Pennsylvania Timber Market Report - 1st Quarter, 2021

January - March 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 significant increase in the price of stumpage from the previous quarter. The increase in red and white oak, and hard maple in the Northeast is especially eye-popping and puts those species in that region at record historical price levels.

The rest of the data is a lot more difficult to get a read on. Yes, prices are up, generally. But there is more to the story.

I went back and reviewed the Timber Market Report from 1Q 2005, the last time housing was at record price levels. A close comparison of the current price tables shows:

• Yes, oak and maple are through the roof and at historical highs in the eastern half of the state.
• But, those same species are quite a bit below 2005 levels in the western half of the state, and still about in the same price range they were all of 2020.
• And black cherry is a completely different story; it is half the level of 2005 prices in the northeast, and only one-third its 2005 level in the northwest.

Also obscured by the data is that the number of timber sales reported in Q1 was only about 2/3 the number of the sales in several previous quarters, which is somewhat normal for first quarter data, but still a hint that "special conditions" may be in play right now. Several mill managers have told me that they're holding off on buying timber/logs as long as they can with expectations/hopes that timber prices will come back to them before they run out of logs. And several contributors reported "No Sales" this quarter.

The hesitancy in the mills reflects uncertainty in the hardwood lumber market. In North America, lumber prices turned up strongly in March, and should they continue through the summer, stumpage prices may continue to climb. However, logs are becoming more readily available as more sellers seek buyers for their logs, and we could see the spikes in oak and maple stumpage return to more typical prices this summer.

The export market is somewhat cloudier. While exports are generally strong, the Hardwood Review presents an interesting analysis that suggests overseas customers, particularly the Chinese, are trending toward a lower grade mix to offset rising prices. That could help prices of higher quality lumber ease here in North America, a trend that would help maintain building and remodeling recovery here continue its momentum.

The housing market is highly volatile right now, dropping and then spiking upward every other month. Builder optimism is driving new starts, but it remains to be seen whether the economy will support a new wave of first-time homebuyers. The banks are the wild-card, and the bankers I know seem non-committal right now. Even though less than 20% of mortgage lenders polled last week indicated expectations that rates will go lower, the rates remain soft and continue to drift slowly downward, while lending criteria seem to be tightening.  All of which means that banks want to finance home purchases, but they are looking for "solid" borrowers, while keeping an eye on the Federal Reserve, and on inflation in the economy.

All in all, this summer looks like a nervous balancing act for our Pennsylvania timber industry as they try to meet current lumber demand at log costs that will be supported by the lumber market prices. But it's a great time to sell high quality oak and maple logs, if you have them, and if you can find someone willing to buy them.