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Wall street journal article on pine over abundance in the SE

Started by alan gage, October 13, 2018, 08:21:42 PM

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alan gage

Hope this hasn't already been posted. Interesting article about an over abundance of ready to harvest pine in the SE. Would be interested to hear what those of you in that area think about it.

Thousands of Southerners Planted Trees for Retirement. It Didn?t Work. - WSJ

Alan
Timberking B-16, a few chainsaws from small to large, and a Bobcat 873 Skidloader.

Southside

I would say it is actually spot on. Been saying the same things myself. The only part the article missed is that it is going to get worse in the future as harvests are faster than ever and more and more folks are planting to pine these days. Even tillable ground is being planted. 

Virginia has a tax based cost share program to plant pine today.  Makes absolutely zero sense. But what do I know?
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Magicman

This is a very real situation.  Overabundance of SYP plus timber companies own zillions of acres so they control the price.  Personally I am thankful that I only have ~30 acres of SYP on my property that I planted in 2005.  When it is thinned and harvested (clearcut) it will not even bring enough to pay the taxes incurred since it was planted which means that the planted acres will produce no income. 

Thankfully the rest of my property is predominantly Red Oak.   
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

brianJ

Another example of best to not follow the popular or trendy thing.    On a personal note the best story I ever heard about not doing the trendy thing was from my wife about the Grandfather who raised her.

In southern Conn back in 71 maybe 72 prosperity and thus new people had been flowing in fast for a bunch of years.   The old ways were dying out and violence from the City were starting to flow alongside the influx of people and money.   

For his generation there was still the newness of electric appliances in the kitchen and central hot air controlled by thermostat and the marvel of all that ease.    Going against trends he got himself a wood stove installed and because of so little demand he bought the nicest cheapest seasoned firewood.    Most everybody thought the old timer was going a bit daft  until that winter of the Arab oil embargo.    Heating fuel doubled then tripled as the winter got stronger   Meanwhile he kept the stove stoked so much he had to keep the windows open to keep it bearable inside.    

alan gage

I thought it was interesting than even though log and lumber prices are up in other parts of the country it's not so feasible to ship logs long distances to other markets. The mills, on the other hand, are looking to make money off the low log prices because lumber can easily be shipped to other markets.

Hmm, maybe those of us in areas with no trees suitable for framing lumber could start getting logs hauled this way for a reasonable price. They can haul a load of hardwoods back. Then again 2x6's are pretty cheap at the lumber yard.

Alan
Timberking B-16, a few chainsaws from small to large, and a Bobcat 873 Skidloader.

mike_belben

Quarantines and the current truck shortage make it spendy.  Theres more trucks available in winter but DOT doesnt seem to love logs on flatbeds without atleast stakes, which most flatbedders seeking a backhaul arent likely to have.  

If DOT allowed logs in pyramid configuration with just dunnage and binders then yeah, youd be able to ship them a lot cheaper.  
Praise The Lord

Sixacresand

I could not read the WSJ article because I was not a subscriber.  I know a lot of landowners get taken by timber buyers.  I suggest anyone with timber hire a reputable forester who knows the market.   For folks with acreage, diversify:  row crops, hay, timber, hunting leases.  A lot of private landowners find their land is a liability due to property taxes.  I think the way to make a small fortune is to take a large fortune and invest in farming.   
"Sometimes you can make more hay with less equipment if you just use your head."  Tom, Forestry Forum.  Tenth year with a LT40 Woodmizer,

Magicman

My property taxes are over $4K per year and I could easily get $5K per year for a hunting lease so it could become self sustaining but my choice is to keep the hunting/recreational rights for myself and my family.  ;D
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

nativewolf

Quote from: Sixacresand on October 15, 2018, 07:18:54 AM
I could not read the WSJ article because I was not a subscriber.  I know a lot of landowners get taken by timber buyers.  I suggest anyone with timber hire a reputable forester who knows the market.   For folks with acreage, diversify:  row crops, hay, timber, hunting leases.  A lot of private landowners find their land is a liability due to property taxes.  I think the way to make a small fortune is to take a large fortune and invest in farming.  
Lots and lots of fortune money has gone into farming in the last 40 years and it keeps moving.  They do very very well, farming 30k acres gives you flexibility and derisk you to some extent.  
Same with Forestry, the issue as Southside correctly points out is that there is just way toooo much planted pine.  The issue with genetically improved pine is that it is planted so now we have to wait 30 years to work through the wave of over planting.  Why anyone plants pine today, especially north of southern NC is ????   We can grow black cherry almost as fast as pine and the forest service is pushing pine ...every day pushing fing pine.  I am fighting them at every client site.  The only prescription they have is to plant pine.  Doesn't even make good hunting ground, a good White Oak forest gets much more in hunting lease than a pine forest.  Once that canopy closes it is basically a desert until they become merchantable.  
Pine forestry..basically an economic joke for all but a small circle of folks about 400 miles from the core southern pulp markets.  And it wasn't thousands of southerners it was hundreds of thousands.  As a result we have more additions to our pine timber growing today than at any time since the American revolution.  Just think about that.  To cap that off, they are growing them even faster.  
Liking Walnut

alan gage

Quote from: Sixacresand on October 15, 2018, 07:18:54 AM
I could not read the WSJ article because I was not a subscriber. 
Neither am I but I could still read it. It popped up some window asking me to subscribe but I just closed it out and the article was there.
Alan
Timberking B-16, a few chainsaws from small to large, and a Bobcat 873 Skidloader.

mike_belben

Ive culled every pine except the planted row of shade sapplings by my mailbox 

Im not waiting 30yrs for 20Cents/bf.  Inflation grows faster than that.
Praise The Lord

Ron Wenrich

But, when I go to the local Lowe's or Home Depot, their dimension lumber is Canadian.  The prime stuff comes from the West Coast.  I remember that SYP was the predominant building species back in the '50s and '60s.   Also lots of SYP in plywood.  Only SYP is in treated wood.  Seems like you lost market share.
Never under estimate the power of stupid people in large groups.

Ed_K

 Aren't they pushing the pine because we're supplying EU with industrial wood pellets for the next 50 yrs?
Ed K

WDH

Down here, SYP is used for treated lumber, trusses, rafters, and joists for strength applications.  Most builders use SPF for studs, which are straighter but not as strong. 
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

WDH

What they don't tell you is that the forecast is for this "wave" of over-supply in the South will pass through about 2020.  In the late 90's and early 2000's until the 2007-2008 Recession and after, plantings were off.  Timber supplies will tighten, and the stumpage prices will go up.  Plus, the Industry is adding new capacity due to increased demand.  It is all a big circle.
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

Wudman

There are a few more pieces to the puzzle.  Part of the oversupply issue goes back to the Global Financial Collapse of 2008.  Here in Virginia, we lost over 50% of our sawmill capacity....as did much of the South.  Large landowners started to deferring harvests.  The two contributed to a general oversupply of raw material.  Markets tend to self correct.  Existing mills in Virginia have upgraded and increased capacity.  In these areas of oversupply and cheap stumpage, new mills are slated to come online.  A handful of these 300 Million board feet per year monsters will make a difference in timber prices.....and the Canadians have run to the U.S. South.

For years, Canada dumped cheap stud grade wood into our markets, thus you don't see as much southern pine in the non-treated stud grades.  Our Southern Pines are predominantly sold into the treated wood market.  Spruce / fir does not accept treating as well as the southern pines.  Plus, you won't find many 2x10s and 2x12s coming out of Eastern Canada.  Southern yellow pine retains its market share.

Another factor is merger and acquisitions.  Consolidation has also hurt the marketplace.  Here, WestRock is close to a monopoly in the pulp side.  They own mills at Covington, VA (old Westvaco mill), West Point, VA (old Chesapeake Forest Products), Hopewell, VA (old Stone Container), and they are in the process of buying Kapstone Kraft (Champion International).  Those four mills, with overlapping procurement zones, will be under one ownership.  Any thoughts on competition there?

With that said, there is still opportunity for financial returns on Southern pine.  The last 10 years have been rough, but times are improving.  Growth rates are in the 10% range, so there is biological growth regardless of the financial events of today.  I just thinned my pines that were planted in 2002.  I recovered about 1/2 of the cost of my land purchase with this first thinning.  The second thinning in another 6 or so years will have the land paid for.....and I have deer running out of my ears following this thinning.  Life is good on that front. 

Wudman
"You may tear down statues and burn buildings but you can't kill the spirit of patriots and when they've had enough this madness will end."
Charlie Daniels
July 4, 2020 (2 days before his death)

Claybraker

Initial estimates are losses of $1 billion of standing timber from Hurricane Michael in Georgia. When all that salvage timber hits the market, it could depress stumpage prices for weeks, maybe even months, over in that part of the state.

quilbilly

We ship sawlogs on flatbeds all the time with no issues, stake and binders pyramid style.
a man is strongest on his knees

Don P

One more that might affect demand in the future. Mass timber construction is in its infancy right now but it will probably grow in the future as they begin to build LEED grade high rises out of timber panels to reduce concrete use. Basically 2x dimensional stock cross laminated into panels from 4 to 12" thick. It has received code approval and is being pushed heavily in the design community.

mike_belben

Quote from: Claybraker on October 20, 2018, 07:19:50 PM
Initial estimates are losses of $1 billion of standing timber from Hurricane Michael in Georgia. When all that salvage timber hits the market, it could depress stumpage prices for weeks, maybe even months, over in that part of the state.
My mother lost half her house in it. So did everyone else around.  Now insurance is rebuilding them all at once and every tradesman is flat out.  So theres a counterweight effect there, the surge in demand for lumber to rebuild may pull prices up for a while.   Have to wait and see. 
Praise The Lord

Southside

Problem is the majority of that lumber will be northern spruce and fir. 
Franklin buncher and skidder
JD Processor
Woodmizer LT Super 70 and LT35 sawmill, KD250 kiln, BMS 250 sharpener and setter
Riehl Edger
Woodmaster 725 and 4000 planner and moulder
Enough cows to ensure there is no spare time.
White Oak Meadows

mike_belben

Praise The Lord

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