Stumpage price – the price paid to a landowner for the right to fell trees and remove them from the owners’ timberland – can vary dramatically across local wood basins. Increases and decreases are typically tied to one of the five main causes of stumpage price variation.
Competition: Wood basins are generally small in size and only consist of a handful of counties. Depending upon whether timber is located in a highly competitive or a marginal area, pine sawtimber prices can vary by as much as $8-12 per ton. Forest products companies prefer to procure wood from as close to their mills as possible, and as a result, pricing can vary greatly within a relatively compact geographic distance.
Inventory: When inventories run low, mills will often go out on the open market and pay a premium for wood. This strategy ensures a mill obtains the volume it requires to operate at its desired production level.
Seasonality: Wet weather makes it difficult for loggers to supply as many loads of wood per day as they would during dry times. Tracts considered wet weather tracts can be harvested year round and, because of their accessibility, earn a big premium. Loggers shift production to wet weather tracts during months that see more rainfall, and mills pay a higher price to maintain their needed supply.
Tract Size: The cost to move equipment from one tract to another is a major expense for loggers. Large size tracts of 200 acres or more give loggers the opportunity to increase their weekly production by harvesting and hauling more loads per day. For this reason, tracts with more volume and acreage will often secure price premiums.
Tree Size and Quality: Pricing can often appear product-based when, in fact, the size of the tree is what matters. In general, pine logs fall into the following size categories: 5-7” diameter at breast height (DBH) is pulpwood, 8”-11” comprises chip-n-saw, and 12” and larger are considered sawtimber. The per-ton value of trees increases as logs gain size. For example, sawtimber with a DBH of 18" commands a higher price than 12" sawtimber.
These variables contribute to the complexity of the wood supply chain and marketplace. In order to understand market price, it is important to thoroughly examine these factors in light of both short- and long-term risks and opportunities.
Information provided by a wood supplier offers an individual view of the market that is colored by a vested interest in selling timber. Forest2Market, on the other hand, has collected stumpage sales data, including price and volume by timber class (pulpwood, chip-n-saw, sawtimber, etc.), weather conditions, tract size and timber quality, for 13 years. Our main goal is to provide accurate information to those who make decisions within the forest supply chain. Learn more about our timber price services.
This article was updated from a blog post first published in November 2011: Five-Causes of Stumpage Price Variation in the US South.
The greatest impact on wood supply and wood cost is annual rainfall. You can track delivered wood cost and annual rainfall over a long period of years for a specific basin or a region to see this. All the other causes are actually subsets of seasonality / rainfall. Other short term but significant impacts on wood cost for pulp/paper mills are lumber demand and catastrophic forest pest infestations.