Factors That Influence Timber Prices

Supply and Demand and the Economy

One of the major factors that influence timber prices is the economy, both nationally and internationally. When unemployment rates, inflation, and interest rates are high, people tend to be more cautious with their money. Home improvement projects may be put on hold, and new home construction may slow down, and this will cause a decrease in lumber demand, which will tend to cause a drop in prices paid for timber. On the other hand, when the economy is strong, and unemployment and interest rates are low, home improvement projects and new construction tend to increase, thus driving prices higher.

Pennsylvania is a major hardwood exporter, so the economies of countries around the globe can influence prices paid as well. When less lumber is being exported, supply increases, which causes prices to drop, and when imports increase, prices will often increase as well.

Species

The species of timber being sold has an influence on the price someone is willing to pay for it. Some species, such as black walnut, are sought after for its color and workability in the cabinet industry. Fashion trends influence which species are more popular and that can affect the prices for the species that are more popular.

An example of this is black cherry prices. In the fourth quarter of 2017, black cherry stumpage prices for northwest Pennsylvania were $840/MBF (thousand board feet). By the second quarter of 2024 the price dropped to $374/MBF. The demand for the red color that black cherry offers is less popular today than in the past which caused a drop in demand and lowered prices. White oak is an example of the opposite happening. During the same time mentioned above, white oak was bringing $415/MBF in 2017 and has increased to $753 in 2024. The increased demand for white oak bourbon and wine barrels as well as its use in flooring has increased demand which has caused prices to rise.

Weather

The weather conditions throughout the year can affect timber prices. If there are extended periods of weather that prevent sawmills from getting logs, their inventory may drop. In order to get inventories back up to keep the sawmill running, higher prices may be offered to ensure that there is a steady supply of logs for the mill.

Quality of Trees

In the same way that lumber has different grades that indicate the quality of each board, logs also have grades. Log grades give an estimate of how much lumber of each grade can be sawn from the log. A log that is high quality will produce more high-quality lumber than a log with low quality. More high-quality (or high-grade) lumber from a log means more money that the lumber can be sold for. Stands of timber that can produce a lot of high-quality logs will command a better price than a stand that produces a lot of low-quality logs. If the stand has a high potential to produce veneer logs, prices that are offered may increase as well and veneer logs are worth money to the buyer of the timber.

Factors that can affect the quality of a log include how many knots are on the log or tree. Knots are locations where branches once grew on the tree and show up in the lumber as a defect which can lower the value of the board. The straightness of the log can affect how much lumber can be sawn from the log. Other factors that can affect log quality include rot, seams (such as a lightning strike), and insect infestations as well as the size of the trees. A stand that offers high-quality trees will tend to command better prices.

Logging Expenses

There are several factors that affect the cost of running a harvest operation. Things such as fuel and equipment costs, distance from the sawmill, and whether infrastructure in the harvest area is present or not can affect prices that are offered for timber. If a stand does not have existing roads that can be used for hauling, they will need to be built. Landing areas for piling logs and loading trucks may also need to be built. These types of costs are figured into the price that is offered for the timber and will usually lower the offer if they are not present when the harvesting operation begins. Steep, rocky, wet areas, or wetland crossings can increase costs to the logger as well.

Size of Sale

Larger acreages will tend to lower the overall costs of the harvesting operation thus potentially increasing the price paid for the timber. When a logger has to move equipment from one site to another it takes time away from actual logging as well as introducing other costs associated with moving equipment such as fuel. More time can be spent logging and less time moving equipment on a two hundred acre sale versus logging on four different stands that are fifty acres each.

Regional Competition

How close the harvest area is located to a sawmill can certainly impact prices offered for timber. The closer to the mill it is, the less it costs to transport the logs to the mill. Another factor that can influence prices is competition for the timber. If there are several sawmills in the area all competing for logs, the prices that are offered may be higher than if there are few mills in the region. Ideally, when selling timber, it is best to get multiple bids on a sale. Hiring a forester not only has the ability to market your timber to bring a higher price, but they can also manage the forest in a way that meets the goals of the landowner.

There are many factors that can influence how much money someone is willing to spend on buying standing timber. Prices go up for some species for a period of time and then they may drop. There is no way to reliably gauge when prices will increase or decrease or by how much. I encourage forest landowners to focus on sound forest management, use a good forester, and harvest timber when the forest is ready to be harvested rather than focusing on when the prices are at their peak.