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10/28/2014 » 10/30/2014
2014 South East Regional Forest Resource Owner and Manager Conference

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2012 Charlotte Regional Meeting [AFM] Chris Miller
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Forest Product Markets and the Private Landowner

 

 

 

One word to describe the forest product markets over the last 5 years?

 

 

Unbelievable!

 

 

Forest Products Sector and Private Landowner

 

Strong forest products markets sustain the private forest landowner.
Without strong forest product markets we lose forestland.

Focus – 100-mile radius of Charlotte, NC

One of the strongest forest product markets in the US Southeast.

Lots of influence from urban areas within focus area

Great place to grow trees

Also a great place to live, work, and recreate.

 

 

 

Importance of Forest Products Markets

 

60% of North Carolina is forested - 18MM Acres,
 – Of that 85% is privately owned (NC Forestry Association)

68% of South Carolina is forested – 13MM Acres
 – Of that 90% is privately owned (SC Forestry Association)

The forest products manufacturing industry is NC and SC’s largest in terms of
jobs and wages

 

 

 Forest Product Market Map - 100 Mile Radius from Charlotte

 

 

Market Map Summary

104 Individual markets identified
within radius

Does not include dealers or
loggers

71 Sawmills

4 Pulp mills

17 Chip mills

4 Engineered panel mills

3 Plywood mills

4 Wood energy

1 Wood pellet producer

 

 
 
 
 
 
 
 
 
 
 

South Carolina Timber Mart South Entire State Stumpage Trends Vs US Housing Starts, 2007 - current
Forest Economics Advisors Housing Starts Projections (June 2011)

 

North Carolina Timber Mart South Entire State Stumpage Trends Vs US Housing Starts, 2007 - current
Forest Economics Advisors Housing Starts Projections (June 2011)

 

 

Local Markets Matter

 

Stumpage prices have become very local
market specific.

Forest product values vary considerably
between local markets.

Identified 4 individual markets within the
100 mile radius

 

 Focus Area - Unique Local Markets Within 100 Mile Radius

 

Market A – Central Carolina
–  Strongest forest products markets in the Southeast.

–  Three family owned pine sawmills within 30 miles of
each other compete heavily for pine stumpage

–  Multiple large hardwood sawmills and pallet facilities

 

Market B – Wilkes
–  Five family owned hardwood and white pine mills in
close proximity to Wilkesboro


–  Great hardwood market, lots of competition

–  Hardwood and pine OSB mills

–  Market purchases on International Log Scale - unique

 

Market C – Upstate SC
–  Contains the region’s pulp and paper mills
–  Pine plywood mills
–  Several pine and hardwood sawmills

Market D – Western NC 
–  Two large hardwood and white pine mills in close 
proximity to each other 

–  Good hardwood markets
–  Mostly mountain terrain

Market E – Socialist Republic of Mecklenburg
–  Beg buyers from Markets A-D to deal with traffic and
nosey, uniformed neighbors to harvest your sales 

 

Stumpage Values – Markets A-D

Prices are broad averages presented for comparison purposes.

Chart is intended to demonstrate stumpage price variance across local markets.

Land owners should not assume this data is suitable for timber valuation at individual tract level.

 

 

How Are Markets Today?

 

All stumpage products are moving well
currently

Mill inventories are low and are having a
hard time building inventory

Afternoon thunderstorms have occurred daily for weeks, creating operability and
hauling problems

 

 

How Are Markets Today?

 

Logging capacity is a huge concern.
 – Substantially less loggers than five years ago
 – Not enough capacity to keep everyone supplied

Future of logging is uncertain
 – Average age of area loggers is 50+
 – Capital intensive business
 – Conventional crew can cost $1,000,000+ for equipment alone
 – Difficult for new business to start up

As demand improves, will there be enough logging
capacity to supply the mills?

 

 

 

Forest Certification

 

Will certification of forest become necessary
for private landowners?

Current drivers
 – European customers of pulp and paper mills

Forest Stewardship Council (FSC) seems to be
the most sought after system

 – Even though FSC, SFI, and Tree Farm are very similar.
 – FSC has done an excellent job with branding and marketing

 

 

 

Forest Certification

 

International Paper and Domtar are assisting in
development of landowner FSC group certification
programs through suppliers to bring in certified wood
 – Necessary to keep certain customers and maintain market share
 – Groups that exist currently are in the lower part of SC
 – No local group between Columbia and Charlotte, although landowners
can join existing groups further south.
 – All are hoping to increase availability of FSC wood.

Resolute Catawba customers are largely domestic and
have not had significant push to purchase certified wood
to date

 

 Why Certify?

 

Financial incentive
 – Could be worth more in the right place
 – Currently ~ $1 per ton in additional stumpage value

Market Access
 – Be able to sell your wood and harvest during periods when others cannot

Market will set the value
 – Most potential in areas of competition between mills
 – Potential for considerable value add

Must maintain the chain of custody to work
 – From certified forest through certified logger/supplier to certified mill

Do not predict in foreseeable future mills requiring 100% certified
wood for their operations; however, landowners may want to
participate for the benefits

 

 Exports

 

Majority of export opportunities remain in hardwood lumber and logs 
 – Export hardwood has kept prices more stable than pine for example which is closely tied to
domestic housing.
 

 – 50% of US grade hardwood lumber is exported nationally (Hardwood Review)

 – US South has greatest export of lower grade hardwood lumber because of proximity to ports and
demand from Asian buyers.

Pine lumber and logs export from local area and Southeast US is currently a very small
part of total

Majority of our pine sawmills are set up to saw on international measurement scale
 – Most international markets require metric, can cause problems

One local sawmills shipped 40 containers of pine dimension lumber to China within last
six months
 – Have modern mill and able to easily switch sawlog dimensions
 – Buyer was pleased with product but current shipping costs make it difficult to continue/expand
business

Panama Canal expansion could change dynamic

 

 Where Are We Headed?

 

Sawlog prices will remain moderate in the near term with opportunistic fits and starts
through 2014

Surplus sawtimber supply from deferred harvests since downturn will keep market
moderate until that supply is cycled through.

Low logging capacity will add to higher harvest costs and delivered prices keeping
stumpage prices relatively flat.

As housing gains steam, increases are anticipated
 – 2015-2016 potentially doubling stumpage prices in most depressed market areas. Moderate
gains in areas where prices have been less volatile.

Pulpwood prices should increase steadily as housing improves and there is greater
demand for engineered wood products.

Bioenergy sector expansion opportunities in area could also enhance markets.

 

Effect of Deferred Harvest – US South

 

 

 

 

 

 

 

 

 

Forest Economic Advisors (FEA)

Second Quarter 2012 Forecast

Report

 

 US South Softwood Sawtimber Price Forecast

Forest Economic Advisors (FEA) Second
Quarter 2012 Forecast Report                   

 

 US South Pulpwood Stumpage Price Forecast

Forest Economic Advisors (FEA) Second
Quarter 2012 Forecast Report                   

 

US Hardwood Sawtimber Forecast

 

Small gains for the next few years as US economy improves and domestic
demand improves.

Well positioned long term- Excellent sustainable management of our
domestic hardwood.

We are growing more hardwood than we are harvesting which is not the case
internationally.

We have an incredible variety of commercially important species, available in
abundance.

As US demand for hardwood rebounds and global demand continues to grow
we think owners of hardwood forest are well positioned for considerable             gains.

 

Is Forestland A Good Investment?

 

We have been through a tough period, we are
on our way to recovery.

The tree’s growth rate has not slowed down.

A growing global population will increasingly
need the products our land provides.

We have the best story to tell.

« Previous Slide Show Return to 2012 Charlotte PreceedingsNext Slide Show »

 

 

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