NC Tree Farmers 2015 - Wood Market

7/25/2019 NC Tree Farmers 2015 - Wood Market

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North Carolina Wood Markets:What You Grow Matters

Eric McConnell, Ph.D.North Carolina State UniversityWood Products Extension

North Carolina Tree Farmers

Moore County Farmers Studying Timber Management, 1929Photo: North Carolina State University


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Softwood Market Report- Big Pict

Lumber markets shaky in recent months #2&BTR SYP Prices down ~$130/MBF from 12 mos

Softwood lumber markets forcing mill curtailm

Creating issues across wood supply system

Sawmills, loggers, chip buyers, Wood dealers, to L While 2015 not great, what looms for 2016?

Strong US dollar makes foreign imports cheaper

US-Canada softwood lumber agreement

Sources: RISI North American Wood Fiber & Biomass Markets; Hardwood Leader


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Hardwood Market Report- Big Pic

What in the world is up with oak prices?? Oversupply pushed #1C Red Oak down 43%, Whit

Hardwood lumber exports down 10% from 201 Chinese stock market, yuan uncertainty, housing b

Strong US dollar effect here too, will China pay? U.S. residential construction and remodeling u

Generating additional sales for U.S. flooring, cabin

furniture manufacturersBut also competing imp



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Pine Market Report- Big Picture

Sources: RISI; NC State Extension Forestry (courtesy of Forest 2 Market and Timber Mart South)

0%

20%

40%

60%

80%

100%

120%

140%

160%

1/1/2010 5/16/2011 9/27/2012 2/9/2014 6/24/2015

#2&Btr SYP Lumber Pine Sawtimber Pine Pulpwood

Autumn sales

as mills build w

Trucking capa

Longer haull


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Hardwood Market Report- Big Pictu

Sources: Hardwood Review, US Forest Service, NC State Extension Forestry (courtesy Forest 2 Market a

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

1/1/2010 5/16/2011 9/27/2012 2/9/2014 6/24/2015

#1C Lumber Pallet Lumber RR Ties

Hardwood Sawtimber Hardwood Pulpwood

Autumn sales

as mills build w

Trucking capa

Longer haull


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Timber Market Report- Big Pictur

Potential Domino Effects Loggers shifting from sawlog tracts to pulpwood

Where pellet mills present, competition holding price

Pulp mill buyers losing key mill residual chip volum

provide about 10% of fiber furnish for pulp and pa

Timber suppliers (read Landowners) face depresse

prices (especially in the South)

Flooring, industrial products keeping hardwoo In NC, crane mats (gas exploration), RR ties, pallet



7/33Source: NC State Extension Forestry (courtesy Timber Mart South)

North Carol

Timber Price


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North Carolina Timber P

Published quarterly by NC Price data gathered from Timb

All prices reported in dollars p

Prices paid for two regions, W

Conversions available for conv

feet (sawtimber, CNS) or cords (

Note: Prices for sawtimber va

volume

Hardwood: Doyle; Pine:

Log Rule Matters!!!

www.forestry.ces.ncsu.edu/fo


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NC Timber Price Report

As an indicator of market

Market activity evaluatedtrends*

NEVER used for the direc

of timber or logs

Considering a sale? 5 yea

Considering an investme

30+ year trends


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Why Use a Grading System?

Timber owners and managers need to estimate present anvalue of trees in a stand

Timber buyers must determine value of stand for purchase

Loggers use grades to decide where to buck logs for maximprofits

Mills need quality standards to estimate volume of producproduced


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Grade is Important Because Price Varies at Dramatically by Grade

Log Grade Log Price ($/mbf) Premium Over Next GradePrime $887 $286/mbf, or 48%

#1 Sawlog $601 $259/mbf, or 76%

#2 Sawlog $342 $129/mbf, or 61%

#3 Sawlog $213

Prices for Appalachian Red Oak


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The Quality and Quantity of High Lumber ContaWithin the Log Dictates Its Value

Green Lumber Yields from Red Oak Logs From Y

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

FAS #1C #2C #3C

Grade 1 Grade 2 Grade 3


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Grade is Important Because a Trees Value VDramatically by Grade

Because prices can vary so dramatically by grade at the mill, it is

very beneficial to maximize the grade of trees grown on your land

For pine, Plylogs can bring 15% premium over sawtimber

Prices for Appalachian Red Oak

16, 2 Log Red OakLumberProduct Value

Premium OverNext Grade

Tree Grade 1 $109 $19, or 21%

Tree Grade 2 $90 $8, or 9.75%

Tree Grade 3 $82


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Grading Trees and Logs: Part Art and Par

3 THINGS TO KNOW

Rules

Markets

Relationships


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Part Art and Part Science

Different customers often use somewhatdifferent grading rules

Even the same rules can be applied differently

Know your markets There is no replacement for working with the

buyer to see what they want and/or require

Since larger logs allow wider boards, buyers maysometimes be more forgiving when grading largelogs and trees, thus


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Part Art and Part Science

Relationships matter- work with a professionalforester

Whose work with buyers over time has helpedhim/her learn what the market requires

And helps them appreciate your situation


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What is the Value of My Tree

$1,000 per acre

Landowners sell timber 1 (maybe 2)

time in a lifetime

Question: How much knowledge can

someone have when they do something

once in a lifetime?

Invest in gaining assistance from those

who work in this area daily!

They can tailor a stewardship plan to

maximize the economic, environmental,

and social aspects of your property


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No Easy AnswersInfluenced by:

Species

Volume

Size

Quality

Acreage

Timing

Distance from Mill

Site and LoggingConditions

Local, Regional,National andInternational Markets

Number of Bidders

Knowledge of Lan


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Reality:

Timber is worth whatever the

highest bidder is willing to pay.

Ever been to an auction with only onebidder?


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Inventory

Determine Species and Quality to be harvested

Mark Trees to be Harvested

Estimate Volume

Approximate Value


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Mark Trees to Harvest

Example Timber SaleSPECIES NUMBER AVERAGE

DBH

BF VOLUME

DOYLE FC 78Black Cherry 18 19 3,684

Red Oaks 44 19 7,786

Hickory 81 16 7,013

White Oak 38 18 6,166

Yellow-Poplar 44 21 14,354

Miscellaneous 10 20 1,924

TOTALS 40,927


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Contents Of Timber Sale Announcement

Name and Address of

Seller Location of Sale

Description of Trees tobe Sold

Type of Sale

Times Available forinspection

Date, Time and Place ofBid Opening

Statement That SeMay Reject Any or Bids

Requirement of De

How Payment is M

Seller Conditions oLimitations

Requirement ofPerformance Bond


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Types of Sales Lump-Sum Sale

Selling on Shares

Sale by Unit

The Bidding Process Single Offer

Oral Bid or Negotiatio

Written Sealed Bid


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The Contract:Your Only Protection


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Some things to include in aTimber Sale Contract

Buyer and SellerInformation

Items for Sale

Dollar amount andMethod of Payment

Duration of Contract

Provision for oragainst assignment ofcontract.

Arbitration Provisions

Utilization Standards

Loss of Timber

Liability & FinancialResponsibility(Performance Bond)

Accounting for use ofBMPs


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How Do You Insure You Get What YourTimber Is Worth?

Get Professional Assistance

Advertise Develop a Timber Sale Notice

Try to get at least 3 competitive bids

Set A Minimum Bid

Be Patient, Markets Change


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Whats Left: Depends on Planning

Is the Harvest Prescribed by a Forest Management Plan?

Was the Residual Stand Considered?

What about Regeneration for the Future?

Were BMPs Followed?


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BEWARE OF :Select Cutting & Diameter Limit Cutting

Often leads High-Grading

Take the Best and Leave the Rest

Not Much Left for the Future, Inferior Stock

Actually can take longer to produce future

timber than with a clear-cut


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Final RecommendationCant Say This Enough!

Slide: D


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Utilize a Public or Private Forester

To Develop a WoodlandManagement Plan

To Assist With YourTimber Harvest

www.ncforestservice.gov/Managing_your_forest/managing_your_forest.htm


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Types of Professional Foresters

County RangersNC Forest Service

Consulting ForestersSelf employed Directory found at NC Forest Service

Industrial ForestersEmployed by the forest Industry

Certified Forester- meets requirements set forth by SAF, StatCarolina


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Benefits of Working With a Professional Fo

Often Generates More Money with Fewer Cut Trees

More Higher Quality Trees Left for the Future

Harvest is Compatible with Landowner Objectives

Forest, Soil, Water, Wildlife and Other Resources ProtecEnhanced

Visual Impact of Harvest Lessened

Landowner Usually More Satisfied With the Whole Expe


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THANKS FOR YOUR TIME TODAY!

Questions, Comments?

Feel free to contact me,

Eric McConnell, PhD

Wood Products Extension

(919) 515-5582

[email protected]

Planting Longleaf Pine o

Photo: North

NC Tree Farmers 2015 - Wood Market

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