Just about every industry is affected by the current state of the US and Global economy. The timber industry is certainly affected as well. We see local and global trends dictating supply and demand causing fluctuation in the price we get for our timber products. Landowners need to ask a few questions about their timber investment before making an investment strategy or cashing in on their timber investment.
- What is the health of your timber?
- Does your timber need harvesting?
- What products do you have to sell?
- What volume of timber will you be marketing?
- What is the current market for this product?
- What type of timber sale will be the best for your type of product?
- Do we see a peak in the market we can take advantage of for your sale?
- Do you need cash now that we can generate from timber harvest?
- Do you have long term goals for timber income, and at what stage is your timber rotation?
- Do you have plans to sell land in the future and how will a timber sale affect your land value?
These are a few questions among others that need to be addressed. Each property and landowner has specific character and needs. I have always been an advocate of knowing what investments you have and implementing a plan to manage the investment. This applies to timber, land, stock portfolios … Knowing what you have, understanding the current market for your product or investment and having a plan or goal to manage the investment puts you in an informed position to manage and take advantage of special situations. We look at these things and monitor the markets so we can take advantage of special circumstances. We work with landowners to determine when we should wait for a bit or if we need to take advantage of a current market situation.
We see some very difficult and unsettling times in the timber market. Fortunately, timber is a product we can “leave on the shelf” for an extended period of time. This provides us the ability to work the market to your advantage. Pine pulpwood prices are in the upper price range and we advise people to thin younger pines to promote healthy vigorous stands. This also helps the timber grow into the larger diameter classes which are more valuable products. Pine Chip-N-Saw and pine sawtimber are in the medium to low price range as of the date of this post. These stands need to be inventoried so you know what volume and products you have to sell. We also look at growth rates and stand health as part of our management criteria. We recommend holding them for a better market. An exception to this would be a need for income or if there is some type of stand health issue. Hardwood markets have been very good but have declined a bit over the last six months. Hardwood prices are in the medium to high range but off the peak. We would suggest inventorying and holding unless there is some other motivating factor to sell.
We are in a difficult period but there are signs of improvement. Recovery could be lengthy and drawn out, possibly several years or longer. There will be windows of opportunity that can be taken advantage of if you are prepared. We still think timber is a good investment if bought properly. Carbon credits, biofuels and fuel chip exports all present possible opportunities that could spark significant demand in wood fiber. Green Hill Land & Timber is here to help you with your land and timber investment and would like the opportunity to talk with you. We think we can provide sound solutions in making plans to reach your goals.