Timber Market Report August 2019

  August 2019

The big news is that over the last few months the Trump tariff on China have severely impacted the red oak log market in our area. The Chinese were buying the vast majority of red oak lumber produced by our mills. Once the tariff was imposed the demand from them disappeared.

The stumpage price for red oak has dropped almost thirty percent, and the drop was immediate. Our expectation is that once the tariffs are lifted demand will be reinstated just as quickly, as well as the previous stumpage prices. The problem is no one knows when this will happen. It’s looking like it won’t happen until after the 2020 elections.

In other markets, white oak logs remain at or near their all-time highs. Yellow poplar and mixed hardwood logs remain strong. The demand and pricing for hardwood pulpwood is waning. Hardwood pulpwood stumpage is down thirty three percent from it’s high earlier this year. Pulp and paper manufacturers to our south have replenished their raw material inventories, driving down demand and price.

In pine market there has been no change in demand or price. They both remain at all time lows in North Alabama. On some tracts the pine pulpwood price is $0.00. This is because of location, increases in logging cost and especially trucking cost have increased to the point where when the tract is 85 miles or more from the mill, the pine pulpwood has zero stumpage value. Other pine products, like chip and saw, and logs, remain stagnant and weak. Housing starts are decent but not enough to liquidate the huge inventory of standing sawtimber built up since the crash in 2008-2009.

We are expecting some loosening of delivery restrictions at pine mills as we move into the fourth quarter. This represents an annual seasonal adjustment to purchases as mills begin to stockpile in advance of winter weather issues. We don’t foresee any positive impact on price.

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