News & Updates

Southeast Timber Markets Temporarily Challenged, Offer Great Long-Term Opportunity

dollar_sign_forest_image

Southeast Timber Markets Temporarily Challenged, Offer Great Long-Term Opportunity

 

Timber markets across the Southeast have changed many times since reaching their low point in 2007, when a dramatic housing market correction was driven by the largest mortgage crisis in memory.  

Recent years have seen a surge in pulpwood prices while sawtimber has declined.  2016 and 2017 have shown us that the pine markets are generally oversupplied.  Hardwood sawtimber, as compared to pine, has done well.  Lumber prices have rebounded while sawtimber prices have slightly declined.  Why the discrepancy?  A number of credible sources suggest that in areas of the southeast, growth exceeds supply by as much as 50 percent annually.  State growth-to-drain ratios --- long used by policymakers and industry as coarse metrics of forest sustainability --- are solid.  A surplus of standing timber presents huge opportunities and large challenges for landowners and forest industry.  It also says that timber production is healthy, while markets have room to improve.

Positive development is underway in pulp markets. Demand is increasing as fuelwood energy producers continue to establish themselves into the market, but these have had a minimal effect on supply at this point.

The Southeast still has a lot of undeveloped potential and landowners can make good money growing timber. Wood demand is durable - and most of the supply originates from private landowners who own a majority of the best wood-producing soils in the region. The National Forest system no longer ‘gets out the cut,’ so demand must be satisfied by landowners interested in growing trees in smart and innovative ways. Those of us who own or manage timberland are in this for the long term and realize that markets go through cycles. As professional foresters and land managers, we are prepared for multiple types of markets and we adapt over time.

There are other bright spots in the forestry world! Recent news is that international demand for forest products is predicted to rise due to increased populations and development abroad. Landowners in the Southeast should be excited about the potential for new and continued markets because the Southeast U.S. remains the largest supply of wood in the world.