Log Market Expectations for 2017

Northwest Management forecast

Featured Professional: Vincent P. Corrao President, Northwest Management, Inc. Log Market Expectations for 2017

Since the collapse of the lumber market in 2008 many family forest owners evaluate the decision on whether it is a good time to harvest and is the market favorable to engage in a timber sale that may occur a few times in a landowner’s ownership of a property. The US economy is affected by many factors when it comes to the value of lumber and what the mills can pay for logs. When the economy is strengthening, employment is steady; inflation is held in check with favorable interest rates sets the stage for more building of homes and remodeling efforts. The forecast for 2017 shows the economy strengthening and home construction continues an upswing where lumber prices are expected to rise and log prices are to improve.

The US Lumber demand forecast for 2017 through 2019 show a steady increase in lumber use for new homes, remodeling and other uses (Source WWPA). Home construction forecast includes single-family and multifamily units and is projected at approximately 1.3 million in 2017, slightly higher in 2018 and moving up through 2019 to approximately 1.5 million home starts (Source WWPA). Housing starts hit an all-time low in 2008 through 2010 and have slowly been recovering the last seven years. Delivered log prices have continued to improve and with home starts in the 1.2 to 1.3 million ranges, log prices are expected to strengthen considerably. Historically looking back from 1990 to present, delivered log prices for Douglas fir and grand fir improve when housing starts are at these levels and improving economic conditions exist and during these periods prices will range between $450 per thousand board feet (MBF) to over $500/MBF.

Delivered log prices on a competitive bid for Northwest Management Inc. (NMI) family forest owners have ranged between $335/MBF all species in 2012 to $442/MBF in 2014. Delivered log prices in 2015 and 2016 worked their way up to approximately $450/MBF including all species and reflects the high price paid for western red cedar which has been strong the past 3 to 4 years. The log market for 2017 is strengthening with Douglas fir open market prices starting at $420 to $500/MBF, grand fir $400 to $480/MBF and cedar ranging from $950 to over $1,200/MBF. Lodgepole, spruce, white pines are expected to be between $350 and $450/MBF.

NMI tracks delivered log prices through open market and bid sales and looking back from 1990 to present indicates that when open market logs have reached $450 to $500/MBF ranges for Douglas fir and grand fir that this is a strong market and if a harvest is desirable this is a good time to consider preparing to implement a timber sale and the log market forecast is projected to remain strong through 2019.

Anchor Forest: Sustainable Forest Ecosystems through…

Anchor Forest: Sustainable Forest Ecosystems through Cross-Boundary, Landscape-Scale Collaborative Management

Mark Corrao, Northwest Management, Inc.

The purpose of the Anchor Forest project was to develop a viable framework for institutionalizing collaborative cross-boundary forest ecosystem management, and to assess science-based metrics in order to overcome forestland fragmentation, maintain working forests, and sustain ecosystem services at a landscape scale.

Nation-wide more than 1,009 sawmills, 15 pulp mills, and 148 other mills have been closed since 2005 (Smith and Guldin, 2012) and in the wake of the 2014 and ‘15 fire seasons many forest land owners and managers throughout the West witnessed a marked change in the very resource we work daily to protect and hold near and dear to our families and livelihoods. Today with an ever-increasing urban population culturally removed from the functions of forestry and silviculture and an unparalleled flush of people from these areas into the wildland urban interface it is no surprise to see the resource decisions and practices available to forestland managers become exponentially more complex.

In the true spirit of a natural resource manager the Anchor Forest project took on the task of contextualizing the dynamic of diminishing infrastructure, jobs, funding and management tools with an exploding need to provide for the resource and the public in some “balanced” fashion. Therefore, the Anchor Forest project itself was an assessment of (1) forest land health and the forestry industry, (2) available infrastructure and (3) current capacity, (4) stakeholder interests / participation, (5) currently available support-funding mechanisms, and (6) forest ecosystem services on nearly 2.7 million acres across eastern Washington. And the Anchor Forest assessment reports were then completed

in March 2016 by Northwest Management, Inc. and included more than 480 peer-reviewed publication references, 1,000 surveys and responses from numerous stakeholder workshops completed over a 3-year period.

Again in true “forester” fashion the need for actionable findings that could be applied to the land was a critical part of contextualizing the challenges our forests face. Therefore within the Anchor Forest Final Report a summary of measurable metrics, actionable goals and a balance of landscape-scale social/cultural, economic, and ecologic management options were tied to recommendations that targeted maintaining ecosystem function and working forests. The findings and recommendations provide metrics for measuring success of invested resources that address deteriorating forest health conditions, maintenance of working forests, and the jobs, wages and revenue needed to sustain many rural communities throughout the western U.S. using eastern Washington as an example.

This project was initiated and funded by the US Forest Service through cooperation with the Bureau of Indian Affairs and the Intertribal Timber Council. The executive summary, final report and individual task-assessment reports are all available online at www.Anchorforest.org and on the Northwest Management, Inc. website under featured projects – Anchor Forests at www.TheNMIWay.com.

Cross-laminated timber made by an Oregon company creates a buzz…

John Redfield watches with pride as his son moves a laser-guided precision saw the size of a big rig wheel into place over a massive panel of wood.

Redfield and his son work at D.R. Johnson Lumber Co., one of two U.S. timber mills making a new wood product that’s the buzz of the construction industry. It’s called cross-­laminated timber, or CLT, and it’s made like it sounds: rafts of 2-by-4 beams aligned in perpendicular layers, then glued — or laminated — together like a giant sandwich.

The resulting panels are lighter and less energy-intensive than concrete and steel and much faster to assemble on-site than regular timber, proponents say. Because the grain in each layer is at a right angle to the one below and above it, there’s a counter-tension built into the panels that supporters say makes them strong enough to build even the tallest skyscrapers.

Visually blemished wood that currently goes to waste can be used in the middle layers of a CLT panel without sacrificing strength or look. Supporters say it could bring sawmills back online while improving forest health through thinning dense stands and making use of low-value wood and local tree species. Trees as small as 5 inches in diameter at the top and those damaged by pests and wildfire are prime candidates.

U.S. building codes generally place height limits on all-wood buildings for safety reasons, though a special committee of the International Code Council is investigating potential changes to address the use of CLT in such structures. And research is still underway on critical questions of how these buildings withstand fire and earthquakes in high-seismic regions.

“The early adopters are looking at it and seeing it as a good opportunity,” but before CLT can take off, there will have to be more examples to get people excited and more mills producing it, said Thomas DeLuca, professor and director of University of Washington’s School of Environmental and Forest Sciences.

SmartLam in Montana is the other company producing CLT panels.

This spring, cross-laminated timber will get its ultimate test in the United States when a Portland architectural firm breaks ground on a 12-story wood building in the city’s trendy Pearl District. It would be the tallest all-wood building in the world constructed in a seismic zone and the tallest all-wood building in North America.

An all-wood building in Norway is taller, but it’s not in a seismic zone. An 18-story wood building in British Columbia is also taller, but rests on a traditional concrete core.

Lever Architecture is using $1.5 million it won in a tall wood building competition sponsored by the U.S. Department of Agriculture and the softwood industry that’s intended to promote CLT as a domestic building material. A 10-story residential tower in New York City also got $1.5 million.

The Portland firm has been working with scientists at Portland State University and Oregon State University to test the panels’ strength by subjecting them to hundreds of thousands of pounds of pressure. They are also testing various methods for joining the massive panels together.

“We’re looking at creating a resilient design, a design that could withstand a major earthquake — basically the earthquake that we all worry about — and be repaired,” said Thomas Robinson, founder of Lever Architecture.

The 125-employee company has been inundated with visitors from around country interested in touring their new CLT business expansion.

Using a Consulting Forester to find the Best Tool for the Job

Using a Consulting Forester to find the Best Tool for the Job

Gary Ellingson, Montana Area Office Manager, Northwest Management, Inc.

Consulting foresters face a unique set of challenges in the forestry profession.  In a typical week a Northwest Management, Inc. (NMI) staff forester might be spend time on tribal forest land, industrial forest ownership, and on a family forest property.  The point being that consultants work with an extremely diverse clientele with widely varying management objectives. The consultant’s success is based the ability to provide value in process of accomplishing forest management objectives by using problem solving skills and developing creative solutions  NMI staff has managed to accomplish this over the 35 years for an extremely diverse clientele.

NMI staff benefits from exposure to various management techniques utilized across the inland Northwest and beyond.  This exposure provides unique insights as how forest management objectives are best achieved.  As the saying goes “there is more than one way to skin a cat”.  NMI staff have the opportunity to see what works best in other places and then apply new ideas and the best technology to the particular task at hand.

Too often NMI staff see mistakes being made by good people with good intentions. Mostly these mistakes are due to a lack of experience with how best to accomplish a specific project.  Sometimes the scope of a project is under estimated and the landowner ends up overwhelmed or unable to complete the work on budget and on time. Some folks are simply shy about asking for help. Please don’t be that person!

Family forest owners will often seek forestry consulting help with more complex efforts such as timber sales but neglect to seek professional assistance with seemingly less complex projects such as tree plantings, pre-commercial thinning’s, slash disposal and burning projects, wildfire hazard reduction projects, timber valuations, real estate transactions, and cost-share projects even though these projects often require significant outputs of labor and dollars. Large forest owners may make significant investments in software, technology, training and staff without accessing alternative methods of getting the work done.

It is disappointing to see work that is not completed in the most efficient, cost-effective and environmentally sound method possible.  Especially if the consultant is aware of a “better tool” for the job that is not being utilized.  It can be as simple as seeing a landowner utilize a contractor who does not own and operate the most appropriate equipment for the task at hand.  Or as complex as a large scale natural resource assessment does not adequately provide necessary and useful information for managers.  As you might imagine consultants often get the call after it is too late or after a preventable problem has occurred.

NMI offers free initial consultation on potential projects.  There are a several reasons for this. One is we have a vested interest in seeing good forestry performed on the landscape to the benefit of society. Another is that we feel in many instances we can add value to a client by identifying the best solution to management goal or issue.  Lastly, the initial consultation provides us an opportunity to meet with landowners on a regular basis and see what the ongoing challenges are in our profession.  Please keep this in mind next time you have a potential project.  Let’s work together to make sure you have the best tool for the job at hand!

Announcements 2016

Northwest Management annoucement

Northwest Management, Inc welcomes new Foresters to our team!

Northwest Management, Inc. is proud to welcome two new foresters to our team of natural resource professionals.

Derek Fogle, Professional Forester, joined the Deer Park office and is currently working out of the new NMI office located in Colville, Washington.
Peter Nolin, Professional Forester, has joined the Helena, Montana office.

___________________________________________________________________________________________________________________

Welcome the new Northwest Management, Inc. partners!

NMI partners Vincent Corrao, Ric Hagenbaugh, Greg Bassler and Vaiden Bloch would like to welcome our new partners to the team!

Mark Corrao– Hydrology and Water Resources
Gary Ellingson– Manager Helena Office
Eric Femreite– Division Manager, Land Operations
Tera King– Division Managers, Management Services
Megan Landers– Financial Controller
Luck Machtolf– Deer Park Office Manager
Brock Purvis– Inventory

Rocky Mountain Elk Foundation Surpasses 10,000 Conservation Projects

Rocky Mountain Elk Foundation Surpasses 10,000 Conservation Projects

from the August 18, 2016 RMEF Press Release

MISSOULA, Mont.—An ongoing aspen restoration effort in Oregon’s South Warner Mountains marks the Rocky Mountain Elk Foundation’s 10,000th lifetime conservation project.

“This is an incredible conservation milestone,” said David Allen, RMEF president and CEO. “It speaks volumes to the positive, beneficial impact the RMEF has on elk and elk country from coast to coast.”

Earlier this year, RMEF contributed $30,000 in grant funding to the Fremont-Winema National Forest as part of the seventh and final year of landscape aspen treatment in south-central Oregon where elk numbers are below objective. RMEF funded similar efforts in 2014 and 2015 to conserve and restore aspen stands and meadows in the same region. Also in 2016, RMEF awarded $20,000 in grant funding to begin a similar landscape-scale effort in the North Warner Mountains.

RMEF’s first habitat stewardship project was a 1986 prescribed burn in a place fittingly named Elk Creek on the Kootenai National Forest in northwest Montana. The backcountry burn encompassed more than 1,000 acres of prime elk habitat where shrubs had become overgrown or decadent.

“We are grateful to our many partners who stand shoulder-to-shoulder with us in making meaningful conservation work a reality. We vow to accelerate our conservation mission of ensuring the future of elk, other wildlife, their habitat and our hunting heritage,” added Allen.

To date, RMEF completed 10,198 lifetime conservation and hunting heritage outreach projects in 49 states that permanently protected or enhanced 6,883,479 acres of vital elk habitat.

Pine Beetles Infest and Ravage Thousand of Acres

LiDAR + ForestView™ tree mortality

Landsat Satellites Show Mountain Pine Beetles Infest and Ravage Thousand of Acres

US Geological Survey, published by Science Daily, July 19, 2016

Life and Death in Forests
Since 1972, the U.S. Geological Survey’s Landsat satellites have been the watchman that never sleeps with spectral bands capturing the subtle turning of green mountainsides into dying forests. From the ground, the extent of forest land damage is simply too large for field observers to quantify. But 438 miles above the Earth, Landsat satellites pass over every forest in the country dozens of times a year — every year — creating a historical archive of clear, composite images that tells the hidden stories of life and death in our nation’s forests.

Such was the vision of Secretary of the Interior Stewart Udall 50 years ago when he boldly called for Earth observations from space. What the U.S. Geological Survey has accumulated now are vast and continuous long-term records from Landsat that have become critical tools for agencies such as the U.S. Forest Service (Forest Service), which reports the status and health of our nation’s forest resources.

Seeing the Forest for the Trees
Although Forest Service field crews can sample plots to characterize forest types, the species and age of trees, even soil types, the lands are so vast that in the West, field crews visit only a small fraction of the nation’s forests each year. Landsat data increase the ability and frequency of the Forest Service to make these characterizations.

Through continuous monitoring, Landsat satellites can produce a series of images over time that reveal subtle changes in near real time. Such monitoring is not as crucial in cases of timber harvesting or wildfire as the impact on forests is easily identified in those situations. Pine forests under siege by beetles, however, can die a slow death. Forest Service personnel indicate that noticing such trends can be difficult, depending on whether the trees under assault are just a few or number in the thousands. Although aerial photography and field observations might find some of the tree damage, the large-scale revelations really happen only because of Landsat’s ability to monitor forests year after year.

The Big Picture for Forest Management
In addition to longevity and consistency, Landsat data are particularly valuable since the 2008 USGS decision allowing users free access to archived satellite data. Free access has emboldened the evolution of time-series images, giving forest managers a key economical asset in discerning where outbreaks are happening as they occur. Pine beetle outbreak knowledge in real time enables forest managers to make more informed decisions on when to go in and break up stands of trees affected by beetles, thus minimizing the potential fire threat pine beetle damage could pose.

In the larger picture, knowing when and where forests are changing, and what is causing that change, are important in understanding how forests interact with the atmosphere given climate change. The pine beetle is a good example of understanding forest and atmosphere interaction. Researchers can use forest inventory data to study how longer growing seasons and less harsh winters affect pine beetles. As warmer weather boosts pine beetle populations and broadens their range, scientists are trying to discern whether the killing cold of winter still acts as a strong deterrent against the forest pests, or if rising temperatures and drought stress trees to the point of becoming defenseless against pine beetles.

Although questions about the impact of pine beetle infestation still remain, with Landsat data, answers are becoming clearer every day. When it comes to the future of forest health in the United States, USGS scientists understand the invaluable contribution Landsat can make, now and for years to come.

Supreme Court Rules in favor of landowners in Clean Water Act Case

gavel

Supreme Court Rules in favor of landowners in Clean Water Act Case

from National Federation of Independent Business Small Business Weekly

It’s no cure-all, but the Supreme Court still recently helped small businesses navigate the troubled waters of EPA regulations.

In handing down its ruling in the case US Army Corps of Engineers v. Hawkes Co. on May 31, the court stated that landowners have immediate authority to challenge federal classifications of protected waters. Many business owners are applauding the decision because it helps protect private land from federal regulation

“Today’s ruling marks a long-awaited victory for individual liberty, property rights, and the rule of law,” M. Reed Hopper told The Daily Caller. Hopper is an attorney who represented Hawkes Co., the plaintiff in the case.

The law in question was the Clean Water Act, which gives the Army Corps of Engineers the authority to determine whether a body of water is considered “waters of the United States.” If wetlands are given that designation, property owners are restricted from using them without a permit.

The Clean Water Act lists several criteria for determining waters of the United States, such as whether the waterway is used for interstate commerce. Several states and business groups such as NFIB have opposed the rule.

Securing a permit is no easy process; it is both expensive and time consuming for landowners, according to Vox.

Until now, business owners were unable to challenge the Army Corps’ designation, which means they either had to enter an arduous process to obtain a permit or forgo using the land. The Supreme Court upheld a lower court’s decision that these determinations are subject to challenge and judicial review.

“Everyone who values property rights and access to justice should welcome this historic victory,” Hopper told The Daily Caller.

For more information on the Clean Water Act and the NFIB’s stance on the issue, please visit www.nfib.com/waters.

The Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (the Corps) finalized a rule that expanded their regulatory authority under the Clean Water Act (CWA) in August 2015.

Log Market Forecast 2016

Northwest Management forecast

Log Market Forecast 2016

FEATURED PROFESSIONAL: Vincent P. Corrao, President, Northwest Management, Inc.

Nationwide average prices for lumber and other wood products look to remain similar as they were in 2015. There is an overall expectation the economy will continue to improve and wood products values should continue to improve as they are highly correlated with the US housing starts.  Housing starts are expected to continue to increase in 2016 which will improve lumber prices.  Financing for first-time homebuyers continues to remain challenging and low interest rates should further stimulate home sales.

North American Lumber Prices published by Random Lengths with forecast from Wood Markets indicate initially 2016 lumber prices would be higher first and second quarters in 2016 as compared to fourth quarter 2015. Some lumber products are expected to continue improving through third and fourth quarter’s in 2016 while other products will remain flat. With the lumber market expected to stay flat with some increases, log prices are expected to remain stable or improve in some species.

Douglas fir and Western red cedar are expected to remain strong while Ponderosa pine and white woods may see a softening particularly in areas impacted by the 2015 wildfires. Wildfire damage timber should be harvested as soon as possible as fire killed timber is affected by blue stain in the pine and can have severe checking as well as insect damage. Green trees in wildfire areas are often stressed and can be damaged by insects causing mortality 12 to 24 months after the wildfire. These trees should be monitored during this period particularly pine as its value can be lost within a 12 month period.  Take the opportunity to recover some value by immediately harvesting trees and provide an opportunity to reestablish new trees, improve habitat and protect soil from erosion.

Most mills are accepting fire damage timber at this time and log manufacturing will need to remove any part of the tree that is deeply burned into the wood. Manufacturing as much of each tree as possible for sawlogs is important as the chips for pulpwood are undesirable because the burned wood reduces the quality of the paper in the pulping process.

As log markets are not expected to improve significantly in 2016, burned areas should focus on completing harvest, and continue thinning and restoration activities to reduce impacts of future wildfire events. Stands that are thinned reducing tree density and fuel loading are significantly more resilient to withstand wildfire damage and reduce reestablishment cost following high-intensity burns.  Identifying treatment areas now will provide an opportunity to prepare timber sales for a favorable market as sawmills do seasonally demand certain products and different size logs to meet customer’s orders. Making your wood available when the mills are in need of key products/species builds a long-term relationship with purchasers and establishes you as an effective supplier. NMI can assist you in being prepared to make your forest more resilient to wildfire, monitor market prices and be prepared to take advantage of market opportunities as they become available.

Contrary to Popular Thinking, Going Paperless Does Not “Save” Trees

Northwest Management articles

-Taken from Two Sides North America, February 8, 2016

Two Sides North America (www.twosidesna.org) released a new study outlining key facts on why paperless initiatives do not save trees. Findings point to mounting evidence that loss of markets for paper and other wood products, a large portion of which are produced from wood harvested on privately-owned land, increases the risk of forest loss. The study was conducted by Dovetail Partners, an environmental think-tank specializing in forestry research and analysis.

Private forest ownership and stable paper markets create a synergy that has long yielded tens of thousands of jobs, rural income, and strong incentives for continued investment in forests for the near and long term. However, if efforts to reduce wood markets succeed over an extended period, the result would likely be loss of forest lands rather than the reverse.

Absent a market for wood from pulp and paper manufacturers, significant numbers of landowners will turn to different markets or perhaps reduce investments in tree planting. Should markets for wood simply dry up, then there is a very real likelihood of land conversion to other uses such as urban development or agriculture.

The risk of forest loss in the absence of wood markets is reflected in trends for the world as a whole which show that regions with the highest levels of industrial timber harvest and forest products output also tend to be the regions with the lowest rates of deforestation. The reality is that the greatest incentive for continued investment and retention of our nation’s forests is a stable market for paper and other wood products.

Some Key Facts from the Study

  • The reality is that the greatest incentive for continued investment and retention of our nation’s forests is a stable market for paper and other wood products.
  • Annual removals of wood in the U.S. as a whole are less than half of annual net growth. In other words, each year forests of the United States grow more than twice as much wood as is harvested or otherwise removed.
  • [In the U.S. South] Forest landowners have embraced the emergence of a growing bioenergy industry that produces fuel pellets from wood. The new industry is producing fuel pellets largely to serve an export market that is seeking lower carbon production of energy supplies. The new bioenergy industry is currently consuming a quantity of wood equivalent to about 16% of that going into pulp and paper production, up from 0% in 2008.
  • The experience in the southern U.S. is not unique. For instance, in Northern New Brunswick, Canada there has been a major decline in paper production and use of pulpwood for papermaking due to the closure of three large mills over the past decade. However, harvesting rates on Crown Land have remained the same or increased due to several factors:
    • Sawmills are accepting lower diameter logs which would have typically gone into pulp.
    • Trees are now going into other markets such as sulfite pulp for textiles.  Most of this pulp is shipped to India.  Two of the mills in Northern NB are now under partial or full ownership by Indian companies.
    • Pulpwood sized logs are being used to manufacture oriented strandboard (OSB) and pellets for energy, with an increase in volumes forecasted for the pellet market.
  • In Minnesota, the closure of several paper and oriented strandboard mills has led to divestiture of large blocks of forest land long held by Potlatch Corporation. Several thousand acres of that land were recently cleared of trees and converted to intensive agriculture, including potato production.

 

To read the full report please visit:  www.twosidesna.org/US/Contrary-to-Popular-Thinking-Going-Paperless-Does-Not-Save-Trees