2010 Delivered Pulpwood Prices at Historic Highs in South, According to Forest2Market

Timberland owners in the South struggled in 2010, as low demand for sawtimber and prices below historical norms forced them to delay sawtimber sales beyond the dates set in their timberland management plans. Landowners with smaller timber took advantage of pulpwood markets, however, thinning timber tracts or cutting pulpwood to meet increased demand from pulp and paper mills.

Demand for pulpwood was noticeably higher in 2010. According to Forest2Market’s data on delivered pulpwood prices, pulp and paper mills purchased an additional 5 million tons of pine pulpwood and chips. This is 4.3% higher than 2009’s volume. Hardwood pulpwood and chip purchases increased 2 million tons, an increase of 5.4% year over year.

Pulpwood prices rose across the board as well. According to Daniel Stuber, Forest2Market’s Director of Operations, “Emergency shortages at mills in the first quarter of 2010 drove prices higher. The wet weather restricted supply to the point that hardwood pulpwood prices increased by more than $10/ton on average. Pine prices rose by $5/ton. Even though markets retreated in the second quarter and then leveled off in the last half of the year, prices for both products settled above 2009’s levels.”

The price of pine fiber increased by $2.00/ton, or 6%, in 2010, just $0.10/ton below the historic high. Hardwood fiber prices exceeded 2009 levels by $4.62/ton and were $3.48/ton above the historic high set in 2008.

Volume and prices for pulpwood are likely to remain near second half levels through much of 2011, although, according to Stuber, “greater risk will creep into the market at the end of the year, as our economic outlook indicates that a slowdown in the economy in the fourth quarter is a distinct possibility. If this occurs, a decline in pulp and paper demand could put downward pressure on the volume of pulpwood harvested and record high prices, and timberland owners will need to revisit their harvest schedules once again.”