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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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Stock quotes, news and financial metrics

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Prentiss & Carlisle newsletters

Quarterly updates on conditions in our operating regions

 

Timber Mart North 

Lake States price reporting service published by P&C

 

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Report Says Wisconsin Forestry Industry On The Upswing

Report Says Wisconsin Forestry Industry On The Upswing | Timberland Investment | Scoop.it
More people are working in Wisconsin's forestry industry, and Wisconsin timber is fetching millions more on the market than it did even a few years ago.
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Acadian Timber Corp (ACAZF) CEO Mark Bishop on Q4 2018 Results - Earnings Call Transcript

Acadian Timber Corp (ACAZF) CEO Mark Bishop on Q4 2018 Results - Earnings Call Transcript | Timberland Investment | Scoop.it
Overall, Acadian Performed well operationally which led to solid results for the 2018 year. During the period, Acadian generated adjusted EBITDA of $22.1 million which compared to $23.3 million during 2017. The strong demand and pricing Acadian experienced in the first half of 2018 reflecting the favorable dynamics of the Northeast regional log markets carried through the second half of the year.
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Trump’s executive order will aggressively cut more forest trees

The president is intent on pushing up timber sales in spite of the government shutdown.
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Timber losses threaten Panhandle economy

Timber losses threaten Panhandle economy | Timberland Investment | Scoop.it

There’s been no shortage of coverage on the tragic and personal losses survivors of Hurricane Michael are experiencing, but the storm is also causing an economic crisis for some in the state's poorest counties.

 

The back roads of Liberty and Calhoun counties in Florida’s Panhandle look like a bomb has gone off.

 

Calhoun County lost 90 percent of its timber. The short term problem is getting the trees off the ground.

 

“To put it in perspective, we estimate that there is roughly the equivalent of 2.5 million truckloads of timber laying on the ground. It could be as much as a 20-year supply of wood laying there,” said Florida Commissioner of Agriculture Adam Putnam.

 

The trees have been down 60-plus days and the clock is running on how long the downed trees can be salvaged.

 

“We’ll only be able to use the timber for a certain amount of time and then it will be pulpwood,” said Timber Consultant Virgil Shannon.

 

"You know, somewhere around six to nine months before the bugs move in,” said Putnam.

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South Africa: Fires drive local timber industry to its knees

South Africa: Fires drive local timber industry to its knees | Timberland Investment | Scoop.it

A total of 7 643 hectares of predominantly pine plantations belonging to private timber growers in the Southern Cape region have either been totally or partially destroyed in the fires that raged in the Outeniqua mountains between 25 October and 16 November. Plantations ranging in age from one to 25 years were affected.

 

These were the findings of a meeting of 35 people involved in the timber and timber processing industries, held at the Nelson Mandela University in George on 3 December.

 

This will have a major negative influence on the future ability of the forestry industry in the region to produce the timber needed to supply the processing plants reliant on this resource.

 

The value of the timber lost has not yet been completely established, as many factors need to be taken into consideration. The cost of re-establishing those areas that have been totally destroyed has also not been established accurately. However, initial estimates are that just the re-establishment costs could be in the region of R80-million.

 

Furthermore, many jobs in the timber-growing sector will be permanently lost. Forestry infrastructure was also destroyed.

The processing side of the industry in the region has the potential to process approximately 700 000m³ of logs per annum, the majority of this through sawmills and pole treatment plants.

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Climate assessment predicts increasing wildfires

Climate assessment predicts increasing wildfires | Timberland Investment | Scoop.it

The Fourth National Climate Assessment focuses on human welfare, societal, and environmental elements of climate change.

It lays out the devastating effects on the economy, health, environment, and wildfires. Within the 1,656-page document wildfires are covered extensively.

 

The scientists conclude that by the middle of this century, the annual area burned in the western United States could increase 2–6 times from the present, depending on the geographic area, ecosystem, and local climate. The area burned by lightning-ignited wildfires could increase by 30% by 2060.

 

In the Southeast rising temperatures and increases in the duration and intensity of drought are expected to increase wildfire occurrence and also reduce the effectiveness of prescribed fire. Intra-annual droughts, like the one in 2016, are expected to become more frequent in the future. Thus, drought and greater fire activity are expected to continue to transform forest ecosystems in the region.

 

In the Southwest, recent wildfires have made California ecosystems and Southwest forests net carbon emitters (they are releasing more carbon to the atmosphere than they are storing). With continued greenhouse gas emissions, models project more wildfire across the area. Under higher emissions, fire frequency could increase 25%, and the frequency of very large fires (greater than 5,000 hectares) could triple.

 

The Northwest is likely to continue to warm during all seasons under all future scenarios, although the rate of warming depends on current and future emissions. The warming trend is projected to be accentuated in certain mountain areas in late winter and spring, further exacerbating snowpack loss and increasing the risk for insect infestations and wildfires. In central Idaho and eastern Oregon and Washington, vast mountain areas have already been transformed by mountain pine beetle infestations, wildfires, or both, but the western Cascades and coastal mountain ranges have less experience with these growing threats. Forests in the interior Northwest are changing rapidly because of increasing wildfire and insect and disease damage, attributed largely to a changing climate. These changes are expected to increase as temperatures increase and as summer droughts deepen.

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Climate change shrinks winter snowpack, damaging Northeast's forests

Climate change shrinks winter snowpack, damaging Northeast's forests | Timberland Investment | Scoop.it
Climate change often conjures up images of heat, drought and hurricanes. But according to the latest U.S. National Climate Assessment, released on Nov. 23, 2018, winters have warmed three times faster than summers in the Northeast in recent years. These changes are also producing significant effects. Historically, over 50 percent of the northern hemisphere has …
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NH Biomass Sustains Veto, but a New Challenge Emerges

NH Biomass Sustains Veto, but a New Challenge Emerges | Timberland Investment | Scoop.it

Biomass fuel is an important market for New Hampshire’s forest industry and, despite recent victories in the state legislature, six legacy biomass plants now face a new challenge that threatens their ability to continue operations. 


The Granite State is home to eight total biomass plants, six of which are older plants that were developed decades ago in response to policy incentives. These plants provide a vital market for low-grade wood. In 2016, the most recent year for which New Hampshire has full harvest data, wood for all products (sawlogs, pulpwood, firewood and biomass) totaled 3.3 million tons. 1.3 million tons—or 41% of the total—was biomass. Biomass has supplanted pulpwood as the single largest market for low-grade wood in NH, as in-state pulp mills have closed and two new biomass plants have opened.

 

While they comprise an important market for the state, New Hampshire’s smaller biomass plants have a hard time operating in the highly competitive wholesale energy market. In 2008, the average price for wholesale electricity in New England was $80.56 per MWh; in 2017 it dropped to $33.94 per MWh (up from $28.94 per MWh in 2016). Decreased natural gas prices coupled with increased efficiency at homes and businesses has been great for forest industries that purchase electricity, but it also threatens the continued operations of some biomass plants.

The New Hampshire legislature stepped into this fray in early 2018 and passed a bill providing for three years of above-market contracts for electricity from the state’s six legacy biomass plants (five of which are operating). 
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Citing the increased cost to electricity customers from this bill, Governor Chris Sununu vetoed the legislation, setting up a contentious and high-profile effort to override the veto and continue the biomass market at these legacy plants.

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In September, the 400-member NH House overrode the governor’s veto by just one vote, apparently securing the near-term future for these biomass markets. 

But the nail-biting win for biomass may turn out to be too good to be true. In mid-November, the New England Ratepayers’ Association filed a challenge with the Federal Energy Regulatory Commission (FERC) arguing that federal law doesn’t allow states to set electricity rates, and that New Hampshire’s support for biomass effectively does just that.

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Just when New Hampshire’s loggers, truckers and forest industry thought they had three more years of a critical market for low-grade wood, the future is now uncertain. 

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Stumpage or Delivered: Is there an Ideal Sales Model in the US South?

Stumpage or Delivered: Is there an Ideal Sales Model in the US South? | Timberland Investment | Scoop.it
Two basic sales models exist for individuals and companies that own and manage timberland for profit in the US South:
Stumpage model: A company or individual sells timber “on the stump” to a logger or broker by either a bid sale or negotiation process. A vast majority of small, private landowners in the South sell their timber this way because it streamlines and simplifies the timber sales process, and they simply don’t have the available timber resources to meet the long-term supply needs of a large mill facility.


Delivered Model: A company or individual sells timber directly to end-use/mill facilities, taking responsibility for harvesting and delivering the wood. In this case, the seller gets paid a stumpage price + the margin that would otherwise go to the logger or broker if they sold wood as stumpage.

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The stumpage model is typically favored by landowners who have relatively small holdings and are looking to sell timber on a one-off basis. Large landowners such as Timber Investment Management Organization (TIMOS) and Real Estate Investment Trusts (REITS) also favor this model at times as they seek to eliminate the uncertainty of operating costs.

The delivered model is only a “real-world” option for large landowners who own and manage thousands of acres of timberland. It is favored by larger landowners that continuously harvest and deliver large volumes of timber, month after month and year after year. These landowners typically secure a higher-than-average delivered market price since they can commit large volumes of secure supply. This model allows large landowners to focus on net realization and minimize the costs of harvesting and hauling timber.
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The charts below compare net realization from our delivered price database and stumpage price from our stumpage database for FY2017. When analyzing data for our standard areas for pine sawtimber and pine pulpwood in the US South, strong evidence suggests that the delivered model is more profitable for landowners. While this is the case when analyzing larger areas, a more detailed view produces different results, as some local markets clearly favor a stumpage model.

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Chequamegon-Nicolet National Forest timber sales reach record levels

Chequamegon-Nicolet National Forest timber sales reach record levels | Timberland Investment | Scoop.it
Timber sale levels on the Chequamegon-Nicolet National Forest  reached 128.7 million board feet in fiscal year 2018, a level of sales not seen since the early 1990s.

The 2018 fiscal year was also the sixth year in a row timber sales have increased in the forest. In 2017, the forest sold 120.5 million board feet of timber for an estimated value of $7.72 million. Contractors also harvested 93.1 million board feet of timber valued at $7.48 million.

“I am very proud of the great staff and partners we have in making this achievement possible," said Paul Strong, forest supervisor of the Chequamegon-Nicolet National Forest.

In addition to the forest’s regular timber sale program, which sold 98 million board feet this year, 30.7 million board feet were sold through the Good Neighbor Authority agreement with the Wisconsin Department of Natural Resources.

“The 2014 Farm Bill permanently authorized Good Neighbor Authority as well as Stewardship Contracting, and the forest continues to leverage them to increase timber sales and sustainable forest management activities on the National Forest,” Strong said.
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Presidential Wildfire Tweets: Right Message, Wrong Time

Presidential Wildfire Tweets: Right Message, Wrong Time | Timberland Investment | Scoop.it

Every so often, a Presidential tweet sparks a worthwhile conversation on the national stage. While President Trump is constantly criticized for his choice of words on the digital platform, two of his latest messages in question centered on the cause of the devastating wildfires that have ravaged portions of California:
“There is no reason for these massive, deadly and costly forest fires in California except that forest management is so poor. Billions of dollars are given each year, with so many lives lost, all because of gross mismanagement of the forests. Remedy now, or no more Fed payments!”
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Under any other circumstances, the entire US forest value chain would applaud the President for raising awareness about a topic that is so often dismissed at the legislative level.
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However, in this particular case, the President’s remarks were simply ill-informed and ill-timed. While many of the devastating wildfires in the Pacific Northwest (PNW) and much of California do indeed originate in poorly-managed forests, the current blazes that are decimating California did not start in a forest. Rather, they were sparked in a “wildland-urban interface,” which are areas where suburbs abut undeveloped wildlands—in this case grasslands. Aided by strong Santa Ana winds, the fires have quickly spread to engulf huge swaths of the state.

 

The President’s tweets also implied that the state’s forest management is to blame; however, the majority of California’s forests are federally owned.
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The single largest contributing factor to the dangerous state of western forests has not been climate change; rather, it is almost entirely an artifact of the way that our national forests—millions of acres of timberland—have been managed since the mid-1970s. The controversy and senseless litigation that has surrounded harvesting activities on publicly-owned lands has long prevented the US Forest Service (USFS) and the Bureau of Land Management (BLM) from taking a common sense, science-based approach to managing forests to control for naturally-occurring, catastrophic events like forest fires, insect damage and disease.

 

To be clear, cyclical changes in climate undoubtedly impact western forests. Precipitation, snowpack/snowmelt, temperature, soil moisture, the density of trees, shrubs and other potential fuel—as well as the health of these trees and shrubs—all contribute to the conditions that create favorable wildfire scenarios. All of these factors are also impacted by climate variability. But in the case of the devastating fires that have grown in scale over the last few decades, it is a widely-held belief that the mismanagement of western national forests is the primary cause for the unprecedented destruction.

 

In a separate blog post we published earlier this year, we noted that forest mortality now far exceeds forest growth in western national forests. In 2017, forest growth was 48 percent of mortality while timber harvests were a mere 11 percent of what is dying annually—and this trend is on the rise. The USFS estimates that 6.3 billion dead trees were standing in 11 western states in 2015, up from 5.8 billion in 2010. Regardless of the climate variability in the region, this accumulation of dead timber is a tremendous problem that has resulted in a very dangerous situation.

 

The good news is that a successful model for managing forests to minimize devastating mega fires and disease risk already exists. We need only look to privately-owned working forests to find a solution. Working forests are managed for production and health and, while fires and infestations do occur in these forests, overwhelming incidents like those currently ravaging California are rare.

 

At a landscape level, working forests are made up of a patchwork of smaller timber tracts that are thinned and harvested at different intervals. Due to this hands-on management, the landscape-level forest has multiple characteristics that prevent catastrophic damage:

 

Because they are thinned at regular intervals, these forests do not contain as much fuel as forests that are unmanaged, and the remaining trees stand farther apart.
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Due to rotating harvest schedules, working forests are also of different age classes. Planting and harvesting tracts of timber at varying periods helps to slow down—and sometimes even stops—the spread of fire or disease.
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Simply cloning a management style from region to region is unrealistic, as there are a number of key differences between western and southern forests. Timberland acres and tree species are dissimilar, as are the soil and terrain, elevations, climatic trends and precipitation norms just to name a few. However, key forest management practices such as regular thinnings, harvests and prescribed burns—rigorous monitoring and reacting to health issues—are pretty universal in application. For example, a 2015 study by The Nature Conservancy and the USFS showed that a 12,000-acre “doughnut hole” within a major western fire zone remained untouched by the massive Carlton Complex fire in Washington. The area survived, the researchers believe, because it had previously undergone a thinning and prescribed burn.

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Forest Resilience Bond to help fund $4.6 million restoration project to mitigate wildfire risk in Tahoe National Forest

Forest Resilience Bond to help fund $4.6 million restoration project to mitigate wildfire risk in Tahoe National Forest | Timberland Investment | Scoop.it

This summer, California experienced its largest fire in state history—the latest disaster in a growing trend towards hotter, larger, and more destructive fires. Without urgent action, wildfires will be even deadlier and costlier in years to come. The Forest Resilience Bond (FRB), developed by Blue Forest Conservation (BFC) in partnership with World Resources Institute (WRI), raises private capital to finance forest restoration today, to reduce the risk of severe fire tomorrow. With financing secured from The Rockefeller Foundation, the Gordon & Betty Moore Foundation, Calvert Impact Capital, and CSAA Insurance Group, private capital will now fund the upfront costs of forest restoration, while multiple beneficiaries share in the cost of reimbursing investors over time.
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The investment will kick off a forest restoration project protecting 15,000 acres of forestland in the North Yuba River watershed using ecologically based tree thinning, meadow restoration, prescribed burning, and invasive species management—all specifically designed to reduce the risk of severe fire, improve watershed health, and protect water resources. The restoration treatments are prescribed by the Forest Service, benefit from public comment, and rely on the work of existing restoration crews.
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The Yuba Water Agency, a utility provider that recognizes the benefits of restoration to local water and power resources, has committed $1.5 million over five years to reimburse investors. In addition, the state of California has committed $2.6M in grant funding to the project from the state’s Climate Change Investment program. The Tahoe National Forest will provide in-kind support and services and has provided all the resources associated with planning and permitting the project. The National Forest Foundation serves as one of the project’s primary implementation partners, leading much of the forest restoration work on the ground.

 

“The financing provided by the FRB provides us with the financial flexibility to accelerate the pace and scale of restoration treatments at a time when this work is needed most”, said Marcus Selig, Vice President of Field Programs for the National Forest Foundation.
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The FRB also makes a compelling case to investors. “The Forest Resilience Bond provides diversification while also benefitting our communities by making them safer,” said Linc Walworth, vice president of investments at CSAA Insurance Group, a AAA insurer offering insurance to AAA members in Northern California. “We earn a good return while helping the environment and our policyholders. What a great combination in a single investment.”

 

As the prescribed forest management techniques are applied in the North Yuba River watershed, researchers from the Sierra Nevada Research Institute at UC Merced and the Natural Capital Project at Stanford University will monitor the impacts on water supply and other ecosystem services, providing data to quantify the benefits of restoration activities undertaken. Findings from this research could help catalyze future investment in forest restoration by showing how healthy landscapes can reduce fire risks —and by identifying the best possible interventions.

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Study: Wisconsin sees growth in forestry industry

Study: Wisconsin sees growth in forestry industry | Timberland Investment | Scoop.it
MADISON, Wis. (AP) - Timber sales are increasing in Wisconsin and more people are working in the state's forestry industry, according to a new national study.
The National Alliance of Forest Owners released a report last month that found employment in Wisconsin's forestry sector grew by nearly 5% from 2010 to 2016, totaling 174,848. The state's timber sales increased by nearly 10% to $21.6 billion in 2016, the most recent year that comprehensive data is available, Wisconsin Public Radio reported.
Wisconsin led the Midwest in both fields in 2016, as well as timberland acres, according to the study.
Growth in the state's timber industry comes despite the closure of paper mills across Wisconsin in the last decade, said Henry Schienebeck, director of the Great Lakes Timber Professionals Association and chairman of the Wisconsin Council on Forestry.
He attributed that in part to the production of more saw timber, the high-quality wood that's used in hardwood flooring and furniture.
"Some of our forests are getting a little older," Schienebeck said. "What that means is we've actually got more saw timber that's growing."
The majority of the state's 16.5 million timberland acres are privately owned, according to the study. Public lands account for about 4.7 million acres, while companies and individuals own the remaining 11.8 million.
The National Alliance of Forest Owners' CEO, Dave Tenney, said creating healthy economies around forestry also protects forest lands because it becomes less likely that they're sold or developed as farmland, among other uses.
"Anybody who owns and manages forests in the United States knows one thing: It's a long-term commitment," Tenney said. "And in order to make a long-term commitment with forests, they have to make investments toda
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Natural Resources Board Signs Off On Iron County Conservation Easement

Natural Resources Board Signs Off On Iron County Conservation Easement | Timberland Investment | Scoop.it
The Wisconsin Natural Resources board unanimously approved spending $4.8 million to buy a conservation easement on more than 14,000 acres of forest land in Iron County.
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Softwood Lumber Prices Rise as Canadian Transportation Issues Hamper Deliveries

Softwood Lumber Prices Rise as Canadian Transportation Issues Hamper Deliveries | Timberland Investment | Scoop.it
The spectacular rebound of North American construction framing dimension softwood lumber prices in early February continued as prices rose in response to transportation problems, mostly on Canadian railways. Severe weather hit many parts of Canada and the US, causing delays of shipments from softwood lumber suppliers.
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Complaint: Butler Snow, Baker Donelson contributed to $100M Ponzi scheme

Complaint: Butler Snow, Baker Donelson contributed to $100M Ponzi scheme | Timberland Investment | Scoop.it
The federal court-appointed receiver in a $100 million Mississippi Ponzi scheme case is holding the state's most prominent law firm and others responsible for "contributing" to its facade out of a desire for profits. 

A federal complaint says Butler Snow and the founder and president of Butler Snow Advisories Services LLC, Matt Thornton, as well as Brent Alexander and Jon Seawright of the law firm Baker Donelson, spent months assisting Lamar Adams and Madison Timber, where they overlooked or failed to examine the fraudulent business practices of the company, which should have been obvious to the high-powered law firms. 

Alysson Mills, the court-appointed receiver in the case, wants to hold those parties liable for payment of damages as she seeks to recoup money for duped investors. In the complaint, she maintains Butler Snow and Baker Donelson should be held liable for the "negligent and reckless acts of their agents."

The connection between the law firm representatives and Madison Timber further gave the company a legitimacy that led to additional investors being duped, the complaint says. 
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Log exports to be permitted to lure timber plantations

Log exports to be permitted to lure timber plantations | Timberland Investment | Scoop.it

The Forest Department under the Ministry of Natural Resources and Environmental Conservation has been planning to permit the export of logs harvested from private timber plantations, U Tin Tun, director of the Forest Department, told The Myanmar Times.

 

To protect the environment and prevent deforestation, Myanmar in April 2014 banned the export of whole logs and raw timber, leading to a substantial decline in export revenues over the past few years.

 

In July this year, the government proposed allowing the export of logs grown by private investors such as sawmills. “Our aim is to attract investments in private timber plantations. Allowing exports is one way to incentivise investors in this segment,” said U Tin Tun.

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In Myanmar, private forest areas consist of teak, hardwood and industrial crop plantations. Some 300 private timber plantations have been allowed to harvest timber over 250,000 acres of private forest. Over 140,000 acres had been developed as at March this year, according to the Forest Department.

 

Before 2015, Myanmar allowed local businesses to develop commercial timber plantations on 500 acre of private forest lands for teakwood plantations, 200 acres for industrial plantations and 100 acres for hardwood plantation.

 

Since then, the Forest Department has permitted larger scale plantations of over 1000 acres to be developed on private forest land by both local and foreign investors. Land is awarded to private plantations via an open tender process.

 

So far, there have been a total of six local and foreign investments in large-scale plantations.

 

According to the Myanmar Investment Commission, foreign investors such as sawmills are required to produce and grow their own supply of timber. Approvals for such investments are to be obtained from the Ministry of Natural Resources and Environmental Conservation.

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Why Have Lumber Prices Fallen?

Why Have Lumber Prices Fallen? | Timberland Investment | Scoop.it

The US housing sector—a bellwether for economic health—has showed signs of stagnation (and even the prospect of reaching peak housing in this market cycle) in recent months. As I wrote last month, forecasts for housing starts are simply overblown, as there isn't much room for an increase beyond the 2018 level of 1.266 million units.

 

As a commodity largely tied to housing starts and broader building and construction activity, lumber prices also reflect the general health of this market via supply and demand metrics. After steady increases beginning in 4Q2017, lumber prices skyrocketed to new record highs in 2Q2018 before dropping precipitously across the board over the last four months. Southern yellow pine (SYP) lumber prices recently hit their lowest point since August 2017; Forest2Market’s SYP composite index price for mid-November was $376/MBF—a 35% drop from the record high of $576/MBF achieved in May.

 

Despite the one–two hurricane punch that recently impacted the US South and the continued wildfires in the Pacific Northwest (PNW)—extreme weather events that have significantly impacted forest inventories, harvests and supply—the drop in lumber prices over the last six months is largely, though not entirely, demand driven. Fewer new-home builds = less lumber.

 

The sudden reversal begs a serious question: Did the lumber market simply over drive its headlights in the price run-up earlier this year, or are there more structural forces at work? Several dynamics are combining to impact housing starts and, by extension, the North American lumber market.
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Did lumber prices really crash in 2018? Not if we take an historical view using Forest2Market’s SYP price data in the chart below. In fact, we should be asking the inverse question: Why did lumber prices spike to historical highs?

 

It is clear that the irregular peak that occurred from May-August was an anomaly likely driven by speculation around uncertain trade policies, overly optimistic housing start numbers and the likelihood of pinched lumber flows from Canada and the timber-constrained PNW. Yet, none of these events materialized either disproportionately or collectively to a degree that would drive prices to new highs. Remove the May-August variance, control for a more historical trend and 2018 lumber prices are really in line with historical norms and current demand.

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CatchMark Completes $79.3 Million Sale of Southwest Timberlands

CatchMark Completes $79.3 Million Sale of Southwest Timberlands | Timberland Investment | Scoop.it

CatchMark Timber Trust, Inc. (NYSE: CTT) announced today that it had completed the sale of approximately 56,000 acres of timberlands in Texas and Louisiana — the Southwest Region — to Forest Investment Associates (FIA) for $79.3 million. As part of the transaction, CatchMark retains approximately 280,000 tons of merchantable inventory (50% sawtimber/50% pulpwood) to be harvested over the next 18 to 24 months. The per-acre sales price was $1,533, including the timber reservations.

 

Jerry Barag, CatchMark's President and CEO, said: "As a part of a series of coordinated transactions, the Southwest Region sale has enabled CatchMark to recycle capital and diversify our revenue streams, strengthening our capital position, and advancing our future growth track. We have reduced regional exposure in East Texas, after investing in 1.1 million acres of extremely high-quality timberlands through the Triple T joint venture, and redeployed capital into 18,100 acres of prime Pacific Northwest timberlands through the Bandon acquisition — both transactions completed during the summer. Proceeds from the Southwest Region sale are being used to repay debt incurred to fund the Triple T and Bandon investments."  

 

The Southwest Region portfolio, located across counties in East Texas and western Louisiana, was acquired by CatchMark in four separate transactions during 2014 and 2015.

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US Housing Starts Inch up in October as Market Shows Signs of Weakness

US Housing Starts Inch up in October as Market Shows Signs of Weakness | Timberland Investment | Scoop.it

After dropping 5.3 percent in September, US housing starts inched up 1.5 percent to a seasonally adjusted annual rate (SAAR) of 1,228,000 units in October. Single-family starts accounted for 865,000 units, which is 1.8 percent below the revised September figure of 881,000, and starts for the volatile multi-family housing segment jumped 10.3 percent to a rate of 363,000 units in October. Multi-family numbers were off over 15 percent last month, so a bounce back is not unexpected.

Privately-owned housing authorizations were also down 0.6 percent to a rate of 1,263,000 units in October. Single-family authorizations decreased to 849,000, which is 0.6 percent below the revised September figure. Privately-owned housing completions were down 3.3 percent to a SAAR of 1,111,000 units in October. Regional performance demonstrated some drastic variation as confirmed by the US Census Bureau report.

 

Seasonally-adjusted total housing starts by region included:
Northeast: -34.1 percent (+29 percent last month)
South: +4.7 percent (-13.7 percent last month)
Midwest: +32.9 percent (-14.0 percent last month)
West: -4.6 percent (+6.6 percent last month)

 

Seasonally-adjusted single-family housing starts by region included:
Northeast: +14.8 percent (-6.7 percent last month)
South: -4.0 percent (-6.8 percent last month)
Midwest: -1.6 percent (+10.2 percent last month)
West: -2.0 percent (+7.0 percent last month)
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The 30-year fixed mortgage rate is now hovering at a seven-year high of 4.94 percent as of late November. At the same time, builder sentiment recorded its sharpest one-month drop in over 4.5 years as the National Association of Home Builders (NAHB)/Wells Fargo builder sentiment index fell to 60—an 8-point drop in one month and the lowest level since 59 that was recorded in August 2016.

The sputtering housing market—whose slow growth helped to buoy the larger US economy over the last decade—now stands in stark contrast with the broader economy, which has seen two straight quarters of robust growth and an unemployment rate at a near 50-year low of 3.7 percent. 
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Among the drivers of this softening is the restrained amount of new-home building since the Great Recession of 2008. Single-family housing starts have been well below the 1984-2004 median level for nearly a decade, which has kept inventories at sustained low levels—particularly at the lower end of the housing market.

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Top Court Orders New Review in Weyerhaeuser Frog Habitat Case

Top Court Orders New Review in Weyerhaeuser Frog Habitat Case | Timberland Investment | Scoop.it

The U.S. Supreme Court told a lower court to take another look at the federal designation of privately owned land in Louisiana as critical habitat for the endangered dusky gopher frog.

Ruling unanimously in a case involving the forest-products company Weyerhaeuser Co., the justices called for a closer look at the meaning of the word "habitat" in the U.S. Endangered Species Act.

Weyerhaeuser, which owns part of the land, said the designation was improper because the animal doesn’t live on the property and couldn’t do so without modifications to the land. Weyerhaeuser is harvesting timber on the land and says the owners are planning to develop the 1,500-acre property later.

During arguments in October, the justices had seemed divided on whether the law’s definition of "habitat" left open the possibility that modifications would be needed.

Writing for the Supreme Court Tuesday, Chief Justice John Roberts said a federal appeals court didn’t squarely confront that issue when it rejected a challenge to the Fish and Wildlife Service designation. Roberts also told the appeals court to consider whether the agency adequately weighed the costs and benefits of designating the land.

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Southern Yellow Pine Exports to China on Pace to Double in 2018

Southern Yellow Pine Exports to China on Pace to Double in 2018 | Timberland Investment | Scoop.it

According to trade data compiled by the US Census Bureau through August, 20181 exports of southern yellow pine (SYP) have increased nearly 1 million cubic meters (m3), or 73 percent, over 2017. If the trend holds, the US South will surpass the Pacific Northwest (PNW) on exports of conifer logs to China in 2018. Export prices2 (to all destinations) for Douglas fir have increased sharply and Hemlock prices have remained flat, but SYP prices have dropped significantly over the last year.


While exports of pine logs out of the US South are increasing, exports on an annualized basis in the PNW are trending down. Doug Fir exports continue a downward slide, dropping 3 percent since 2017 and 36 percent compared to 2014. Hemlock exports, which were up slightly in 2016 due to Chinese demand, are also on a 5-year slide; export volume is down 13 percent since 2017 and 43 percent compared to 2014.

Alternatively, SYP continues its upward trend driven by exports to China, gaining 28 percent in the conifer export market share since 2015. The increase in volume is driven by a significant decrease in price, as export SYP log prices are down 13 percent compared to 2017 and currently averaging $141/m3. This price decrease is a result of the plentiful log supply and availability of fast-growing SYP timber in the US South.
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The impact that some previously-enacted tariffs are having on the wood products trade between the two countries is just beginning to show up in the data. In late 2017, the US hit China’s plywood industry with significant countervailing duties. As the American Journal of Transportation recently noted, the tariffs totaled “nearly 200 percent on some imports of Chinese hardwood plywood after a Commerce Department analysis showed the engineered panels were being sold below cost of manufacture. Since the duties, China’s fiberboard exports to the U.S. fell 11% to 71,200 m3 and plywood exports to the U.S. dropped 31% to 360,000 m3 in the first three months of 2018.”

It’s still too early to tell how the escalating trade dispute and new round of tariffs between the US and China will play out.

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Forestry investment remains a top performer

Forestry investment remains a top performer | Timberland Investment | Scoop.it

The 20th edition of The UK Forest Market report, produced by Tilhill Forestry and John Clegg & Co., reveals that patience and shrewd forestry investment choices have paid dividends over the last 12 months.

 

Many UK forest owners who purchased their property 30 or 40 years ago are now reaping exceptional rewards for patiently growing their timber assets. Not only is their investment showing returns of 13.9 per cent per annum, but the price of standing timber has soared 30 per cent in the last year alone - great news for owners whose forests are now ready to harvest.

 

In discussing the performance of the commercial forestry market in the year to September 2018, the report describes a "brisk and robust" sector. A total of £104.2m of forest properties were traded in 2018. This is a 6 per cent drop from 2017, but, interestingly, the market comprised a smaller number of higher value sales (57 in 2018 compared to 87 in 2017) with an average size of 196 hectares (149ha in 2017) and an average price of £1.83m (£1.28m in 2017). Scotland retained its dominant position in the marketplace with 69 per cent of the sales recorded.

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Peter Whitefield, Business Development Director for Tilhill Forestry, explained: "Motivations for investors vary, but the main reasons are long-term financial returns, the potential for tax planning, long-term capital growth particularly within a pension, or the amenity value."

 

More conifers were planted in Scotland last year than in any year since 2000. There has been strong demand for woodland creation schemes for 2018/19 with over 12,000ha assessed - well exceeding the Forestry Commission Scotland target of 10,000ha per year.

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Market Snapshot: Canadian Softwood Lumber

Market Snapshot: Canadian Softwood Lumber | Timberland Investment | Scoop.it
The North American softwood lumber market ended October 2018 at a low point for the year—a complete reversal compared to its record-setting performance earlier in 2018, which also came on the heels of solid performance in 2H2017.
Throughout Canada, inventories still remain heavy, customers are quiet, producers are just starting to announce seasonal downtime and secondary suppliers have an abundance of wood on hand. At sawmills, log supply has been plentiful and small orders of fill-in lumber are about the only sales tasks that need to be addressed.

Market conditions for North America softwood lumber products—the supply-demand balance—has changed drastically in recent weeks. The slowdown in US construction activity has caused lumber producers to pump the brakes just a few months after surging demand drove price levels to new highs.

At the start of 4Q, suppliers quickly found themselves with overflowing inventories and more manufacturing booked to come online quickly. Buyers, meanwhile, have backed off almost entirely and prices have responded accordingly.

An unexpected predicament recently manifested itself in the form of labor action for producers in British Columbia (BC); the United Steelworkers Union, representing sawmill workers across Canada, is currently in negotiations with two BC employer groups that have been hit by rotating strikes at select operations. In response, several individual operators have announced seasonal curtailments and downtime. This sudden uncertainty is hitting at a time when lumber demand is soft and prices are lower than earlier in the year, so the impact to production has not yet been felt in the market.
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Lumber Market Crash Is Probably Over, Resolute Forest Says

Lumber Market Crash Is Probably Over, Resolute Forest Says | Timberland Investment | Scoop.it

The plunge in lumber prices is probably over, Resolute Forest Products Inc. Chief Executive Officer Yves Laflamme said in an interview.

The market is “close” to a bottom, though prices probably won’t rebound to this year’s highs, Laflamme said. Last week, lumber futures tumbled to a 28-month low and have plunged 50 percent from the record in May. That spurred Interfor Corp. to announce plans to reduce output by 20 percent at its British Columbia sawmills. Canfor Corp. on Thursday said it will to cut production 10 percent in British Columbia in the fourth quarter.

Montreal-based Resolute reduced shifts at some mills in Thunder Bay, Ontario, and Quebec to adjust log inventory, Laflamme said in the telephone interview. “That’s the way we’re managing right now, and if we need to do more, we’ll do more,” he said.

Tight supplies, trade disputes and transport bottlenecks sent lumber futures higher earlier this year. As a Canadian rail logjam eased, the outlook for U.S. housing started to trail some expectation, and the lumber “market started to collapse,” Laflamme said.

Even if prices have bottomed, fourth-quarter results for lumber “won’t be that great” after the slump and the persistent dispute between Canada and the U.S. over softwood lumber, Laflamme said.

Resolute will pay about $88 million in import duties to the U.S. by the end of the year, and neither side appears to have “any interest” in a deal, he said.

On the outlook for lumber prices, “I’m not expecting to go back to where we were because that was the exception,” though the market will be “better in the next few months.”

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