I’ve always been told that if one grows quality trees, the market will reward such efforts. However over the last few years I’ve been challenged by the pine log market’s seeming variance from this assumed norm, with 16’ pine logs often in greater demand than large knot-free logs. An interesting project this spring helped me understand what might be going on.
The current owners of an historic farm needed funds to replace a collapsed barn and hoped to sell some of its timber to pay for it. The trees in question, totaling more than 250,000 board feet of sawtimber, are the legacy of one of the owners’ fathers. His thinning out of competitors and pruning of branches, years ago, helped create today’s 22” to 26” diameter and 80’ to 100’ tall white pines. They are by far the best pines that I’ve ever sold. As I pondered how best to sell them, I was confronted by the pine market’s peculiarity.
As is generally the case with high value timber, auctioning the timber sale to a group of skilled and honest loggers yields the best results. And so about 15 loggers and sawmill representatives walked the woodlot and saw many of the trees that I’d marked with blue paint. I provided them copies of the proposed contract, stipulating the conditions under which they were to be logged and paid for. A week later I opened the bids that most of them had submitted. As with any market place offers huddle around an average, with a few quite low, and hopefully a few quite high. To be honest I didn’t think that the average reflected the quality that the trees represented. $230 per 1,000 board feet is a pretty good price, but as an average for really good pine, I thought that it seemed a touch low.
Fortunately the log buyers provided some interesting perspectives. To begin, it is no secret that mills pay different contractors different prices for logs. They make deals on individual lots of wood, often inclusive of quality, but more often based on their need for logs and the willingness of the contractor to deliver high volumes within certain time limits. That much I knew, but what I’ve been learning is that the market for clear lumber is more competitive than I’d imagined. Though such lumber represents only a modest volume in Maine, New Zealand pines, pruned of branches, are a significant competitor. As well some mills saw logs into boards, cut out the knotty sections, and then finger joint the short sections into much longer clear boards. Most of the latter are used as trim, the removed knots don’t ‘bleed’ through paint, though the paint obscures the joints. So, it seems that high quality logs come in many forms and thus aren’t as rare as I’d thought.
What it seems is more rare is a full log yard in early summer, with mills running at/near capacity. Though the financial margins on clear lumber might be better than that of lower grades, the knottier grades make up for it with volume. What it turned out that the mills wanted during the period of our auction were 16’-long logs, and they need them now. However mill demand is only part of what factors into what a logger is willing to pay in stumpage to a landowner. Stumpage is actually the result of a simple equation, mill price less logging/trucking costs equals landowner income. With contractors operating for various rates, that portion of the equation differs from one logger to the next. As well some may be hungrier for work more than others, or see efficiencies in how they can utilize their equipment and talents to perhaps accept less per unit of wood, while still generating sufficient income from the higher volumes cut than usual.
As I reviewed the offered prices, I saw the familiar bell-shaped pattern, and felt confident that I sold the beautiful pines as well as I could have. A sufficiently large group of capable loggers had all made offers; a few were in the $200/MBF range, most fell between $220 and $240, and a couple exceeded $260. Interestingly both of the top two offers proposed selling to a mill unique from any of the others. That mill seemingly needed wood more than the others, and was willing to pay more.
So at the end of the day, was it the quality, volume, or availability that ruled the day? I honestly can’t say, though what is clear to me is that the efforts of the now deceased farmer, whose name remains atop one of the farm’s barns, continue to benefit his kids and their farm customers. A new barn will rise, because ‘his’ pines sold well.