Forestry Report

Throughout the second quarter, most factors seemed to point towards continued declines in stumpage prices, quotas for loggers, and a depressed housing market. But late in the quarter, news came out that housing starts in May shot up to 1.6 million annualized units, the highest rate since April 2022. This was followed by a climb in lumber prices. And suddenly there was hope again! Hope that the downturn, which started hitting hard in the fourth quarter of 2022, might have bottomed out and we might have begun the recovery. It’ll take a few months of positive numbers to establish a trend, but I couldn’t ignore the positive signs that showed up at the end of this quarter.

It is with a great sense of sadness that I have to report that stumpage prices continued their retreat of last year, declining from both the fourth quarter and the same quarter last year (price graphs, pages 6 to 9). That makes it a trend, and it is not a good one.

Unfortunately, 2022 ended with a slowing economy, dour forecasts, declining stumpage prices, and lumber-adjusted housing starts well under 1.2 million (a benchmark for demand). Other than that, we are just fine. The trees are still growing, our land is not shrinking, and we still have one of the most robust markets for trees in the world. But I think the next six months may not be a lot of fun.

La Niña weather conditions are forecast to continue into 2023, according to the National Oceanic & Atmospheric Administration (NOAA), bringing wetter conditions to the Northwestern U.S., where they are sorely needed, but unfortunately, this means drier conditions across the Southern U.S.

Weather or markets—that is the question. We are seeing somewhat of a cooling of timber prices across our operating region. At the same time, housing starts are down somewhat and lumber prices are, too (see page 7). So that’s probably why prices are down, right? I’m not so sure.