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Summary of Changes

Changes in both harvest quantities and timber prices since 1998, suggest that the timber market is in the midst of a transition. Prices have declined from their peak levels but remain relatively strong for hardwood products and for softwood sawtimber. However, these declines along with a precipitous decline in softwood pulpwood prices suggest a substantial reduction in the returns to timberland owners from peak values in the 1990’s. Especially for softwood pulpwood, these patterns suggest a strong contraction in demand coupled with stable to expanding supplies of timber.

Figure 5. Hardwood pulpwood harvest and price in the US South (Source: Timber Mart South and various RPA Timber Product Output reports).

Figure 6. Softwood sawtimber harvest and price in the US South (Source: Timber Mart South and various RPA Timber Product Output reports).

Figure 7. Softwood pulpwood harvest and price in the US South (Source: Timber Mart South and various RPA Timber Product Output reports).

Looking jointly at price and harvest changes for the three largest product classes in the South (Figures 5-7), we can define three distinct periods of development between 1977 and 2002:

Moderate Growth Phase--1977-1986: During this period, harvests of all products increased at a moderate rate while timber prices stayed constant or even declined for all three of the major products. These trends are consistent with both supply and demand for the products expanding.

Rapid Growth Phase--1986-1998: During this period, harvests of pulpwood and softwood sawtimber continued to increase but at a faster rate than between 1977 and 1986. Prices for these products also increased during this period at a higher rate than for harvests. This pattern of change is consistent with a strong outward shift in timber demand but doesn’t provide conclusive evidence of changes in timber supply. It is consistent however with demand shifting outward faster than supply. In contrast, hardwood sawtimber production was stable with increasing prices signaling a tightening of hardwood sawlog supplies.

Adjustment Phase--1998-2002: During this period both harvests and prices have declined for pulpwood products. These patterns of change are consistent with a strong contraction in the demand for pulpwood. For softwood sawtimber, harvests leveled off with declining prices. This is consistent with an expansion in sawtimber supply coupled with a decline in demand. Limited data for hardwood sawtimber indicates stable harvests and prices over this period.

In the subsequent sections of this paper, we examine various demand and supply factors that have likely influenced the markets for timber products in the South, with attention focused on evaluating the changes during the Adjustment Phase (1998-2002).

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modified: 07-Feb-2017
created by: John M. Pye
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