May 2013-Mississippi Timber Markets Holding Up
May 2013
Mississippi Timber Markets Holding Up
by Dr. James Henderson, Extension Forestry
Housing starts are on the rise! The seasonally adjusted annual rate for U.S. housing starts for March crossed the million mark at 1.036 million. Demand is exceeding supply for both housing and building materials. The Random Lengths composite price for framing lumber for May is up 13.6% from the same period last year. As of March 2013 there was a 4.4 month supply of newly constructed homes. This measure indicates the number months needed to sell all available units at the current home sales volume. The supply from the same period in 2012 and 2011 was 4.9 and 7.1, respectively. However, stumpage prices for pine sawtimber are not rebounding as quickly. Mississippi stumpage prices for the 1st quarter of 2013 as reported by Forest2Market did show gains for most product categories; however, pine sawtimber was the lone exception falling by $1.75 to $26.07. The full price report is available at Msucares.com/forestry/prices or you can contact your local county MSU Extension Service office.
One issue that will keep stumpage prices from rising more quickly will be the accumulated inventory of standing timber. Since the decline in the U.S. housing market the rate of timber harvesting has been much lower resulting in accumulation of standing timber. One estimate by the Mississippi Institute for Forest Inventory indicated that standing pine sawtimber volume was up by over 40% since the last state wide inventory was conducted starting in 2005. Housing is projected to be back at a production level of about 1.5 million units a year by 2015 or 2016. At that point stumpage prices for pine should reflect the resulting increase in demand and reduction of standing timber inventories as timber harvesting increases. It is reasonable to expect modest increases in stumpage prices over this period of time. 2013 is looking better than 2012 and much better than the last several years following the recession. The recovery for Mississippi's timber markets will take time but everything is finally heading in the right direction.
As timber sales increase so will questions on paying taxes. The IRS just issued a new audit technique guide for the timber industry. This is the document that IRS agents will consult before conducting an audit of a timber sale. This can be found on the IRS website by searching for Hardwood Timber Industry Audit Technique Guide. There are also two newly revised USDA publications available. Forest Landowners' Guide to the Federal Income Tax and Federal Income Tax on Timber: A Quick Guide for Woodland Owners. Both are available at timbertax.org.
News
RAYMOND, Miss. -- Mississippi’s 2023 timber harvest is expected to set a record for the 21st century. “We are on pace to exceed 36 million tons of timber harvested, which would be the highest level we have experienced this century, surpassing the previous high set in 2005 prior to the Great Recession,” said Eric McConnell, an associate professor of forest business at Mississippi State University. The increased harvest helped Mississippi’s forestry industry remain in third place among the state’s agricultural commodities, with an estimated production value of $1.5 billion. That is a 9.6% increase from 2022.
RAYMOND, Miss. -- An increase in both the amount of timber harvested and delivered wood prices landed Mississippi’s forestry industry in third place among the state’s agricultural commodities. At an estimated production value of $1.3 billion, timber is up 15% from 2021. Poultry and soybeans ranked first and second, generating an estimated value of $3.8 billion and $1.8 billion, respectively, in 2022.