The historian Stephen Ambrose once said, “The past is a source of knowledge, and the future is a source of hope.” This simple statement contains multitudes (to misappropriate another famous quote), but the sentiment provides some comfort as it pertains to timberland owners. The past is the prism through which we view our future. It allows us to rationalize the underlying fundamentals needed to achieve some future outcome. While we firmly believe in looking forward with a hopeful eye, a look at where we’ve been can be informative. Forisk recently sought to provide a clearer look at historic hardwood sawtimber prices to provide better context for our price forecasts. As we’ve discussed before, hardwood prices can be complex.
We wanted a single measure of prices that better accounted for the diversity of species and regions we cover in the North. We weighted available state-level stumpage prices by the volume of sawtimber removals based on U.S. Forest Service FIA data (Figure 1). We limited the index to species with available stumpage price series and reasonably large removal volumes across the region, narrowing our base species to four, Red Oak, Hard Maple, Soft Maple, and Ash. Compiling price data across all the regions* for each species provided weighted price series that highlighted similarities in many of the species (Figure 2). Given the substitution potential of similar hardwood species, these patterns are in step with our understanding of hardwood markets.
Finally we combined all species prices weighted by removal volumes to generate a single price series (Figure 3). We published the Forisk Hardwood Price Index this quarter in the Forisk Research Quarterly and will update it quarterly moving forward. It is a simple reference to see how hardwood log prices generally have trended over the recent past. The upward price trajectory since 2009 provides a historical sense of where we’ve come from. Landowners can hope the future will provide similar gains.
* All prices were converted to International ¼” log scale
To learn more about the Forisk Research Quarterly (FRQ), click here or call Forisk at 770.725.8447.