Forest2Market Data Shows Growth in Pulpwood Prices in Texas during 2010

December 22, 2010; Charlotte, NC

Standing timber markets in Texas have been mixed over the course of 2010, according to Forest2Market, the industry’s only provider of local timber price reports based on actual sales transaction.

Pulpwood prices have shown modest increases. The two-month weighted average price for hardwood pulpwood from October 1 through December 1 rose 13 percent from $7.34 per ton in 2009 to $8.31 per ton during the same period in 2010. Pine pulpwood prices increased 4 percent during the same time period, from $8.26 per ton to $8.61 per ton. “While these increases are relatively modest, they reflect the relative strength of the global pulp and paper market,” said Mike Fiery, a timber market analyst at Forest2Market.

Prices for sawtimber products were mixed. Pine sawtimber prices increased 4 percent year over year. The two-month weighted average at the end of 2009 was $29.72 per ton in 2009; in 2010, it was $30.90 per ton. Small pine saw logs (also known as cut-n-saw) fell by 9 percent, on the other hand, from a two-month weighted average of $16.52 per ton in 2009 to $15.00 per ton in 2010.

Hardwood sawtimber prices dropped 11 percent, from $19.88 per ton in the October 1 through December 1 period in 2009 to $17.72 per ton during the same period in 2010.

Twelve million of Texas’ acres are forested; 11 million of these acres are privately owned. More than 200,000 private individuals own these acres and rely on the timber harvested there for income. In 2010 year-to-date, more than 11 million tons of forest products have been harvested in Texas, bringing in $217 million in revenue for these landowners. While these numbers are certainly less than mid-decade highs, when forestry-related industries in the state supported more than 60,000 jobs and contributed more than $6 billion to the state’s gross domestic product (GDP), the timber industry continues to be very important to the economic health of rural counties in Texas.

“The Texas timber industry fared about as well as could be expected in the last year,” says Fiery. “Since the housing market is not likely to return to its former highs for several years, new markets will be the key to the future. The wood-to electricity and biofuels facilities that are either scheduled for or under construction are a good sign for the industry, as the industry tends to be stronger when there are more markets for timber products. Texas leads most states right now in making a transition to biomass power and fuels plants, and this will be important for healthy markets in the future.”

Texans should not be concerned that these new markets for timber products will lead to the destruction of the state’s forests, however. According to Fiery, annual forest growth exceeds annual forest harvests in the state by 34 percent. “Even as more wood-to-energy facilities come online, Texas forests are in a good position to support high levels of industry employment into the future.”