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Timber prices poised to improve this fall
MISSISSIPPI STATE -- Recent rulings on Canadian lumber trade could have far reaching effects on Mississippi landowners considering the timber market this fall.
Bob Daniels, forestry specialist with Mississippi State University's Extension Service, said the bottom of the pine sawtimber stumpage market is probably behind, thanks in part to the recent tariff imposed on Canadian softwood lumber imports.
"Pine lumber prices are about where they were last year at this time, but they were dropping then; now, they are rising," Daniels said. "Standing prices for pine sawtimber are down about 13 percent from last year, and oak sawtimber prices are down about 8 percent."
Daniels said pine sawlog prices peaked in 1999 and had trended down until very recently. He views the two-year trend as a market correction brought on by an oversupply of softwood lumber and weakened demand. Current pine and hardwood prices are similar to what they were in the mid-1990s.
"Based on the timber severance taxes, which are paid when the timber is cut, Mississippi's timber harvest through July was behind by 12 percent," Daniels said. "That's consistent with the regional trend. In Mississippi, we've had a number of mills close temporarily in reaction to the oversupply and others close permanently because of the softwood lumber market since last fall."
The U.S. Department of Commerce recently ruled in favor of U.S. lumber producers who charged that Canada subsidized their timber industry, giving an unfair advantage over U.S. softwood lumber. The ruling imposed a 19.3 percent duty on Canadian lumber coming in to the United States, which had formerly come in duty-free. The charge is also retroactive back into mid-May 2001.
"About one-third of the softwood lumber used in the United States was coming from Canada. If most of it had stayed in the northern United States, it might not have become a big issue," Daniels said. "However, when Canadian lumber is showing up in Atlanta, Dallas and other southern markets for less than Southern lumber producers can sell it, you start to see how Canada had an unfair advantage in production."
Daniels said the majority of Canadian timber is harvested from government land. The Canadian government's emphasis on forest management is to maintain the employment in the timber industry, making forces of supply and demand less important. Market watchers are already seeing signs that buyers of Canadian spruce, pine and fir lumber are switching to less expensive Southern pine since the tariff went into place.
"Other positive news is that the housing market is good with 1.6 million starts in July," Daniels said. "Given these positive developments, this fall may be an opportunity for Mississippi forest owners to market pine sawtimber."
The most recent Mississippi timber prices can be viewed on the internet at http://www.msucares.com/forestry/ under the timber price reports.