Every log is different, and every load of logs is different. That's why I often have customers ask me how we account for log size and its influence on price in our timber pricing products and services. As many of you may know, F2M collects log size in both its stumpage price database and its delivered pricing service.
In response to this common question, I prepared this presentation to explain how pounds per lineal foot or PLF is measured and how F2M uses this measurement to describe pine sawtimber pricing in the market. We've found that doing so reduces much of the variability in price between loads and between tracts and provides our customers with a defensible index price for supply agreements.
[...] how many pounds there are in one foot of tree. (For detail into how we make this calculation, see Daniel Stuber’s post on PLF.) So, a big tree with a large diameter will have more pounds per foot than a skinny tree. Since a [...]
I enjoyed your presentation on $/PLF. I understand how it is very important to a sawmill for the purpose of assuring quality control. However, the part I don’t understand is a landowner deciding to sell his timber at Chip-N-Saw size as opposed to letting in grow to plylogs because he is getting less $/PLF. For instance, a 6-inch pulpwood tree is worth about $1.00/PLF. (Crunch the numbers and see what you get). Based on this logic, a landowner should grow only small pulpwood because the $/PLF decreases as it grows; an 8-inch tree drops to about 72 cents /PLF. Thanks, David Stephens
You have a point that within the pulpwood product class, the price per PLF decreases from the low range (6” DBH) to the high range (8” DBH). But this is just a function of the predetermined product class. The real point is that the price per PLF decreases as trees move from small cns to sawtimber, even though, price per ton increases. This is a real reversal from historical norms where as trees grew bigger, they would be more valuable, not less valuable per PLF. In practical terms for the landowner, this means that the NPV of thier forest is maximized at an earlier age than in past markets.
I can agree with you that when the price differential of the various products decreases, the NPV is maximized at an earlier age than when sawtimber prices are relatively high. I remember back in about 1980 when Union Camp announced that they were going to a 12-year rotation on loblolly plantations. The reason being that sawtimber prices were relatively low, and interest rates were high, and they were in the paper business.
If you were evaluating the NPV of a typical loblolly plantation today, I would be interested seeing a printout What discount rate you would use? I am guesssing establishment cost of $225/acre on cutover land with a site index of 60 feet at age 25, hunting lease income = property taxes. Thin to BA 70 at age 15, clearcut at age 30, and using the current average southwide prices.
Oh, and figure it two ways: 1. ignoring the land value,and 2. figure it using, say an $800 BLV and selling the land immediately after the timber is cut. Asume no inflation of wood prices or of land values.
I am of the pre computer growth & yield models so if you or someone else can do it, that would be good.
Thanks, David Stephens
[...] Over the last five years, the relationship between price and log size has changed. By plotting annual delivered and stumpage prices against log size, the relative stability of smaller logs can be compared to the much more dramatic dip in prices for larger logs (Figures 1 and 2). (For this analysis, log size is measured is pounds per lineal foot, or PLF. For a description of how PLF is calculated and its significance, see my post: Timber Pricing by Log Size or Pounds per Lineal Foot (PLF). [...]