Hardwood Pulpwood Goes Down
Hardwood Pulpwood Goes Down
The end of summer and early fall weather pattern of near drought conditions across the southeast allowed hardwood pulpwood users to replenish their inventories.As those woodyards have filled up the price has dropped dramatically. Delivered prices have dropped 20% in the last 30 days.
In addition,a major fuel spill in a lock on the Tennessee- Tom Waterway shut down barge traffic for over two weeks. This prevented hardwood chips from moving up stream to manufacturers in Kentucky. The Mississippi chip mills couldn’t ship barges,so they stopped chipping pulpwood. Their woodyards filled up putting a huge squeeze on demand.
These demand side price changes will be passed along to the landowner in lower stumpage rates. This may be a short-term problem as winter and its traditionally challenging weather is nearly upon us. As rain sets in hardwood tracts will be less accessible.These restrictions on the supply side will drive prices back up by the end of the year.