Log Prices

[Ron Wenrich]

We had a local mill owner that had thousands of acres of timber.  The only time he cut his own timber was when prices were way high, and stumpage prices were high.  When stumpage was low, he cut other people's timber.  Smart man, and wealthy.

[woodmills1]

todays market report was the first in months where nothing green went down in price, and very little went down on the dried lists

[Cedarman]

My export broker just told me that poplar is the only hardwood he is moving and that he will need the next 3 months production from one of his suppliers.  He also said US lumber sales are down 70%.   This tells me that those that do survive will be in demand as business picks up.  Timber will be cheap, but loggers and mills should make money again.

[Ron Wenrich]

We can move tulip poplar and white oak.  Red oak lumber is dead, but can move some casket lumber.  The cant market is totally dead.  We've only moved a load or two in the past several months.

Our veneer markets are also drying up.  They usually do in the summer. 

[mad murdock]

Casket market... not to sound too morbid, but with the baby-boomers getting older, an dpushing on, there likely will be no drop in that market, unless they offer carbon credits for getting cremated!?!;)

[chucker]

 being a boomer myself and the low market price on logs . i sure dont look forward to seeing the up side of the market none to soon !!! lol here in n.minn. the market used to be bass wood and balsam for casket making... now the trendy ways of the funeral homes are pushing up oak,ash and maple... go figure if theres better prices there ??

[John Woodworth]

Another new price sheet today, makes you want to through your arms in the air and say what's the use. Maybe about the tine people start using corncobs and ferns for TP and quit building houses for a while the mills will get the message, they sure haven't lowered their prices much yet want the raw product for next to nothing.

[fishpharmer]

I called my logger friend yesterday.  He says hardwood pulp is bringing $4-8 per ton to the landowner. 

[Ron Wenrich]

Another new price sheet today, makes you want to through your arms in the air and say what's the use. Maybe about the tine people start using corncobs and ferns for TP and quit building houses for a while the mills will get the message, they sure haven't lowered their prices much yet want the raw product for next to nothing.

Those mills are really hogging all the profits.  A few years ago, red oak was in the $1200/Mbf range for uppers.  Now its $630, when you can find a market.  Last October we were getting $1500/Mbf for white oak.  Now its $800.  Pallet stock is down $60/Mbf for a low value product.  Ash has been in the dumper for years.  And even walnut has lost its luster.  Mills also were buying logs in a falling market, losing money all the way down.

When the housing market was going into its bubble, guys went and upped their production.  That happened in the woods and in the mills.  I talked to a logger who was almost ashamed at how much money he was making.  When the bubble popped, it hurt everyone. 

We have a lot of guys that have closed or throttled back production.  That will help the supply problem.  But, when things get better, wholesalers are really worried that there won't be enough production capacity to meet demand.  Its a matter of surviving for the moment. 

[Cedarman]

All the timber that didn't get logged last year and this year is still on the stump putting on even more wood.  When times get better, if they do get better, stumpage will be cheap for quite some time.  Fewer loggers, more trees, economics dictates it.  If oil goes sky high and biomass takes off in demand, things will get very interesting.

[Kansas]

We have a lot of guys that have closed or throttled back production.  That will help the supply problem.  But, when things get better, wholesalers are really worried that there won't be enough production capacity to meet demand.  Its a matter of surviving for the moment.

I agree with that. This has gone on long enough that enough producers, both in the timber, and the sawmill side, have been pushed to the brink or gone out of business that there will be a time down the road when production will be way short of the market. Here in Kansas we had basically 4 mills that you could go to for the conventional grade markets for good logs. One is doing very little due to family issues. 2 of them are still operating, but barely. Loggers are waiting to get paid for logs hauled 6 months ago. The other is going, but 125 miles away from my area. What worries me is that with lost markets, and 4 dollar corn, landowners will look at trees as a nuisance and not a commodity. We used to have a standing rule at our mill that we always bought cottonwood and most any species at the gate. We bought walnut, oak and maple and sent a lot of that to the other mills.  Those markets are mostly closed now.  We have had to shut down buying, simply because we were the last mill buying, and are overrun with logs we need to get used up.

[Banjo picker]

My son and I went for a little drive yesterday to look at an edger we had been told about.  We didn't find it, but I did find an empty lot where a medium sized sawmill had been.  Completly gone.  Wonder where those logs are going now.  Tim

[Frickman]

Ron said that alot of guys have throttled back production. I'm one of them. I'm sending little or no wood into the wholesale grade market. I'm only cutting special orders and firewood. With the extra time on my hands I've been upgrading and updating my equipment so I'll be ready to go when things pick up again. The mill and most of the equipment are paid for and they don't eat any hay so they can sit under the roof for a while.

I have a bunch of timber either bought or nearly under contract that I'm holding off cutting. I have advised all my landowners to wait until prices improve before they harvest. I could use the extra work right now for sure, but I can't in good conscious pay them for stumpage what the market is dictating right now.

[fishpharmer]

http://msucares.com/forestry/prices/reports/2009/1.pdf

You might find this interesting.

[PAFaller]

Personal opinion, but I think we are going to have to get used to lower log and lumber prices, and landowners will have to get used to lower stumpage rates. Its evident and no big secret that this housing bubble and the rates of new home construction were not sustainable. So too was the increased prices and demand for timber. I am not saying that these prices where logs are worth less than firewood are at all fair, but I dont expect to see big hikes in prices any time soon, nor do I or anyone I know seem to think we will see the rates of a couple years ago. That being said, maybe it will help convince landowners to take a pro-active approach to management and do gentle thinnings on 10-12 year intervals to maximize their timber value and their land investment. Just my thoughts but this might be the new normal for a while. Greg

[ID4ster]

Ron,

Why do prices for veneer fall in the summer and what month do they start falling? Out here in Idaho, in normal times, we can expect the price for ponderosa pine to fall beginning in July or mid June. So its' interesting to me to see that veneer prices fall in the summer also. Also what grading rules or publication do you use to determine what a veneer log looks like on the stump?

[Ron Wenrich]

A lot of veneer goes for export.  Export buyers don't buy veneer logs in the summer.  They usually buy from September to April/May.  The biggest problem is sap stain.  The white woods can stain pretty quick in hot weather, especially in ship holds or in containers.  Wood like ash and oak are susceptible to bug infestations.  You might not be able to see them, but they'll show up down the line.  Cool and cold weather avoid those problems.

We do have a few domestic mills that buy all year long.  They can pick and choose pretty much whatever they want in the summer. 

On the stump its a lot harder to tell what's veneer.  For most species, you'll be able to see the defects from the outside that will limit the value.  Some guys will miss things like bud sprouts or grub holes.  But, there are things you simply can't see from the outside.

A lot of the white woods need a certain percentage of sapwood, or it won't make veneer.  Ash, maple, birch and tulip poplar are the ones in my area.  Sometimes there is a certain number of rings per inch a buyer will pay premium.  There's also certain worms, such as glass worm that you won't see until you spray water on the log.   Some species are prone to mineral in certain areas, and even cherry has the gum streak defect that will negate veneer values.  You won't see that on a standing tree.

I always have to chuckle when a forester marks a stand of timber and puts a figure in there about veneer value.  Some will even make comments on the quality of the stand.  I've seen a lot of logs that look good, but simply don't cut out as good as it looks.  A lot of that has to do with past management practices that have healed over. 

Timber buyers have a much better feel for the veneer value.  There aren't any grading rules or publications that can match a well trained and experienced buyer. 

[Jasperfield]

Do any of the Forest / Timber industry organizations offer a "log grading" course?

[chucker]

 >:(  YUPP!!  but its always at the expence of the seller....... :D

[Ron Wenrich]

The Forest Service came up with a way to grade logs.  They also came up with predicted grade recovery from logs using their grade and a method of grading timber based on those log grades.

But, only a few mills use those rules.  Most mills make up their own based on their local markets and what it takes to get logs in the gates.  I tried using those grades at one mill and had to add a few to make it competitive with the other local mills.

For example, many mills buy a tie grade log.  It grades out as a #3, but needs to be a little better and a little bigger.  Prices can be double for a tie grade log.  The #3 is usually called a pallet grade log.

Yields from the Forest Service were for sawing logs down to all boards of various thickness.  Few mills operate like that.  It was also done in a mill in New England.  Our black oak is a lot different than theirs.  So, although the yield study was nice, it wasn't specific to a wide range of mills.  Each mill has different cutting patterns and it probably varies from sawyer to sawyer.

Instead of a log grading course, a log bucking course is a better one.  That's where values are set.