North America Log and Lumber Markets

A spurt of talk in the past few days about lumber market recovery / not yet recovery prompted Madison’s to do a Round Up Update for North American log and lumber data:
Said the Vancouver Sun Tuesday, “The key commodity price for 1,000 board feet of western spruce, pine or fir 2X4s, as reported by trade publication Madison’s Lumber Reporter, fell from a high of US$324 at the start of the year to a low of $253 at the end of April.
Prices have rebounded since to US$300 per 1,000 board feet at the end of June.”
USA Supply
Conversely, average southern log prices in 2Q 2015, southern pine stumpage log price, increased a modest 1.5 per cent year-over-year to US$25.60 per ton, said Timber Mart South Tuesday. On a quarter-over-quarter basis, the southern average slipped 2.6 per cent. Overall, 2Q 2015 prices point to a continued muted recovery in southern log prices.
• Elsewhere in the US, Oregon log prices dropped by US$102 since January and are already at a typical summer price of US$651, wrote Rick Sohn, retired CEO of Lone Rock Timber, in the latest issue of Timber Report out of The News-Review. The early price drop this year is symptomatic of the dry winter and spring months, which permitted more logging in winter months than usual. But the price is still high for the mills, relative to the log price. The lumber price, at 41 per cent of the log price in April, is the lowest it has been for the last three years, except for December 2013 says Timber Report.
Meanwhile, the latest Washington State Dept of Natural Resources (DNR) quarterly Economic and Revenue Forecast found that as of May, DNR had sold 394 mmbf of stumpage volume in fiscal year 2015. Projected timber sales volume for the current fiscal year is lowered by 21 mmbf, from 491 mmbf to 470 mmbf based on an updated sales plan. This volume has been pushed out to fiscal year 2016.

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• At the end of April, the Department had 591 mmbf of timber under contract, valued at US$209 million, or US$353/mbf. This Forecast’s survey, conducted in the first half of May, indicates that purchasers will likely harvest 71 mmbf of inventory volume in the remainder of this fiscal year, 384 mmbf of the existing inventory in fiscal year 2016, and the remaining 136 mmbf in fiscal year 2017 and fiscal year 2018.
Global Exports

  • While there was a complete halt to wood ordering from China through 4Q 2014, and early 2015 lumber stocks in China were well supplied, overall lumber and log import volumes for 2014 through April 2015 is exactly flat compared to 2013.
  • As a possible forward indicator of North America export demand, New Zealand — a major softwood log supplier to China — reported this week export log prices rose from a three-year low this month, helped by a decline in the Kiwi dollar and increased demand in China, the country’s largest market.
  • The average wharf gate price for New Zealand A-grade logs increased to NZD$86 a tonne from NZD$83 a tonne in May, halting three months of declines, according to AgriHQ’s monthly survey of exporters, forest owners and sawmillers. The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, rose to 89.38 from 88.40 last month.

The prices for New Zealand export logs have picked up from their lows as inventories on Chinese ports fell below four million cubic metres.
The total volume of Japan’s log exports for January to May 2015 were 259 thousand cubic metres, a 47.5 per cent increase over the previous year, said the Japan Lumber Reports Friday. It was active inquiries from China, due largely to a weakening Yen, which was responsible for increased exports, said the Reports.
North America Demand
Several analysts this week came out with assessments of near-term future US home building and timber demand:
“Chinese demand will eventually be displaced when U.S. housing starts reach 1.2 million to 1.3 million units annually since pricing is higher in the US and shipping costs are lower. At that point North American demand should be sufficient to eliminate any supply surpluses,” says analyst Todd Kapala of Montreal-based institutional investment manager Addenda Capital July 3. “We see robust lumber pricing for years to come even if housing starts struggle to reach the long-term annual average of 1.4 million units … though rising North American prices could attract heavier import competition from Europe.”