I am attending the Forest InSight conference in Valdosta, Georgia. The picture is the hotel across from the venue. I don’t have one more interesting. It is interesting to me that they have so many palm trees here.
Positive outlook for southern forests
The outlook for southern forests is good from both the supply and demand sides. Supply calculations are based on a simple return to the average. The most recent recession was bad enough but the recovery has the worst in modern history. If housing starts just return to the long term average, things would be fine for timber demand.
Supply side complicated
Supply is a little more complicated. The mountain pine beetle has destroyed vast areas in the west and in Canada. After the bugs kill the trees, they can be salvaged for 8-12 years. After that, there is too much rot. So this supply has been flooding onto the market, but it is almost out of time, so this supply will be done. Eastern Canada is currently facing bureaucratic and regulatory barriers. Many of these forests are government owned. This is also true in the American west. Government owned lands are more susceptible to pressure groups.
So the only region left fully standing is the South. Most of the forests in the South are privately held, often by smaller owners, so there is widespread acceptance of forestry in the region. When demand picks up, the South has the capacity to meet it. And the South is the region where mills are opening. It doesn’t matter how much forest you have, if it is too far from a mill it is not much use.
Saw timber and small wood prices converge
There is a permutation. The price of saw-timber is coming more in line with smaller timber, as engineered wood makes it possible to use smaller pieces. Most forestry is built around growing saw timber, eventually. Pulp and chip & saw are just intermediate steps. Maybe in future these will be products in their own rights.