For the last 11 years, Forest2Market has been collecting stumpage sales data in the US South. In addition to volume and price by timber class (pulpwood, sawtimber, chip-n-saw, etc.), we’ve also been collecting information about tract size, loggability, access to roads and quality of timber. Over the years, I’ve received dozens of calls from customers about why prices are changing dramatically in their local wood basins. Because Forest2Market collects so many data points about each of the sales in our database, we have particular insight into the issue of price variability. Here are the top 5 causes of this variability:
- Competition: Some areas are much more competitive than others. The difference between pine sawtimber prices can vary by as much as $8-10 depending upon whether the timber is located in a highly competitive area or a marginal one. Wood basins are generally small in size and only consist of a handful of counties. Pricing just a couple of counties over can vary greatly as mills prefer to procure wood from as close as possible.
- Mill Inventories: When mills run low on wood, they will often go out on the open market and pay a big premium for wood. This strategy ensures that the mill will get the additional volume it needs to keep operating at its desired production level. At the same time, the mill keeps its gatewood prices low while obtaining the additional amount on one time “spot price” basis.
- Weather: Wet weather logging conditions make it difficult for loggers to supply as many loads per day as they would during dry times. Tracts that are considered wet weather tracts are ones that can be harvested year round. These tracts earn a big premium, as loggers shift production to them during wet weather months, and mills will pay a higher price in order to get the supply they need.
- Tract Variables: Tract size also plays a significant role. One major expense for loggers is moving equipment from one tract to another. When loggers purchase larger size tracts (200 acres or more), they can increase their weekly production by harvesting and hauling more loads per day. Tracts with more volume and acreage will often secure price premiums.
- Tree Size and Quality: Pricing can appear to be product based when in fact size is what matters. In general, the size of pine logs fall into the following categories: from 5-7” diameter at breast height (DBH) make up pulpwood, 8”-11” comprise chip-n-saw, and 12” and higher are considered sawtimber. As logs get larger, the per-ton value of the trees will go up. Sawtimber that has a DBH of 18" will get a higher price than 12" sawtimber, for instance.
About Forest2Market’s Stumpage Price Database: Forest2Market’s stumpage database contains timber sales data from a variety of contributors, large and small, and together these transactions provide a full spectrum view of the overall market. Forest product companies (15%), wood dealers and loggers (30%), consultants (15%) and landowners (40%) all contribute information. Forest2Market combines all their sales data together in one database, aggregates it, and then reports an overall weighted average market price. Forest2Market is a neutral 3rd party for timber buyers and sellers. Since we do not buy or sell timber, we have no motive to manipulate or misconstrue information. Our main goal is to provide accurate information to help buyers, sellers, and consultants make the best decisions for themselves and their customers.
Comments
john davis
11-16-2011
I have only one comment. Most of the data is accurate but in the last couple of years, the people managing the TIMO’s and REIT’s have skewed the numbers somewhat. They have unrealistic evaluations of the markets and when they have a timber sale they most times will “no sale” the tract unless the bidder trips up and pays too much.
Forest2Market: July 14, 2023
