Housing Slump Hurts Sawtimber, Pulpwood Strong in Alabama

August 3, 2007; Charlotte, NC

Peter J. Stewart, president and CEO of pricing data provider Forest2Market (F2M), recently told landowners that the housing slump has hurt sawtimber prices. But he said pulpwood markets are strong and carbon absorption could be a new revenue source for timberlands.

Stewart offered his comments during the “Capital Ideas – Live” conference sponsored by the Alabama Forest Owners’ Association on July 18. Stewart pointed to an eight-month inventory of unsold homes nationwide, and he said it would take up to 16 months for the inventory to normalize.

“We’re looking at a situation where we have one of the highest inventories of unsold new homes and unsold existing homes in our history,” Stewart said.

For those reasons, Stewart said he expects the prices of sawtimber to remain soft through most of 2008. But, Stewart also had good news for forest landowners.

He attributed the strength to a growing interest in wood fuels and the increased demand for pulpwood. As a corollary, many pulp mills in Alabama are using more pine instead of hardwood, which is driving the demand for pine and generating profits for pine plantations.

Stewart also cited a new practice of trading carbon credits on the Chicago Climate Exchange as a moneymaker for forest landowners. Companies and communities that join the exchange, purchase the credits to offset their own carbon emissions in an effort to reduce the carbon levels in the atmosphere.

“It basically boils down to a new revenue stream for the forest landowner,” Stewart said.

Returns may be small in the short run for individual landowners due to the limited amount of credits trading on the exchange, Stewart said. But he expects the practice to become more common and more successful over time as faith in the transactions increase and the standards for measuring the credits become more credible.

To hear Stewart’s discussion, click the link at the bottom of the page

Charlotte, N.C.-based Forest2Market, founded in 2000, provides raw material pricing data for the forest products industry that is current, local and accurate. The services provided by F2M allow landowners and forest products professionals to make informed, fact-based decisions about buying and selling.