Panels & Furniture Asia September/October 2021

MARKET REPORT
US southern sawtimber
prices hit 10-year high
By Joe Clark, Global Sales Manager, Forest2Market
There has been a lot of interest in the
disconnect between log and lumber
prices over 2020. While the reason behind
this disparity is often perplexing, the
reality is that the market for trees is vastly
different than the market for lumber.
Photo: Hans Isaacson/Unsplash
In the southern US, the inventory of
standing timber has risen unimpeded
since the onset of the Great Recession
in 2007, which has resulted in an
oversupplied market. The surplus of logs
combined with improved mill efficiencies
has kept log prices suppressed, even as
demand for lumber surges and sawmill
production continues to increase.
There are emerging signs, however, that
this trend is beginning to change.
The last 12 months have been far from
“normal”, but lumber demand has been
strong and prices for pine log products,
such as sawtimber and Chip-n-Saw
(CNS), have surged. Per Forest2Market’s
Stumpage 360 database, year-to-date
pine log stumpage prices across the
South are up 11% over 2020 prices, and
they have now reached a 10-year high.
For many southern sawmills, log costs
can make up more than 70% of the total
cost of the mills’ finished product. It
is therefore the single most important
cost component in the supply chain.
Sawmill procurement teams are tasked
with finding the perfectly sized log,
maximising the mill’s market share of
that log, and reducing the variability
in log size and quality as much as
possible to maintain profitability.
According to Sawmill TQ
benchmarking data, southern mills
keep an average of about six days of
log inventory on hand compared to an
average of nearly 40 days among mills
in the western US. Any upset in the
southern yellow pine supply chain can
quickly affect sawmill operations.
THE INEVITABLE INCREASE ON THE
HORIZON
While the record high lumber prices we
have witnessed over 2020 have been
demand driven, southern sawmills are
incrementally increasing production to
meet the needs of homebuilders. New
20 Panels & Furniture Asia | September / October 2021