September 07, 2022
Author: Neila Cole
After hitting a 15-year peak in 1Q2022, the weighted average price for southern timber turned sharply lower in 2Q as prices for every product dropped during this period. While stumpage prices were up +7% year-over-year (YoY), they were down -13% quarter-over-quarter (QoQ) in 2Q. Southern timber prices have demonstrated significant volatility since 2017; however, prices for all products have trended upwards over the last ten years.
Pulpwood
Both hardwood (HPW) and pine pulpwood (PPW) pricing began collapsing in 1Q2022 and the trend continued in 2Q. Southwide prices for PPW plummeted -17% QoQ, which reflected the steep decrease witnessed in two of three regions for this product. Prices in the East-South were down -14%, prices in the Mid-South dropped -22%, but prices in the West-South jumped +19%.
Demonstrating even more volatility, Southwide prices for HPW were down -5% QoQ, also plummeting in two of the three regions. Prices in the East-South were up +11% percent, but prices in the Mid-South and the West-South were down -32%. In the chart below, notice the 2Q price parity between PPW and HPW, which is tighter than it has been in several years.
Sawtimber & Chip-n-Saw
Prices for pine logs in 2Q2022 plummeted on a Southwide basis. Pine chip-n-saw (CNS) prices were down -16% QoQ, experiencing abrupt decreases in two of three regions. Prices in the East-South plunged -23% and prices in the Mid-South were down -15%, but prices in the West-South edged up +5% QoQ.
Southwide pine sawtimber (PST) prices also demonstrated a double-digit decrease by dropping -10% QoQ as prices for this product were also down in two of the three regions. Prices in the East-South were flat (+0.2%), but prices in the Mid-South were down -15% and prices in the West-South dropped -6%.
After experiencing a significant uptick in 1Q, Southwide hardwood sawtimber (HST) prices in 2Q were down -8% QoQ as prices plunged in all three regions. Prices in the East-South were down -7%, prices in the Mid-South were off -1%, and prices in the West-South dropped -13%.
Outlook
Total precipitation across the South was nearly 2” below the 5-year average in 2Q, which provided some relief for harvesting operations working on tracts that were purchased during the end of 2021 – a particularly wet period. However, precipitation levels have increased (along with some significant flooding) in a few areas over the last several weeks, especially in the West-South region.
Finished lumber prices have come way down from the $1,000/MBF mark where they remained for most of 1Q2022 primarily due to strong demand, trucking and transportation bottlenecks, and pinched trade flows from Canada. Per Forest2Market’s southern yellow pine (SYP) lumber price composite, prices are now down nearly 50% from the high achieved in March as inflationary pressures, rising interest rates and economic concerns are causing trepidation in the new-construction sector.