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Two Trees Forestry
167 Main St.
P.O. Box 356
Winthrop, ME 04364
V: (207) 377-7196
F: (207) 377-7198 harold@twotreesforestry.com

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Market update: June 2008

Huge spike in pulpwood prices

Market conditions through the winter were for the most part a continuation of fall 2007's conditions -- we heard of many loggers absorbing most of 2007's fuel rise -- with stumpage prices and mill demand staying relatively flat. Though fuel increases didn't appear to reduce stumpage prices, it was felt. With the dollar also weakened against other world currencies we approached this summer with trepidation. However to our surprise wood shortages at local pulpmills, including Red Shield Environmental in Old Town that, I spoke glowingly about in the last newsletter, temporarily closed down this week due to a lack of wood. The shortage has spiked mill-delivered pulpwood prices while the dry spring have both eased loggers' concerns; income is up and the dry mud season shortened the loggers' traditional down-period.

AT LAST! A PRICE PREMIUM FOR FSC-CERTIFIED WOOD!
During a May 2008 stumpage auction in Winthrop a bidder offered the following for the woodlot's pulpwood:

FSCNon FSC
Pine pulpwood$12/ton$10/ton
Spruce pulpwood$23/ton$20/ton
Popple/hardwood pulpwood$13/ton$10/ton

Though the woodlot qualifies for FSC-certification, at the time of the auction it wasn't. The bid urged the landowner to become certified.

The price spike for pulpwood hasn't universally translated into higher stumpage for all landowners however, because some of the small-volume logging contractors, many of whom do excellent work and have/are working for our client-landowners now, aren't receiving the same boost. However, on jobs where we are working with larger contractors, the price rises have been eye-popping. Pine pulpwood rose from about $10/cord to more than $25! Popple groundwood has moved from $25/cord upwards more than $10/cord. The reasons aren't entirely clear, though we know that lack of wood supply has been a major problem for area mills, perhaps coupled with the high demand for export paper, which is favorably priced with the weaker dollar. Lastly and in addition, Forest Stewardship Council-certified pulpmills are eager to process FSC-certified fiber, which seemingly has helped drive up stumpage prices (see right) for some timber.

On the sawlog side, there is less enthusiasm for price increases, though demand appears to be stable, if perhaps accelerating. White pine sawlogs, our dominant product, remain at consistent stumpage prices. Sawmills report that though the domestic US market is down, exports to India and elsewhere (where the weakened dollar is advantageous) have increased. Stumpage for hemlock, hard maple, birch, and other hardwood logs remain similar to how they've been priced in recent years. Notable commodity products, like spruce/fir sawlogs are down, and mills are running out of inexpensive logs. One amazed log-broker even commented that some of these mills, "prefer to run out of logs than raise the price of wood. I've never heard that before." Red oak stumpage remains below past years' prices, though demand for oak pallet grade logs is steady. Perhaps Americans aren't buying new houses, though many are renovating their homes, at less expense, with oak flooring often.