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Pulpwood strong in weak timber market

POSTED: May 31, 2007 5:02 a.m.

ALBANY — In spite of generally depressed timber markets, Southern pulpwood prices have shown surprising strength in recent months, raising hopes that a supply glut resulting from a government tree-planting program two decades ago may be nearing an end.

F&W Forestry Services, Inc., a forestry management and marketing firm headquartered in Albany, reported that the prolonged housing slump and worsening drought conditions continued to depress timber markets for most tree classes in the first quarter of 2007.  But pulpwood bucked the trend.

F&W handles timber sales for private forestland owners and tracks timber markets throughout its operating region that stretches from Virginia to Texas and northward into the Ohio Valley.  It publishes timber price data from its 14 branch offices in its quarterly newsletter.

“Reduced housing starts and continued dry weather had their predictable effect on pine sawtimber (large mature trees used for lumber production) across the Southern region in the first quarter of 2007,” writes F&W President Marshall Thomas in the firm’s Spring Forestry Report. “Prices across the region were down almost 5 percent with prices in the Southeast dropping about 15 percent.”

But in a notable market trend reversal, the decline in sawtimber prices was somewhat offset by higher prices for pulpwood, which have been lagging for several years because of excessive supplies of younger, smaller trees used for making pulp and paper.

Thomas said region-wide pulpwood prices increased about $1 per ton in the first quarter, compared to the final quarter of 2006.  Prices of $8 per ton were common across the Southern pine belt though lower in the central hardwood region of Tennessee, Kentucky and southern Ohio.

That compares with about $7 per ton for 2006 and under $6 per ton five years ago.

The higher pulpwood prices are due in part to the housing slump. Pulp mills normally get a significant portion of their wood fiber supply from sawmills in the form of chips and residues from lumber production. 

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