Pennsylvania Timber Market Report - 2nd Quarter, 2021

April - June 2021 Stumpage Prices

$ per MBF International 1/4"

Northeast

Southeast

Northwest

Southwest

Conversion Factors
Doyle Price = 1.695 x International 1/4" Price
Scribner Price = 1.159 x International 1/4" Price
(n) is the number of responses used to calculate the price statistics.

Private and Other Public Pulpwood Stumpage

Hardwood Pulp ($/ton)

Softwood Pulp ($/ton)

Bureau of Forestry Pulpwood Stumpage

Hardwood Pulp ($/ton)

Softwood Pulp ($/ton)

none

Dr. Ray's Comments

The graphs and tables above reflect a cooling of the price of stumpage from the previous quarter in the eastern half of the state. The western half of the state, which had been a cooler market in the first quarter, picked up the slack and shadowed the eastern gains of the first quarter. Red and white oak in the Northeast, which had jumped to record levels, retreated roughly 10-20% but remains at strong price levels. Northeastern hard maple, traditionally the strongest maple market in the state, failed to hold the first-quarter gains and fell back some 50% to pre-spike levels. Oak prices in the western part of the state were mixed but generally strengthening; the real star this quarter was black cherry, with increases of 75% in the NW and 35% in the SW.

So where are we? Generally, looking at the long-term picture, timber prices are normalizing toward their relative historical values. Oaks are strong in the east, and cherry is coming back in the west. Log buyers seem to be getting a clearer handle on real market trends and are buying to meet those trends. And though the general price trends are strong, there are at least three red flags waving on the horizon.

The first red flag is housing trends and related construction lumber prices. Housing starts have slowed, and housing permits have dropped dramatically. In the Northeastern U.S., single-family permits are steady, but multi-family permits are at their lowest level since the first of the year (Source: US Census; 7/26/21). And the price of construction lumber, which was wildly spiking back in April and May, is now in full crash-mode retreat.

The second red flag is the rate of inflation in the country, which has hit levels not seen since 2013. Economists are warning of inflation to come for many years. What this means is that not all the gain in timber prices we're seeing is due to demand, but at least partially due to inflation...which is not a real price gain. Also, if anything should occur to deflate the current bubble of government-subsidized inflation, prices will drop rapidly due to the combination of market cooling and monetary deflation.

The third red flag is the unsettled state of the world and the downside potential that has on export markets. I'll look more closely into this factor next quarter as we see how some of the current unrest plays out.

As you can see, the market is a bit dicey right now. The good news is that Pennsylvania hardwood is relatively stable as a long-term investment and as a raw material to support your hardwood lumber business.

See you next quarter, and feel free to share this report with your friends.