TIMBER MARKET WATCH
Since the last newsletter, we have seen record setting rainfall during the
early summer of 2006, and 50-degree days during the month of December.
This unusual weather has an impact on the timber market, but the affects vary
based on region.
Generally, prices for white pine have decreased except for in the Maine
region, however, this needs to be kept in perspective as prices for white pine
and red oak were at all time highs in 2004. There is a debate as to the
cause of the lower white pine prices. Some will say that it is due to
slower housing market, while others will say that the prices are simply
self-correcting to where they should be.
Higher fuel prices have obviously increased operating costs, which in turn
will affect stumpage prices. Higher operating costs have not been off-set
by higher gate prices, therefore, the difference tends to be made up by lower
stumpage prices.
High quality sugar maple and black cherry are still in high demand, and red
oak appears to have stabilized after dropping from the 2004 record highs.
Foreign competition and weather are playing havoc with mill inventories.
What was considered a low inventory in the past, may now be considered an
acceptable inventory level.
The closure of the Berlin Pulp Mill has certainly had a ripple effect on the
chip market; however, the opening of the Portsmouth, NH plant has helped to
reduce the effect. Firewood is still in demand; however, firewood demand
cannot completely replace the market lost due to the closing of the Berlin mill.
The next 3 to 4 years will be very telling for the timber industry.
Smaller mills tend to be closing while the bigger mills are getting bigger.
Overall, the capacity to produce lumber has not been affected; however, it is
more concentrated in fewer, more productive and efficient sawmills.
It is expected that for the first part of 2007, timber prices will stay
pretty stable; however, if fluctuations occur, they will occur quickly.
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