Mississippi Timber Price Report

July/August 2000
Timber Market Comments

 

Sawtimber

As one reporter put it, the hot dry days of summer have been "the doldrums" for Mississippi's timber market in July/August. Timber severance tax collections though July indicate that about the same volume of timber is being harvested from Mississippi's forests as last year but prices are low and most contacts reflect the pessimism. We have a unique situation in Mississippi this year. The US housing market is good buy an oversupply of lumber has kept southern pine prices under price pressure since April.

Overall, the drought is affecting all parts of the timber market. Most areas of Mississippi are 22 to 35 inches of rainfall behind over the past 24 months, depending on your location. Under these conditions lakes, reservoirs, streams and rivers are low and trees are stressed. Forest fires have also been more common and a nagging problem this summer. In addition, virtually all timber can be harvested, if needed, so oversupply of logs is the order of the day. Accordingly, most mills have all the logs they need, prices have dropped and some loggers and mills have taken down time. Also, Southern pine beetle remains a threat with forests so drought-stressed. It's a tough situation that needs rain to improve.

The pine lumber market has been under pressure to reduce prices. The Random Length lumber price index has been eroding since about April - when the new quota year for Canadian lumber imports began. As of September 1st, the price of #2 southern pine 2x4s, kiln dried was $345; a year before it had been $427. That's a 26% drop in price! In addition, a lumber buyer could find western 2x4s at $204. This shows that as one market watcher said, "Southern pine mills are now the high-cost producer and since raw materials are the largest part of production costs stumpage will have to come down."

Pine sawtimber stumpage prices have been coming down this year. But stumpage prices never come down as fast as they go up. During July/August average pine standing sawtimber prices dropped about 5% statewide to the $420/MBF,Doyle range. There was one report of a spruce pine sale at $200/MBF,D in south Mississippi.

Most reports contacted reported that they had dropped their prices, their mills had plenty of logs and they were hesitant to put money into standing timber right now. Likewise, most consultants and landowners were holing their best tracts off the market but were getting ready for an anticipated improvement in the fall. When the rains do come it's likely we'll see a flurry of buying.

Meanwhile many landowners and foresters complained of difficulties getting pine plantations thinned (especially in south and central Mississippi) because of weak pulpwood demand.

In the hardwood, market logs are also abundant and several reporters commented that mills are taking down time and limiting log deliveries. Reports are that the hardwood lumber market is steady but supply is adequate. Some mills report demand for lumber good but prices are poor. (Overall, the hardwood lumber price index published by the Weekly Hardwood Review is up about 25% since August of 1999 but the price history for #1 common southern red oak lumber is flat.) This situation has made mills more choosy about the quality of the logs they buy and some hardwood mills have begun stockpiling hardwood logs for the winter a bit early.

In general, the timber markets have been poor all summer. Too many logs, not enough rain and lower prices have kept many "singing the blues" as one reporter put it. And the threat of a southern pine beetle outbreak is worse news yet. "That would be a big problem if it developed", one reporter commented, "because our ability to absorb extra wood into the market now is very limited; let's hope it doesn't happen".

Amongst all this bad news there are tracts being sold. Timber is moving to market and there were a few reporters that commented that sales they had made in central and south Mississippi have brought "decent" prices. However, they did qualify those comments saying that they would have waited to sell those tracts if they could. "Sometimes you have to sell no matter what the market looks like and take your chances" one reporter commented, "and we didn't do as bad as I expected". As we move toward fall, the pine lumber prices should rebound and if we get the normal rains there should be opportunities for landowners to sell timber in a better market.

 

Pulpwood

Mississippi's pulpwood market remained slow despite continued improving paper industry production levels. As mentioned, the dry weather is having its impact on pulpwood too. Some pulp mills are taking down time or taking wood less than 5 days per week.

Pulpwood prices slumped again from May/June a d retreated about 10 to 15%. Stumpage prices were in the range of $4 to 8/ton for pine and $3 to 5/ton for hardwood. Pulpwood prices have not been this low since about 1991-92.

The company mergers, acquisitions and rearrangements are also still having their impact on market activity. This type of uncertainty, in the short run, tends to disrupt individuals and affect the markets.

 

Other Comments

Industry contacts confirm, as they did in May/June, that many mills have little timber bought for winter. This is an opportunity for land owners who will have timber sales ready this fall.

Southern pine beetle remains a threat. No significant Southern Pine Beetle activity was reported in July/August. Timber owners should stay on guard for beetle problems in their timber stands.

During July/August however, there were widespread reports of hardwood stands with as much as 20% of the canopy dehydrated from about 2 weeks of 105+-degree days. It appears that the red oaks, cherrybark oak in particular, were hardest hit. The extent of the mortality won't likely be known until next year. Some reporters commented that it seems certain some dieback of the crowns will occur.

Would you like to receive Mississippi Timber Price Report (MTPR) information by E-mail? If you would like to receive a short version of the MTPR to your E-mail box send a message requesting this to the following address: Bob Daniels. We'll use your requests to create a distribution list to send this information to you.

View the Standing and Delivered prices for July/August 2000

As always, your comments, pros and cons are welcome.

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