Sluggish Housing Construction Reduces 2011 Sawtimber Forecast by 6% in US South; Pulpwood Markets Become Increasingly Localized and Diversified

/PRNewswire/ -- Anemic housing construction - and the resulting impacts on lumber demand - delayed the expected recovery of pine sawtimber prices this year. Despite the apparent delay in recovery, several states, and end markets for pulpwood, show signs of resiliency. Forisk Consulting's mid-year update of its 10-year, state-by-state forecast for pine sawtimber and pulpwood stumpage in the US South reflect the variability across local timber markets as sawmills retool and bioenergy projects come on-line.

South-wide, Forisk's update indicates pine sawtimber prices will be 6.4% lower in 2011 than expected six months ago. Results vary across states, with Alabama, Arkansas, Georgia and South Carolina best positioned to rebound quickly as lumber demand strengthens. According to Forest Economist Dr. Tim Sydor, "Expectations for key macroeconomic factors - such as GDP and housing starts - have, frankly, proven to be way off-base. GDP grew faster than expected, but housing starts are expected to remain 30% below 2009 projections. As a result we've adjusted our forecast of US softwood lumber consumption downward by 6.3 billion board feet for 2010. Lower lumber demand means lower stumpage prices, and pine sawtimber prices in the South have been revised downward by nearly $1 per ton for the year."

Forisk's President, Dr. Brooks Mendell, agrees that 2010 is a "bridge" year and emphasizes to investors the benefits of patiently following local markets. "Robust local markets, with capitalized mills and resilient loggers and wood suppliers, pay dividends to their investors through faster recoveries."

Pulpwood demand, relative to sawtimber, is distinct for the complexity of its end-use markets. "We follow several factors that have push-and-pull effects on pulpwood demand and stumpage prices," says Dr. Sydor. "For instance, while a housing recovery lifts demand for pulpwood from OSB producers, it decreases demand for roundwood through increased residual chip flows from lumber mills." Forisk projects that 9.6% of pulpwood demand across the South will come from new bioenergy facilities. "Bioenergy and OSB end-use markets drive any growth in pulpwood demand over the next 10 years," says Dr. Sydor.

Pine Pulpwood and Sawtimber forecasting products from Forisk Consulting help industry leaders follow and understand the impacts on stumpage prices from the economic recovery and changing demand for lumber, pulp and bioenergy products. For more information, visit www.foriskstore.com and click "Stumpage Price Forecasts."

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Sawtimber Prices Expected to Recover in 2010-2011 for US South, yet Results Vary by State

/PRNewswire/ -- Turbulent times characterized by plummeting pine sawtimber prices could soon be over for timber sellers. A new stumpage price forecast published by Forisk signals climbing prices for pine sawtimber in the US South beginning in 2010. The ForiskFORECAST pine sawtimber price forecast and "Forecasting Timber Prices" workshop provide insights for timberland owners, investors, and wood procurement managers in planning future pricing and management strategies as lumber and plywood markets recover.

Despite positive indications for the US South as a region, results vary across the 11 states covered in Forisk's models. For example, between 2010 and 2011, Georgia pine sawtimber prices rebound 17% while prices in North Carolina increase less than 1% over the same timeframe according to the ForiskFORECAST. "The key is understanding the local, state-specific relationship - the elasticity - between wood demand and prices," explains Dr. Tim Sydor, Forisk's Forest Economist. "Pine sawtimber demand declined 32.6% South-wide between 2006 and 2009. Yet these declines varied by state. In the next few years, as lumber demand recovers, our historic wood demand and price analysis suggests a strong stumpage price recovery in several Southern states, while others will take longer to respond."

"Timber markets are uniquely local," says Brooks Mendell, President of Forisk. "Our clients are less concerned about national prices, and directly focused on their local options. South Georgia differs from North Alabama which differs from East Texas. Our basin studies, workshops and the ForiskFORECAST focus on the idea that successful investments in forestry or wood-using facilities rely on detailed knowledge of localized markets."

The ForiskFORECAST-Pine Sawtimber predicts annual pine sawtimber stumpage prices across the US South through 2020. It is available as an interactive Excel model or as individual forecasts for 11 states. For more information, visit www.foriskstore.com and click "Stumpage Price Forecasts."

In addition, two upcoming short courses on February 10th from Forisk - "Timber Market Analysis" and "Forecasting Timber Prices" - teach specific skills and strategies for forestry, procurement, bioenergy, investment and appraisal professionals who must evaluate pricing and demand in specific local wood markets today and looking forward. To learn more about these Atlanta-based courses, visit www.forisk.com and click on "Continuing Education."

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