investment | Scoop.it

As in France, in 2013 the price of wood rose sharply in Britain and Ireland. Moreover, in the first five months of 2014, this trend seems to continue. In 2013, Irish prices of logs and softwood lumber increased by 20%. In early 2014, prices remain firm as demand remains at high levels. Ken Worrell operates 100,000 m3 of wood per year in Ireland and United Kingdom. According to him, the roadside prices of Sitka spruce in Ireland are as follows: 60-90 € / m3 for sawnwood, 30-50 €/m3 for palllet wood, and about 25 €/m3 for pulpwood.

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New Zealand: Oversupply chops log prices

New Zealand: Oversupply chops log prices | Timberland Investment | Scoop.it

There has been a major drop in the prices of log exports, driven by a buildup of inventory in the main market, China, which is contributing to "a bit of a slowdown" of log exports handled by Port of Tauranga, says commercial manager Leonard Sampson.


"It's not a significant change at this time," he said. "This month we've noticed a small reduction in shipping volumes, but at this stage it's hard to say whether it's a market correction or just a blip. You can't read too much into it and it's such a fluid situation,"
***
The current slowdown has been caused by a significant buildup of logs on wharves in China, said Mr Sampson, who noted that overall demand in China was still strong.
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Peter Weblin, PF Olsen's chief marketing manager, said he didn't believe the long-term growth trend driven by China was changing. "The market's been climbing consistently for the last couple of years and we don't see that trend changing."


But the buildup of inventory on Chinese wharves had triggered a fall with April's relatively small reduction in export log prices followed by larger reductions this month. Some prices are down as much as $25/JAS per cubic metre, meaning that in just two months export log prices had lost 14 months of prior month-on-month gains. May export log prices were now equivalent to prices in January 2013. Most market commentators were expecting a further drop in price in June, and then a recovery over the next few months, said Mr Weblin.

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Surging Western Log Prices Have Peaked for Now

Surging Western Log Prices Have Peaked for Now | Timberland Investment | Scoop.it

Early in 2014, Western log prices soared to levels not seen in nearly twenty years. Escalating softwood lumber prices and a strong appetite for Asian exports fueled competition to meet Western log consumption.


Moderate weather encouraged log suppliers to step up deliveries, quickly filling sawmill log yards to the brim. A Western Oregon third party organization who measures logs for buyer-seller transactions reports volumes for Q1 2014 are up nearly 20 percent over the corresponding period last year.


Douglas fir prices are now reversing direction in many areas. At the close of the first quarter, F2M log benchmark data indicated a 2.5 percent decline for Douglas fir logs is leading the way in Southwest Oregon. Chinese port facilities report an oversupply of softwood logs, and US domestic lumber prices have softened in recent weeks. 


Maybe we are still recovering from extreme winter weather in the east or the resulting transportation slowdowns. However, I suspect mills and builders alike have oversupplied a still shaky housing market, and the supply pipeline is simply full.


Better spring weather may refresh home building demand, and historically healthy log prices will stimulate additional harvest of private timber.A likely correction in export values for China sales will push more whitewood into the domestic markets. Considering these implications of supply and demand, we have seen the highest prices for the year. 

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Wisconsin: Timber bid opening exceeds $800,000, "The markets are wide open"

Wisconsin: Timber bid opening exceeds $800,000, "The markets are wide open" | Timberland Investment | Scoop.it

It's rare when the twice-a-year timber sale bid openings make headlines but it's equally rare that a bid opening yields in excess of $800,000 in sales.


"The markets are wide open," an awed Jake Nichols, Burnett County Forestry administrator, said of the prices following the hour-long bid opening.


The bid opening included the sale of 1,260 acres and 21 different contractors bid on the 13 tracts.


"We haven't had that many bidders in a long time," Nichols said.

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Stars align for NZ foresters as 'wall of wood' comes on stream, prices reach record highs

Stars align for NZ foresters as 'wall of wood' comes on stream, prices reach record highs | Timberland Investment | Scoop.it

New Zealand forest growers, long overshadowed by booming returns from the dairy industry, look set to cash in on record prices for logs as they prepare to harvest trees planted in a flurry of activity two decades ago.


Forestry plantation activity in New Zealand jumped between 1992 and 1998, as a surge in Asian log prices lured investment syndicates to the sector. Radiata pine, which makes up about 90 percent of the nation's plantations, are typically felled between 26 and 32 years, meaning the "wall of wood" will start being harvested from about 2018, according to government figures.
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China is underpinning New Zealand commodity price strength as Asia's largest economy undergoes urbanisation, growing incomes and demand for better housing, says ASB rural economist Nathan Penny.


Forestry exports to China rose more than 50 percent in 2013, putting New Zealand ahead of Russia as the biggest seller of logs into that market. Russia's log exports have dipped as a result of an export tax aimed at stimulating its domestic timber processing industry. At the same time, shipments from the US and Canada have dwindled as demand picked up in their home markets.
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While an increase in supply in coming years may put some pressure on prices, foresters have the ability to stagger harvests and continued Chinese demand is likely to underpin the sector, Penny said.
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Increased demand in New Zealand from the rebuilding of earthquake damaged Christchurch and a surging Auckland housing market are also adding to wood demand and supporting prices, Penny said. New Zealand exports of logs and wood surged 22 percent last year to $3.86 billion. In comparison, meat exports rose just 2.2 percent to $5.28 billion and dairy exports increased 17 percent to $13.4 billion. The Wood Council of New Zealand, which represents forestry and wood processors, aims to triple export earnings to $12 billion by 2022.

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The New Zealand Superannuation Fund partnered with Harvard Management Company, the endowment fund of Harvard University, and the Public Sector Pension Investment Board, Canada's largest pension investment managers, for the harvesting rights to the 178,000 hectare Kaingaroa Forest, New Zealand's largest plantation forest and one of the largest contiguous plantation forests in the Southern Hemisphere.

The NZ Super Fund valued its 41.25 percent stake in Kaingaroa at $1 billion as at June 30, saying it has delivered an 18.05 percent return since it was purchased in 2006.


Other large plantations are owned by US-based Hancock Natural Resource Group, the world's largest timberland investment manager which bought 260,000 hectares of forests from Carter Holt Harvey, and Matariki Forests, a consortium managed by US-based Rayonier which owns 130,000 hectares of forests, according to Forest Owners Association records.


Demand for logs from China is hurting the local sawmilling industry as forest owners send their logs overseas rather than sell them to local processors, according to the New Zealand Timber Industry Federation.


Some 40 sawmills have closed since 2003, according to the New Zealand Forest Owners Association. In October, the Tachikawa Forest Products sawmill in Rotorua was put in receivership with the loss of 120 jobs.

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Finland: Timber sales higher than average in 2013

Finland: Timber sales higher than average in 2013 | Timberland Investment | Scoop.it

Finnish Forest Industries Federation (FFIF) members procured 33.4 million cubic metres of timber from private forests in 2013, according to figures published by the organisation.


This total is ten per cent higher than the average volume recorded over the past ten years and comes at a time when wood stumpage prices increased year-on-year and the high cost of roundwood cast doubts on the country's ability to compete on the international market.


The positive performance seen throughout 2013 was influenced by a strong start to the year, with transaction volumes in the early months higher than those recorded in previous years.

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For the full year, timber sales were 18 per cent higher than those recorded in 2012. Log procurement was up by just over a quarter (26 per cent) and pulpwood volumes were 12 per cent higher year-on-year.

In terms of overall procurements by FFIF member companies, these totalled 15.1 million cubic metres of log and 17.1 million cubic metres of pulpwood.


Stumpage prices for softwood logs were up by between three and four per cent on average, while birch log prices declined by one per cent. Spruce pulpwood prices were unchanged from 2012, while pine and birch pulpwood was one to two per cent higher.

Pine log prices in December averaged €55 per cubic metre, but varied between €45 and €58 depending on the region and the method of logging utilised.


The average price of birch logs was €40 per cubic metre, though the range of prices recorded was between €29 and €43 per cubic metre. Spruce logs traded at an average price of €56 per cubic metre and within a range of €46 and €58 per cubic metre.


Stumpage prices for pine and birch pulpwood averaged at €16, while spruce pulpwood fetched €17. In general, stumpage fees varied between €13 and €19.


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Southwide Stumpage Prices – September/October 2013

Southwide Stumpage Prices – September/October 2013 | Timberland Investment | Scoop.it

Over the course of the last year, stumpage prices—the price paid to landowners for standing timber—in the US South have pushed higher.  Pulpwood prices appreciated by more than 20 percent during this period, and sawtimber saw more modest increases.


At the bottom of the pack as far as appreciation is concerned is pine sawtimber. Prices for pine sawtimber moved just marginally higher in 2013. The weighted average price in the September/October period was $24.72, up more than 1 percent from the previous two-month period. In the September/October period of 2012, the weighted average price for pine sawtimber was $24.52; the year-over-year increase was modest, at just under 1 percent. The excess sawtimber that accumulated during the real estate crisis has ensured sufficient supply to meet increased demand, so mills have been able to procure required sawtimber volumes without increasing gate prices. 



Sam Radcliffe's insight:

Go to the source for a table of prices by product. Thanks to Gil DeHuff @ http://goo.gl/XCN1P1

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The first half of 2013 saw increased production of lumber in the US

The first half of 2013 saw increased production of lumber in the US | Timberland Investment | Scoop.it

North American lumber production was up 6.7% during the first seven months of 2013 as compared to the same period in 2012, with all regions on the continent showing higher production this year, according to the latest WWPA data. The biggest increases occurred in the Canadian provinces of Quebec and Alberta, and in the Northwestern states of the US. Lumber production levels in the US and Canada have gradually gone up since 2009, and lumber shipments are currently back up to the same levels as in 2008, just after the beginning of the global financial crises, as reported in the Wood Resource Quarterly. There has been an over 35 percent increase in production the past four years, with the biggest gains on the US west coast.

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TD forecasts lumber prices will rise 30% by end of 2014

TD forecasts lumber prices will rise 30% by end of 2014 | Timberland Investment | Scoop.it

A new report from TD predicts the recent slump in lumber, which has seen prices drop 25% in the past two months, will reverse course by next year.


North American lumber prices reached a nine-and-a-half year high in mid-April, boosted by increasingly more optimistic numbers from U.S. housing. But several factors this year have conspired to wipe away most of the price gains seen in the past 12 months.


“While several commodities have been in the spotlight in recent months, lumber has not been one of them,” said Dina Ignjatovic, an economist at TD Economics. “However, some light should be cast on the market given that prices have been tumbling quite rapidly over the past nine weeks.”

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Is another housing bubble sneaking up on us?

Is another housing bubble sneaking up on us? | Timberland Investment | Scoop.it
Nick Timiraos points to an interesting IMF chart today. It breaks the world into two sorts of countries. The first, which includes the US, UK, Spain, and others, saw a big housing bubble during the aughts and a big housing bust during the Great Recession. The second, which includes Canada, Germany, and others, had only a modest runup in housing prices during the aughts and a correspondingly small decline during the Great Recession.

So what's happening now? Well, countries that already had a housing bubble continue to struggle. Housing prices today are more than 20 percent below their 2007 peak. And the other countries? Well, they're having their own housing bubble now, with prices nearly 30 percent higher than their previous peak.
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Pulpwood Trends in the Northern United States

Pulpwood Trends in the Northern United States | Timberland Investment | Scoop.it

While pulpwood prices across North America are driven by competition for fiber, we tend to see higher price volatility in pulpwood prices in the Northeast and Lake States due to availability factors that are unique to these markets. These factors include:


Seasonality – Wood production tends to be volatile in these regions from one quarter to the next. This is especially true when comparing a high production first quarter to a low production second quarter...Higher delivered prices are fairly common in April and/or May as wood production is limited by weather. This 2014 winter harvest season was also longer than average with March hardwood pulpwood deliveries remaining extremely strong.


Distance Hauled – As the overall supply of hardwood increases during these months, mills are able to purchase wood originating in forests closer to the mill...Lower haul distances coincide with lower delivered prices, such as those observed over the first quarter of this year despite the competitive fiber markets over the course of the winter.


Competition for Other Species and Other Types of Fiber – Logging capacity, particularly as it relates to the “surge capacity” needed to fill inventories during the winter or when unexpected events drive inventory shortfalls, has been a pervasive topic of conversation in the Northeast and Lake States. Capacity issues such as these often affect hardwood production. The overall supply of hardwood pulpwood, for instance, is affected by aspen and softwood demand and the availability of pulp quality chips. If softwood sawmills are running more hours, this will increase the supply of softwood chips, thereby freeing up constrained logging capacity for hardwood production. This interaction affected hardwood production this winter, and the additional supply lowered prices.


Supply Agreements – Supply agreements are frequently used in the pulp and paper industry with strict requirements for deliveries that affect the price of fiber on the open market...Depending on the calculation mechanism, this can create a delayed effect on market pricing.


While these factors come into play in all regions in the North American timber industry, they are typically more pronounced in the Northeast and Lake States regions. Price volatility is therefore higher in these regions as seasonality, haul distances, competition for other species and types of fiber and supply agreements put pressure on prices from opposite directions.

Sam Radcliffe's insight:

In addition, a large portion of the Lake States timber supply is from public lands, where sales are made by competitive auctions. Auction prices are often driven by the desperation of a particular contractor or mill, increasing price volatility.

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Technical Talk: Lagging Lumber Prices Hammer Timber Stocks

Technical Talk: Lagging Lumber Prices Hammer Timber Stocks | Timberland Investment | Scoop.it

Astute traders have likely noticed an interesting divergence between the spot price of random-length lumber and the share prices of the major publicly traded timber companies. From the chart below, you’ll notice that the spot futures price of the lumber continuous contract has fallen by 11% since February relative to the 9.30%, 9.26% and 7.89% increases by Plum Creek Timber Co. Inc. REIT (PCL), Rayonier INC. REIT (RYN) and Weyerhaeuser Co. (WY), respectively.
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Lumber prices have been under pressure since early May. Unfortunately for the bulls, the death cross – where the 50-day moving average crossed below the 200-day moving average back in April – has signaled the beginning of a long-term downtrend. The recent close below the swing low of $321.30 suggests that the selling pressure will likely continue in the weeks ahead and perhaps even intensify. Many traders will expect falling lumber prices to negatively impact the profitability and margins of the major timber companies despite recent positive news of an increase in housing starts.
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Weyerhaeuser is one of the largest publicly traded commodity companies in the world. The company grows, harvests and manufactures forest-related products worldwide and is the dominant player in the industry. With a market capitalization of more than $18 billion, strong moves in lumber prices, shifts in housing trends and general supply and demand changes can have a drastic impact on the movement of its share price.
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From a technical perspective, the 200-day moving average has propped up the price over the past 12 months and the recent economic news has sent the price higher. However, given the weak chart of lumber prices, it may be prudent for bullish traders to tighten their stop-loss orders.
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Plum Creek Timber is another major player. The trust owns and manages timberlands in the U.S. and its products include lumber, plywood, fiberboard and related products. Unlike Weyerhaeuser, Plum Creek's 200-day moving average has acted as a strong area of resistance over the past twelve months.
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Mid-cap timber company Rayonier Inc. has the weakest chart; bullish traders should proceed with caution. Its shares are trading at their 200-day moving average, and recent price action suggests that bulls will have trouble overcoming resistance at this level.
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Divergence between the share price of major timber companies and the spot futures price of the lumber continuous contract suggests that bulls should proceed with extreme caution. Strong news regarding housing starts has caused the prices of the timber stocks to increase, but falling lumber prices could start to impact margins and profitability, and as a result, share prices.

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Wood Fuel Prices in US South - 1Q2014

Wood Fuel Prices in US South - 1Q2014 | Timberland Investment | Scoop.it

Wood fuel delivered prices in the first quarter of 2014 increased $1.04 per ton, or 5.2 percent, from the first quarter 2013 average price of $20.05 per ton. Since fourth quarter 2013, prices increased $0.88 per ton to an average price of $21.09 per ton.
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Breaking out individual price components from the total delivered price into wood raw material and freight costs makes it clear that wood raw material costs are the main cause of the upturn. In 1Q2014, freights costs increased an average of $0.03 per ton, but wood raw material costs increased $1.01 per ton.


The reason for the increase in wood raw material costs is two-fold:


  • Demand for wood fuel increased, as total purchases by volume were 9 percent higher in the first quarter of 2014. The increase in demand has been driven primarily by dedicated biomass power facilities opening and pulp and paper mills converting from coal-fired to biomass boilers in response to electricity and natural gas prices increases of 6.1 percent and 31.1 percent, respectively.
  • A total of 571 inches of rain fell in 2013, which was the second largest amount of rainfall across the South over the last decade. Southwide rainfall amounts increased 22.2 percent from 2012 to 2013, and this caused delayed effects of constrained supply due to a shortage of available inventory during the first quarter of 2014. Our data supports a correlation between increases in rainfall and increases in wood raw material costs.


The combination of increased demand and heavy rainfall influenced the escalation in wood fuel delivered price.

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Vince Bulic's Weekly Lumber Market Wrap: For the week ending May 9, 2014

Vince Bulic's Weekly Lumber Market Wrap: For the week ending May 9, 2014 | Timberland Investment | Scoop.it

Cash: With winter weather soon to become a distant memory we had another week of steady activity. Buyers are still cautious and limiting purchases to upcoming needs while mills have been able to convert the broad based buying into decent order files. Western SPF order files are now stretched out towards the end of May with some items quoted for early June. Railcars are still an issue with B.C. mills but the situation seems to be slowly improving. It is official – no export duties for Canadian producers shipping into the US in June. That makes it 8 months in a row of no duties.


Futures: The May contract made its weekly high early Monday and then pulled back to spend the better part of the week trading just below $340 – fairly close to cash. Interestingly the July contract held on to last Friday’s break-out gains and traded the better part of the week in the low $340’s. May has 4 trading days left and is in line with cash. July is actually trading at a small premium to cash and looks pretty good on the charts. Futures seem to have confidence in cash.

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Backlog Puts the Wood to Lumber Prices

Backlog Puts the Wood to Lumber Prices | Timberland Investment | Scoop.it

Lumber prices are near the lowest levels in seven months, after a cold, wet start to spring has delayed construction and kept potential buyers away from the housing market.


Now, market watchers are waiting for the inevitable spring thaw to shake loose lumber that has been building up in warehouses and at sawmills across North America, while searching for signs of demand from U.S. home builders.


"Last year everyone was irrationally exuberant about the spring and about how fast the housing recovery would take hold," said Steven Chercover, an analyst with D.A. Davidson, an investment-management firm in Portland, Ore. "This year, we were optimistic, but had the worst winter in decades" in parts of the Midwest and East Coast.


The winter halted construction and caused transportation bottlenecks, with heavy snows preventing trains and trucks from moving not only lumber but other commodities as well. As the snow melted, competition from grain and energy shippers left a lot of lumber stuck at mills and warehouses. That left the Canadian National Railway Co. to issue a rare embargo notice to wood and pulp producers in March to say it would stop moving lumber products until the backlog was cleared.
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Still, some analysts are confident the market will recover.

Daryl Swetlishoff, head of research at Raymond James in Vancouver, noted a strike by Canadian truckers has ended, easing another transportation chokepoint, and said he expects the North American market will absorb the lumber stockpiles.


"Wood is flying again, [and] demand should be healthy going forward," Mr. Swetlishoff said.

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Global Wood Chip Price Indices Launched by FOEX and WRI

Global Wood Chip Price Indices Launched by FOEX and WRI | Timberland Investment | Scoop.it

FOEX in cooperation with Wood Resources International (WRI) has launched two wood chip price indices, the Softwood Chip Global (SCG) and Hardwood Chip Global (HCG), both part of the PIX index family of FOEX.


On February 18th, 2014, FOEX in cooperation with Wood Resources International (WRI) launched two wood chip price indices, the Softwood Chip Global (SCG) and Hardwood Chip Global (HCG), both part of the PIX index family of FOEX. The Indices represent prices for wood chips traded globally overseas for the manufacturing of wood pulp and wood-based panels. The latest reported Indices were US$168.63/odmt (+5.18% from the prev. month) for SCG and US$183.13/odmt (-2.15% from the prev. month) for HCG. The Indices will be reported monthly the third Tuesday of the month on the FOEX web site.

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Wood fiber costs for hardwood pulp producers have fallen 17% in two years

Wood fiber costs for hardwood pulp producers have fallen 17% in two  years | Timberland Investment | Scoop.it

The wood costs for the global pulp industry have trended downward in amajority of the pulp-producing regions of the world the past two years, according to the Wood Resource Quarterly (WRQ).This has mainly been the result of lower prices for market pulp but also because of reduced pulp production and increased supply of wood fiber in some regional markets.


As the costs of energy, labor and chemicals have changed relatively less than those of wood fiber the past year, the wood cost as a percentage of the production costs when manufacturing pulp have fallen. In the 2Q/13, wood fiber costs accounted for just over 59% of the production costs on a worldwide basis, down from approximately 63% in the 2Q/12 but up from 51% in 2006, according to Fisher International.

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Rapidly escalating land prices in Brazil and Uruguay force timberland investors to explore other Latin American countries

Rapidly escalating land prices in Brazil and Uruguay force timberland investors to explore other Latin American countries | Timberland Investment | Scoop.it

In 2013, more than three quarters of all Latin American plantation forests owned by overseas financial investors, were in just two countries, Brazil and Uruguay. As prices for agricultural land soar in those countries, timberland investors are exploring other Latin American countries to invest in. The future investment prospects for Latin American Plantation Forests are the subject of a new study recently released by RISI, the leading information provider for the global forest products industry.


"Latin America has become a major target for foreign financial investors. The region is a world leader in the development of fast-growing eucalyptus and pine plantations and has already attracted considerable interest from managers of institutional timberland investments. Between early 2009 and fourth quarter 2013, the area of forest plantations in Latin America owned by foreign financial investors increased by 41%, while the area owned by foreign forest industry companies increased by 9%," explained Robert Flynn, study author and Director of International Timber at RISI.


Despite an excellent potential for growing trees, investing in Latin American plantations can be challenging. A number of countries in Latin America have restricted foreign ownership of land and several other countries are trying to do the same. Latin American Plantation Forests: Outlook for Timber Supply and Markets assesses the prospects for plantation forest investment. It covers both the positive and negative attributes of twenty-one countries, breaking them into groups based on attractiveness for investment.

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Savills and UPM Tilhill release 2013 UK market report

Sam Radcliffe's insight:

From the announcement: Fifty per cent more forestry property was traded in the last year compared to 2012, to the value of £97.3 million, 8.5 times the value traded in 2000. This made 2013 a record year, both in the total value of the market and its unit price.


As in the past, most of the sales were in Scotland (68.9% by value) but there was a significant increase in Wales this year with 16% of sales taking place there compared to just 4% in 2012.


Also at record levels is the average value per stocked hectare which is now at £7,057. This has given an annualised average growth since 2002 of 15.4%. The average value of a property is up 29% on 2012 values to £1,231,000.

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Sawmill Log Prices Up 30 Percent in Carolinas

Sawmill Log Prices Up 30 Percent in Carolinas | Timberland Investment | Scoop.it

Sawmills in all producing regions reported rising timber and log prices. “There is no economic sense to timber prices,” said one mill owner in the Upper Midwest. Another in the Carolinas said log prices have increased 30% in the past year, and contacts elsewhere painted similar pictures.


Landowners sitting atop the large Marcellus Shale formation in NY, PA, WV and OH are deriving more income from oil and gas leasing, and have less incentive to sell timber. Some mills have plenty of standing timber purchased, but are struggling to find loggers and trucks to get it to the mill. Moreover, in several areas, poor logging conditions remain a limiting factor. For example, in Tennessee—where the weather has been particularly wet this year—some sawmills are still operating less than 50% of normal hours.


Concentration yards were generally aggressive with lumber purchases, which one sales manager attributed more so to expectations of shortages in December and January than to current demand. That said, most concentration yards did report increasing demand, particularly from export markets. Business for distribution yards—while inconsistent from region to region and week to week—has been trending up.


One distribution yard in the Great Lakes region is having its best year ever, with sales up almost 30% from last year. Residential flooring factories were busy and optimistic about future business notwithstanding seasonal slowdowns in some regions in the months ahead.


About as many flooring plants reported adequate lumber inventories and replacement-only purchasing as reported inadequate supplies. Notably, a large moulding manufacturer indicated business has been “very strong” for the last 60-90 days.

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Don't Listen To Pundits That Overhype The Lumber Price Correction

Don't Listen To Pundits That Overhype The Lumber Price Correction | Timberland Investment | Scoop.it

There have recently been several articles published on sites such as Sum Zero and Business Insider about "Lumber prices plunging to 5 month lows" while housing prices continue to uptick.

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If you look at a longer picture though, lumber prices are still high relative to historical prices (chart).


Although lumber prices have come off recent highs (which were also near decade highs) by about 25%, they are still near prices not seen since 2006.

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