I was expecting log prices to start climbing as diesel rose, but they haven't been. I am hard pressed to get 300.00 a 1000 for oak sawlogs. Can't even skid them out and truck them for that. I had a guy bring a load in for me to mill a few days ago because the log yard wouldn't give him enough for it.
Pine and helmlock is bringing more than oak around here, too bad this area is hard pressed to find any.
Where in ky. are you located? I'm in east ky. was in Morehead today, where there's a mill every 1/2 mile, some were almost out of logs, found out one mill had 2 weeks sawing, guess the weather is the reason, But I wouldn't be looking for log prices to improve, lumber market is way down, and the big mills are feeling the higher fuel prices also.
I am in Lexington, I have hauled to Morehead in the past, but its closer for me to go to Richmond. Veneer I take to Winchester and even that is not bringing alot.
I sure would not hold my breath waiting for the price of logs to go up because diesel has gone up in price.Or anything else that is needed to get logs out with.I just had to put a tube in the front tire of my 40 hp tractor,16 inch,$36 gone,$6 for labor and the rest was the tube.Last one I needed was quite a few years back,but $10 did it I thought.And that is in my little world here.I know there are others that can tell you more expensive stories than that.I don't know when it will all stop.Things have ben high in the past,but now it's out of this world high.
So, when diesel prices go down, you would be OK with someone lowering their log prices?
Around here the state had been telling farmers to plant Walnuts because they where worth so much and in 50 years they could retire off of them. So there are fields around that are rows of walnuts trees, I don't think anybody will be retiring off of them though any time soon.
At least scrap is high if it gets to the point we can't run our equipment anymore.
Quote from: Ron Wenrich on March 12, 2008, 06:01:37 AM
So, when diesel prices go down, you would be OK with someone lowering their log prices?
Sure if they had gone up with diesel. That is the way it should work, cost of production rises, end product rises, cost lowers end lowers.
But over the past two years I have seen cost of production rise and value of raw product decrease, but the end product goes up!!!!!
Most hardwood species and softwood species are commodities. People who sell commodities are price takers. Cost of production has no influence on what someone will pay for commodities. If people who produce commodites don't get enough, they simply quit producing. This lowers supply and eventually demand outstrips supply and the price goes up. Demand has dropped and supply has not dropped enough yet. There will be a bunch of loggers go out of business this go round.
I have had loggers offer to lower their price just so I will take their cedar. Unheard of.
Quote from: Ron Wenrich on March 12, 2008, 06:01:37 AM
So, when diesel prices go down, you would be OK with someone lowering their log prices?
:D :D :D
I will pretty much go out on a limb and say you will not see diesel prices ever go back down again. Whats done is done, folks are already "used to" paying the prices, and theres no way or reason for them to be adjusted back down.
Not too many years ago, I could select out beetle killed spruce sawlogs and sell to mills for about twice what firewood would bring. Now, firewood price has eclipsed sawlog value, in most cases. It seems wrong to burn a clear solid log but they don't have a great shelf life and cash flow is always looming. I'm kind of glad I don't have a mill to worry about, at least I can pay the bills and make a bit of a wage on firewood.
one mill here has actually started paying a % for each load of logs you bring in. i am not sure what % it is but they call it a fuel surcharge so the loggers will take the time to cut sawlogs instead of just pulping everything out.
Cost of production goes up for the mills, as well. Everyone is effected by the cost of fuel. What comes into the yards eventually has to be hauled out. We can't pass that on to customers. They tell us what the market value is. If we can't produce at a profit, our doors go shut and you have one less place to sell logs, even in good times.
Will the price of diesel go down? Maybe. If our dollar was stronger, the prices would be lower. The price of oil is simply the reflection of the weak dollar. Watch oil prices when the dollar takes a dip.
On Tuesday of this week my diesel went up $.05 per liter or $0.28 per gallon, the next day I got a notice from the sawmill that logs were going down $6.00 per ton or $28.00 per thousand.
The next day to rub a bit more salt in the wound the diesel went up another $0.05 per litre.
Oh yes the mill also noted that they were increasing the minimum diameter specs of the logs.
So there seems to be some correlation between diesel and log prices... Diesel goes up .. logs go down.
Gee that didn't seem to help me any?????
:D :D Ain't that the truth.
I wonder if higher transportation costs will help out local producers. I have seen a lot of constructionn lumber with stamps that it was made in Europe. At some point it's got to be cheaper to buy local. Or is the weak dollar working against us in this regard as well?
Dave
The fuel prices have probably helped us get a few more logs. I think our local logger figured out that he could better afford bringing his "junk" logs to us than hauling them to further away markets. For sure, we're not getting many of his good logs as he apparently has better markets for them - but further away.
I think Mary said over the past 6 months she's been paying him an average of $220/mbf for mixed oak top cut logs.
We just went through about 100 8 and 10' logs and made a 6600bf of 4/4 plus about 90 6x8s out of the heart saws. We have the 6x8s sold but not delivered. We shipped out the 4/4 on Thursday. We can afford to eat but it won't be prime rib.
As long as you're moving your lumber by trucks, the transportation costs by boat will undercut you. Same goes for rail.
But, the lower dollar makes our markets worse for European producers. Their more expensive Euros mean that their products are more expensive to US buyers.
The reason you're seeing European stamps is because some Canadian producers found that they can import European lumber and sidestep those tariffs that the US has on Canadian lumber. It has less to do with the US being an attractive market for Europeans, and more to do with how Canadians are marketing lumber.
Yea, I forgot to mention that the truck cost us $50 more than the last load we shipped out late last fall. More than an 10% increase.
While I agree with you Ron, a lot of folks forget that there are still trucking costs from the boat to wherever.
At some point the costs should come closer to being equal and that "should" help promote more locally cut lumber and other things.
That however, is still a ways off.