menu-bgimg

What we can offer you

We provide detailed transactional data, cost benchmarks and in-depth analytics for participants in the wood raw materials supply chain.
  • Pricing Data
  • Benchmarks
  • Product Forecasting
  • Advisory Services
  • Analytics
Learn More

SilvaStat360 Platform

  • Price Benchmarks
  • Madison’s Lumber Reporter
  • The Beck Group’s Sawmill TQ
  • Timber Supply Analysis 
  • Global Economic Data

Explore Forest2Market's Interactive Business Intelligence Platform

Learn More

Industries

From biomass suppliers in the Baltics to pulp producers in Brazil and TIMOs in the United States, Forest2Market provides products and services for suppliers, producers and other stakeholders in the global forest products industry.

Learn More
x
 
Blog

Converting Benchmark DBH Prices

July 01, 2014
Author: Joe Clark
An accurate stumpage price forecast is a vital tool to help overcome budget challenges and aid in procurement decisions. The precision of a stumpage price forecast increases when prices are reported based on diameter at breast height (DBH) measurements. Since the average DBH of a mill’s monthly purchase volume is different than its competitors and even its own previous month’s purchases, it is important that forecast users know how to apply stumpage forecast numbers to other DBHs.

Forest2Market’s stumpage price forecast uses a 10” DBH benchmark for chip n saw and a 14” DBH benchmark for sawtimber. These prices can be converted so they apply to other diameters using either a quick dollar/inch calculation or a more precise regression analysis.

Dollar/Inch Value

In Figure 1 below, monthly data at the 14” sawtimber benchmark is presented. Since we know the starting price and DBH, we can easily calculate the dollar/inch value by dividing the forecasted price by the benchmark DBH to determine price at a 13” DBH.

To determine the dollar/inch value in this case, the formula Price/DBH is employed, where price is the dollar amount for a given month and 14 is the benchmark DBH. Once the dollar/inch value is known, simply multiply by the desired benchmark DBH to calculate the expected price at the desired DBH. While not a perfect solution, this is a quick and easy way to convert prices to various benchmark DBHs.

The complete formula: (Forecast Price / Forecast DBH) x Desired DBH

 

PLF_Conversion_1.png

Figure 1. Original forecast price at DBH 14”, along with conversion calculations from forecasted price at 14” DBH to price at 13” DBH.

Regression Analysis

A more complex regression analysis can be used to produce additional accuracy. Here at Forest2Market we are able to use our stumpage database, which consists of tract-level sales data, to perform this more sophisticated calculation.

We can use this data to analyze DBH/Price relationships for any given area (Figure 2). Here, represented by the solid line, a logarithmic trend line is fit to the data. This trend line allows us to accurately predict average price down to a 1/10” interval for any DBH. We can then use this more accurate price at the desired benchmark DBH to run the forecast.

PLF_Conversion_2.png
 

Figure 2. Graph showing an analysis of the relationship between DBH and price using regression analysis.

Back to Blog

You May Also be Interested In

February 17, 2020
PNW Log & Lumber Prices: 1Q2020 Update
As Forest2Market data has confirmed over the last several years, log and lumber prices in the Pacific Northwest...
Continue Reading
February 13, 2020
Winter Precipitation Trends: Will Timber Prices be Impacted?
Winter weather challenges have the potential to suspend harvesting operations in every wood basket in North America....
Continue Reading
December 10, 2019
Stumpage Sales Slump: Will History Repeat Itself?
As any professional forester will attest, we quickly learn the truth of an old business adage while working in the...
Continue Reading