When natural disasters occur, forest products companies in Brazil often find it challenging to minimize risk, while timber growers find it hard to maintain profits. One of the reasons for this is that the industry lacks high quality pricing information. High quality and accurate pricing information not only helps companies gain a historic perspective, but it also allows them a solid basis for predicting price changes that may occur during the next major supply disruption.
An example of this occurred during the month of June, when heavy rains in the states of Paraná and Santa Catarina caused significant problems for forest products companies. Because of the flooding, both forest and mill operations have faced unique hardships.
Forest management companies are dealing with impassable roads and bridges on both main and secondary roads. Mills, on the other hand, were forced to curtail their operations for several days because of flooding. Mills also experienced energy supply interruptions that affected their ability to operate.
These supply and production disruptions have had a negative impact on the supply chain in both states. When supply and demand shift due to events such as these, wood prices also react. The challenge for forest products companies is to fully understand these effects so that they can develop strategies to minimize losses from supply and production disruptions.
For timber owners and suppliers, understanding the short- and long-term effects of these disruptions is equally important. Supply disruptions cause timber prices to spike. Knowing the amplitude and duration of these spikes allows timber owners and suppliers to take advantage of opportunities to extract additional profits.
Forest2Market do Brasil has been collecting transaction level wood pricing data since March, as it has been ramping up production of a monthly market report for Brazil. The first issue of this report will be published on July 18, 2014.
This tool will offer the best assessment of the impacts of the heavy rains that have interrupted supply and production in Paraná and Santa Catarina. As Forest2Market do Brasil collects data from forest products companies in these states on a monthly basis, its analysts are able to precisely detect the variance in timber prices caused by this natural disaster. With this report, our customers will be able to make important business decisions to reduce risk and develop profitable market strategies for the future.
Marcelo Schmid
Forest2Market: July 14, 2023
