US South Timber Prices Continue to Drop in 2Q2017

Southwide timber prices during 2Q2017 continued to decrease from 1Q, with nearly all pulpwood and pine log products dropping more than -3 percent.

Pulpwood

On a Southwide basis, pine pulpwood prices dropped to $9.32/ton during 2Q2017 (-3.7 percent), and two out of three regions saw prices decrease for this product. The East-South experienced the largest drop to $10.87/ton, or -11.3 percent, and the Mid-South dropped to $8.05/ton, a decrease of -7.8 percent. The West-South was the only region to show an increase in price at +1.5 percent to $7.79/ton.

Hardwood pulpwood prices took an even more significant drop, tumbling -15.6 percent during 2Q to $5.97/ton. The Mid-South region plunged -20.3 percent to $5.96/ton; the West-South plummeted -25.7 percent to $7.55/ton; and the East-South slipped by -3.9 percent to $4.73/ton.

Pine Logs

Pine chip-n-saw prices decreased to $17.16/ton, a decrease of -5.1 percent Southwide. Both the Mid-South and West-South regions saw the largest drops, as prices fell -10.4 percent to $16.35/ton and -11.1 percent to $13.61/ton, respectively. The East-South region rose to $19.60/ton, a +0.5 percent increase.

Pine sawtimber followed suit, declining -3.7 percent to a Southwide average of $25.35/ton. All regions showed minor declines in price. Mid-South pine sawtimber prices slid -4.1 percent, down to $23.74/ton and West-South prices dipped -3.1 percent to $27.80/ton. Prices in the East-South dropped -2.8 percent to $24.42/ton.

Outlook

US GDP has been increasing the past few quarters and is forecasted to rise in the near term. The Atlanta Federal Reserve recently projected that the US economy grew 3.0 percent in 2Q2017 and continued growth at this pace could create an increase in demand for pulp and sawtimber in the coming months. The looming US tariffs on lumber imports from Canada—with a final decision expected by late summer—may also spur demand for sawtimber logs in the US South.

However, even if demand for pine sawtimber increases through the next few months, there continues to be an oversupply of large logs available on the market. Southwide stumpage prices could remain muted through the remainder of the building season and into 2H2017.