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Timber Markets

Primary Question (chapter 13): What are the history, status, and projected future demands for and supplies of wood products in the South?

Related Questions (chapter 14): What are the status and trends of forest management practices in the South? (chapter 15): How might existing and new technologies influence forest operations and the resultant conditions of forests?

The South, particularly the Coastal Plain and the Piedmont, contains the most intensively managed forests in the world. This one region of the United States produces more wood products than any other single nation. Timber harvesting, tree planting, and other forest investments have increased, and forest inventories have expanded as harvesting and processing technologies have changed in ways that favor southern timber. Over the past several years, changes in processing technology and in the location of large processing facilities (for example, chip mills and oriented-strand-board mills), have changed the intensity of timber harvesting within subregions of the South.

We examined changes in the world’s timber markets and technology, searching for probable effects on markets for the South’s forest products (chapter 13, chapter 14, and chapter 15). We found that:

• Wood production continues to be an important part of the U.S. economy. The United States is the world’s largest producer, consumer, and importer of wood products. It is also the second largest exporter of wood products after Canada.

• Technology, public policy, and forest growth have all combined to enhance the South’s position and share of the forest products markets. Technology has allowed smaller diameter trees and a wider variety of species to be used in wood products. Public policies have reduced timber harvesting from public land, which is concentrated in the Western United States.

• Forest regeneration and growth have expanded southern timber inventories by 73 percent since the 1950s, and strong timber markets have encouraged landowners to keep land forested. As a result of these and other factors, the South’s timber production more than doubled between 1953 and 1997. Its share of U.S. production rose from 41 to 58 percent and its share of the world’s production from 6.3 to 15.8 percent (fig. 7).

• The South provides a great variety of timber products, with no single product dominating. Softwood saw logs represent the largest product share at 28 percent of total output. Softwood pulpwood and hardwood pulpwood now account for 25 and 16 percent of output, respectively (fig 8).

• Since 1953, hardwood pulpwood has experienced the greatest increase in product share, growing from 3 to 16 percent of output. This increase reflects a change in pulping technology that allowed hardwoods to be substituted for more expensive softwoods in the manufacturing of paper products.

• Models described in chapter 13 forecast that timber production in the United States will increase by roughly a third between 1995 and 2040. Nearly all production increases will come from the South. The South’s timber production is forecast to increase by 56 percent for softwoods and by 47 percent for hardwoods between 1995 and 2040 (fig. 9).

Figure 9--Subregional Timber Supply Model projections of total hardwood and softwood removals volumes, in billion cubic feet (bcf), by private owners (where NIPF stands for nonindustrial private forest land), 1999 to 2040, under the base scenario. Source: Chapter 13.

Changing wood manufacturing technologies have altered the type and size of timber materials demanded and the location of processing and harvesting (fig. 10a and fig. 10b). An example is chip mills, which have generated debate about timber harvesting in the South. Chip mills sometimes lead to harvesting in areas not previously subject to harvesting. Before the 1990s, pulp mills and manufactured wood panel mills relied heavily on remote log concentration yards and maintained large chipping facilities at the site of panel and pulp manufacture. Today pulpwood-sized logs increasingly are chipped away from the mill as needed. Per unit of volume, moving wood in chipped form is cheaper than moving pulp logs, providing a significant economic benefit to pulpwood consumers and log producers (chapter 13). Harvesting in new areas also leads to changes in local forest conditions that can change wildlife habitat and landscape aesthetics (chapter 4 and chapter 12). However, wood products markets are highly integrated, so it is very difficult to isolate the effects of this or any other technological component from all other demand and supply factors.

Data on chip mill output are limited to recent years. Chip mills processed about 27 percent of pulpwood in the South in 1999. They produced 47 million green tons of chips in 1998, 45 million green tons in 1999, and 39 million green tons in 2000. In 1999, 42 percent of the material processed in chip mills was softwood and 58 percent was hardwood (chapter 13).