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Author Topic: cancelled orders  (Read 8289 times)

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Offline Ron Wenrich

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cancelled orders
« on: November 30, 2000, 02:16:45 PM »
We went back to work this week after our Thanksgiving hiatus to find that on of our major buyers may not be buying lumber for the balance of the year.  They scaled back their operations in August saying it was an early fall slowdown.  Now, they have customers cancelling orders.  No lumber until they work off their inventory.  They make panels for the furniture markets.  Weekly production around 1/2 MMbf.

Meanwhile, mills are trying to get into other marketplaces.  These will eventually dry up.  I foresee a price shift in the making.  Possibly, a real slowdown like is being felt in the softwood markets.  Major mill shutdowns in the softwood sector in the South.

Other tidbits:  a 12 MMbf flooring plant in Virginia has shut down, Norfolk Southern is scaling back, IP has shut down several pulp operations.

Are you folks in the Midwest seeing the same things?
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Offline Jeff

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Re: cancelled orders
« Reply #1 on: November 30, 2000, 03:59:12 PM »
Generally coming into this week (week after deer season) we are low on logs due to Hunting and Mud.It is also usually one of our busiest times.

This year the log shortage is still there, but we are at least 10 days ahead of orders (non-orders). Our main customer is at about 50% of normal. Never seen it this slow at this time of year, at least since I've been here.
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Offline Ron Scott

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Re: cancelled orders
« Reply #2 on: December 01, 2000, 06:41:52 AM »
So far I have been selling all stumpage that I have prepared. Just put out another oak/Aspen bid sale. So hope things will continue to be favorable here. The economy has some concern at present.
~Ron

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Re: cancelled orders
« Reply #3 on: December 01, 2000, 12:57:41 PM »
Well folks, it looks like the entire enconomy is slowing down.  Automotive, new home starts, the stock market, etc.  I keep a close eye on the markets because it effects my business (environmental consulting), and it looks like everything is in a bit of a slump.  Someone needs to visit Mr. Greenspan and get these interest rates lower to 'restart' the economy.  Recession maybe?

Marc

Offline Ron Wenrich

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Re: cancelled orders
« Reply #4 on: December 01, 2000, 03:07:33 PM »
Business construction was up in October.  I doubt if Greenspan will lower rates, unless the bottom drops out.  A lot depends on Christmas shopping.

Today, Chrysler will idle some plants to help reduce unsold inventory.  Bad news for pallet business.  I've seen figures of 50% of all pallets are automotive related.

Stock market is taking a hit, but some farm products are starting to rise, thanks to exports.  There are going to be some very disappointed 401K plan holders come this January.  This may send a lot of gloom and doom since many will feel poorer.  Even a rate reduction won't get rid of it.
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Offline Jeff

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Re: cancelled orders
« Reply #5 on: December 29, 2000, 07:53:55 PM »
I.P. is our biggest customer of aspen.They are using only about 50% of what they were last quarter, actually the last 5 years. we run two mills and there is talk of shutting one down.
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Offline Ron Wenrich

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Re: cancelled orders
« Reply #6 on: December 31, 2000, 06:49:03 AM »
The company that cancelled the orders have finally bought 1 load of red oak and 1 load of 5/4 poplar.  The outlook does not look good.

The problem is the competition is in a cutthroat mode.  These guys are starting to lower prices in order to maintain business.  How long until that starts to effect prices and at what point do some mills stop cutting?  Lumber buyers can lower prices by stiffening the grade.

Our selling point is quality.  Our thicknesses are good and wane is kept to a minimum.  We've been able to pull in a couple of buyers that we didn't sell to before.  How long that goes on until market saturation is unknown.
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Offline Forester Frank

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Re: cancelled orders
« Reply #7 on: January 04, 2001, 03:49:11 AM »
Our particle board order file is relatively low, as our many others in the panel industry. The midwest is a big user of particle board for ready to assemble (RTA)furniture. Also sink and counter tops.

The key indicator is home construction. Not as many homes being built, thus less computer tables, desks, counter tops, etc. Greenspan will not follow the same actions as before when the economy slumped during the Bush administration. He announced that he will be lowering interest rates to stabilizes this slight downturn.

I think that the media has a lot of influence over the perception of a recession. They talk about slow down so much that we all begin to feel there is a true slow down. People then start pulling money out of the stock market and putting it into conservative, safe, investments. Many now are just shifting away from tech stocks and into solid companies with deep pockets and real asset.

So keep your chins up and stay in it for the long haul. President Bush can only influence the economy slightly, he will need help from the 107th Congress and the rest of the country.
Forester Frank

Offline L. Wakefield

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Re: cancelled orders
« Reply #8 on: January 04, 2001, 04:16:01 PM »
   A note on the economy- pick up the Jan 2001 issue of Scientific American. Look at the article in the Technology and Business section starting on page 31, entitled, 'Complexity's Business Model'. It outlines a precursor of chaos theory which (if I understand it) draws on quasi-biological or genetic models of information processing and process control to restructure business in patterns not necessarily logical but supposedly efficient.
  Go on down to the section on financial applications- middle column of page 34. Read that thing and tell me if you think they are saying that machines are now playing the stock market.
  Let me know what you think of this- a la terminator series of movies.
  I find it seriously obnoxious that as a producer in a primary industry (ya know, production of things you eat or use to stay ALIVE!), I could be modeled by a mechanical construct that would predict buying and selling of 'my' product.
  OK, so you all know that my 'real' job is as a nurse, and my farming, tree growth, and NTFP is more 'play'- but it's not all play. It's survival. I've always felt that if I was going to have stock, I wanted a portion of it to be livestock- that way if things go bad, I can eat.
  Tell me what you think. How do you feel about the market and the economy? Is it an uneasy alliance that you tolerate? What do you think of 'futures' when it's your future that they are talking about- and buying and selling?
  I am necessarily of 2 minds here (as you may be) since I also own stock- and naturally would like to see it do as well as possible.
  I'm asking cuz I really want to know. It's clear from this thread that any small downturn cuts really close to the bone for you- it may be a small respite for a woodland that could use a slack time to have the trees grow a bit bigger- but it's identically and immediately less work for you.
  Since working with woodlands is also identically a living system, is there any application of this complexity theory that you could (or already do) use in tasking? I'm not sure how to phrase that question precisely, cuz I don't understand the theory fully- but in their example, one can (supposedly) make better headway with onload/offload tasks on air freight carriers with this approach than with a more linear model.
  Would this help in approaching a living woodland and trying to match its theoretical output with a dynamically changing market? Or is it more like- the possibilities are infinite until you fell the tree, and then you are into the processing line with very little room for flexibility until the finished product is (kiln?)-dried and stacked- and then you wait til someone buys it?
  Sorry for the dumb questions.   LW
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Offline Ron Wenrich

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Re: cancelled orders
« Reply #9 on: January 05, 2001, 09:29:44 AM »
I don't get that magazine, but from a web search, I found the chaos theory.  It wss developed by Karl Marx and basically means that nothing can be predicted beyond a short span of time.  I'm not sure if this is the same as the random walk theory or not.

I do invest in futures.  There are definite cycles in many markets, especially when you look at some daily markets.  They don't do that during high volitility, but they can be predicted.  Fibonacci numbers can be used to predict retracements, almost to the tick.

Machines can only play the stock market if they are correctly programed.  That may be possible for the short term, but doubtful for the long term.  The program would rely on mechanical trading, and that doesn't work.  

So, what you are left with is cycles.  They are hard to measure, but they are present in the markets as well as nature.  Nature may even influence the business side of things, making commodities more or less expensive.  

We were in a bull market.  It lasted 17 years, and it is over.  The previous bear market lasted 16 years.  Investment strategies that worked the past 10 years will not work the next 10 years.  Buy and hold is not necessarily a good strategy.  

The demise of the bull market has left a lot of depleted accounts where stocks were used as collateral.  Dot com companies are all speculative stocks and that bubble has burst.  With the reduction of collateral, it will be hard for new investment; even with the decrease in the lending rate.  The collateral is lost and can only be earned back to its former amount.

What that means for the wood industry is that the markets will contract.  People will not build as large of homes or as many.  Smaller homes mean less furniture and less lumber.  There may be a decrease in business expansion.

But, housing also goes in cycles.  It happens about every 30 years, and lasts for about 15 years.  We had surges in housing in the '50s-'60s, and '80s-'90s.  Looks generational, doesn't it?  

The same cycles go for hardwoods.  They are on about 30 year cycles.  Oak has had its heyday.  Maple & pine were popular in the '50s.  Looks like maple will be back in the saddle again.  That looks generational, too.

As a landowner, it is time to allow your forest to grow.  You can wait for the next cycle to push timber prices back up.  I doubt if this will happen for several years.  Industry will have to get lean and mean, again.  People will have to want to get into debt and mortgage rates will have to fall alot.

BTW, the recent rate cut by Greenspan was a political move.  He is not in favor of a tax decrease, and just wanted Bush to know he is in control of the economy, not the Prez.  Greenspan is in favor of debt reduction.  Long-term versus short-term views.  I go along with Al.
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Offline Jeff

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Re: cancelled orders
« Reply #10 on: January 05, 2001, 09:55:32 AM »
Here is a good explanation of Chaos Theory, as applied to nature and finance.

Chaos


I remember reading years ago about chaos theory in a Michael Crichton novel.
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Offline Ron Wenrich

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Re: cancelled orders
« Reply #11 on: January 05, 2001, 05:59:20 PM »
That's a pretty good explanation.  I almost understand it.
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Offline Ron Scott

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Re: cancelled orders
« Reply #12 on: June 29, 2001, 06:19:31 PM »
Has there been any improvements in demand for wood products ie: sawlogs, pulpwood, chips, firewood etc? Any preferred species, hardwoods, softwoods?
~Ron

Offline Tom

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Re: cancelled orders
« Reply #13 on: June 29, 2001, 06:59:50 PM »
Ron,

I thought I had read all the threads but I missed this one.  Not having any comments of genius I thought I would offer 2 cents.  

We have mills closing down here that are putting people on the streets by the droves.  Paper mills and sawmills both.

The price of wood is down so far that empty lots are full of log trucks and trailers with "for sale" signs on them.

I am sawing for a logger tomorrow and set the mill up today.  A driver brought a loaded trailer of sawlogs back from the mill to the woods while I was there and told the foreman, "they aren't taking buying anymore wood till next thursday".

My sawing business has dropped off to almost nothing in the past 2 months and I'm just a peanuts operation.  I'm beginning to wonder if anybody is doing anything.  This is the kind of slowdown that gets caused by storys rather than fact.

Do you reckon somebody said times were going to get tough?
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Offline Don P

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Re: cancelled orders
« Reply #14 on: June 29, 2001, 08:45:27 PM »
I heard today that housing starts were up for April (OK so when in memory didn't starts go up in spring?) ((ever want to slap statisticians!?)) and energy prices are heading down. ...For what its worth.
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Offline Jeff

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Re: cancelled orders
« Reply #15 on: June 29, 2001, 09:25:56 PM »
Well, I am on a forced vacation starting today and for the week of the 4th. Both of our mills will be shut down. We are at least a week ahead when we are usually working a lot of overtime at this time of year.

So, I will be taking off for the cabin either tomorrow, or Sunday, or Monday. Whenever I happen to get around to it. I got 9 days to do NAHTHUN~!

When I disappear, leave the light on fer me!
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Offline Tom

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Re: cancelled orders
« Reply #16 on: June 29, 2001, 09:41:45 PM »
HEY JEFF !!!!!!!!

Can you see this light from the cabin?


                                 
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Offline Ron Wenrich

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Re: cancelled orders
« Reply #17 on: June 30, 2001, 05:41:02 AM »
Here's what I've been noticing.  I follow the softwood lumber futures markets.  Back in late April, prices started to rise.  To give you an idea, take a look at this link:  http://futures.tradingcharts.com/chart/LU/91

These prices are as high as it was before the dip.  Just flip to a monthly chart and you will see what I mean.

This means that supply isn't keeping up with demand.  Eventually, more material will have to be cut to replentish the inventories that were stacked up when demand was low.

For hardwoods, that means we have a 6 month delay between our demand and softwood demand.  Hardwoods are used in the finish of homes as well as furniture.  So, any loosening of our markets won't occur before fall.

Other factors for hardwoods include other manufacturing, especially auto.  1/2 of all pallets are used in the car industry (so I've heard).  Lower auto demands equal lower pallet demands.  That depresses prices.  Railroad tie demand has remained steady.  Prices have dropped due to a better supply.

What I've been noticing is that buyers are a lot fussier with the grade.  They will reject material that they bought 1 year ago.  That effectively lowers price to the mill.  But, they are buying.  They weren't this spring.

Another factor will be the strength of the European economy and the American dollar.  Right now the dollar is high against European currency.  This makes our product high priced, even though our prices are lower.  That lowers demand.

The European economy is not really all that strong.  A lot of our upper grade wood is exported, as well as veneer logs.

One thing surpressing pulp markets is the import of processed pulp from South America.  That is also occuring in the dimension market as well.  1/3 of American lumber useage is imported wood.  A good deal of it comes from Canada, but, South American imports are making inroads.  Primary producer is Chile.

My prediction is for hardwood markets to remain steady throughout the summer.  Demand will pick up starting in the fall.  If housing remains good, then prices may follow.  I believe the worst is over.  (Of course, I could be wrong).

For housing starts, try this link: http://www.dismal.com/economy/releases/release_2k.asp?r=usa_housing
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Offline Jeff

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Re: cancelled orders
« Reply #18 on: June 30, 2001, 06:08:22 AM »
Kevin, do you happen to look like Slim Pickens?
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Offline Kevin

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Re: cancelled orders
« Reply #19 on: June 30, 2001, 10:48:57 AM »
Jeff;
Is that a race horse?
I like horses but I`ve never watched a race or bet on a horse.


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