Delaying Your Harvest For Higher Timber Prices Can Cost You

It has been 10 years since we experienced what I call a “perfect storm” of timber prices. In 1999, there were a number of circumstances that occurred at the same time simultaneously which led to a brief period of all-time-high timber prices. We saw pine and hardwood species bring all-time- record high stumpage prices. These all-time-high prices were also found in pulp and solid wood products.
As timber prices tumbled following that record high market, many people chose not to sell and decided to wait for the high prices to return. We had a middle Georgia landowner who chose to hold off thinning his 200 plus acres of planted pine when prices dropped to $12 per ton. Two years later, Southern Pine Beetles attacked his over-crowded and thereby stressed pines, which resulted in him loosing more than 10 acres of trees before he called us in to salvage the remaining timber.
To make things worse, prices continued to decline to a low of $7 per ton resulting in a $5 per ton loss in price drops alone, not to mention the loss the owner experienced due to dead and dying beetle-killed trees. This low price of $7 per ton has remained steady since that time. There have been temporary fluctuations in price but we have seen nowhere near the so-called “low prices” of $12 per ton that kept our landowner from selling his timber 10 years ago.
This scenario is not unique to pulp prices or pine. This story has been true for pine sawtimber and hardwood prices as well. This long-term down swing in prices has remained and prices have been relatively stable throughout a period where the economic environment has been allowed to make adjustments according to the price and demand curve. Who knows how or when our economy will recover with the financial market we are experiencing today where every aspect of the economy seems to be on the downturn  and the government is making adjustments like this country has never seen before. We could be like the seller who chose not to sell a decade ago for $12 per ton and end up waiting another 10 years for prices to improve.
The economic experts I hear are suggesting we not even look for the beginning of recovery from this recession until the end of next year, some 18 months away. But if our country continues with more stimulus bailouts and to print money without restraint, who knows what will happen or when?
I don’t claim to be smart enough to predict timber prices under the best of economic conditions, so I certainly won’t attempt to predict prices in these economic times.¬† However, if you are considering the sale of timber or land, contact me to help evaluate what and how you need to proceed in marketing your trees.Jim Griffith is Gen. Manager of Georgia Farm Bureau Timber and Real Estate Cos.
Georgia Farm Bureau News – August 2009

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