Winter Timber Sale

Challenges in Lake States Timber: A Look at the Third Quarter

Check out our findings on our 3Q data deep dive...

Photo courtesy of Keep the U.P. Wild

Very soft demand for timber and cordwood was readily apparent in comments from people managing Lake States timber businesses at the end of the third quarter. “These are the worst markets I’ve seen in my career — going back 50 years”, was how one manager for a Northern Wisconsin landowner described it. A forest manager from the Northern lower peninsula of Michigan said that their business had worked to make several sales through the summer with none of the efforts bringing success.

The low demand decreased the volume of wood sold in all three Lake States in the July-September period, with volumes sharply reduced but many index prices holding surprisingly steady. There were an abundance of no-bid auctions, and also sales that were withdrawn.

The lowest volumes for FDN data collected were in Wisconsin (where volumes in many quarters are the highest). Several short-term mill closures for maintenance within the state and near the border in the Upper Peninsula of Michigan impacted the flow of wood. Also, unexpectedly high inventories at the beginning of the quarter were reported by several mills.

Anecdotally, market participants described the hardwood pulp market to be the weakest part of the Northern forest economy in the quarter. But that was reflected more in volumes withdrawn than in reduced prices. In Michigan’s Upper Peninsula, lower cordwood volumes sold at stable prices (particularly in maple, oak, and pine). In the state’s Lower Peninsula, oak cordwood prices fell, but sawlog prices slightly increased.

Minnesota volumes suffered as well. And the one black walnut sale recorded by FDN showed a price drop of 50%.

However, pine sawlog prices were healthy, showing increases in all three states. In Minnesota, pine sawlog prices have hit a new high for the last five years.

Landowners and managers all are expressing that the oversupply in inventories is near an end, and demand for pulpwood resumes to complete the necessary components for viable harvest scenarios for loggers and landowners.

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