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.