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Southern Timber Supplies: Investment Implications

This is the fourth in a series related to Forisk’s Q2 2018 forest industry analysis and timber price forecasts for the United States and Canada. The post includes an excerpt from the Regional Summary: U.S. South chapter.

Growth-to-drain analysis compares annual growth of timber to annual harvesting to provide a measure of market demand relative to supply. A growth-to-drain ratio of 1.0 indicates a balanced market that harvests timber at the rate of growth. Growth that exceeds demand by a large margin indicates oversupply. Conversely, annual removals that exceed growth indicate competitive markets for raw materials. The growth-to-drain metric is one useful tool to score markets for investment in timberland (more favorable scores for tighter, competitive markets for raw materials) and in mill infrastructure (more favorable scores for well-supplied markets for access to raw materials).

Forisk conducted an analysis of growth-to-drain in the U.S. South by “smoothing” the timber growth and removals data to better account for local timber markets. The “smoothing” exercise spatially allocated county-level growth and removals to all adjoining counties. This mimics local supply basins for mills.

Removals provide an indication of where pine markets are located; markets are located around mills. Pine removals are heaviest in southeast Georgia, southern Alabama and Mississippi, and in northern Louisiana (Figure 1). Mill activity also concentrates along the North Carolina and Virginia border. Removals drop off rapidly in Appalachia, the Mississippi River delta, the Ozarks, and southern Florida.

Figure 1. Pine Timber Removals and Pine-Using mills in the U.S. South.

Overall, pine markets across the South are balanced or well-supplied with pine timber. The growth-to-drain analysis indicates market areas of East Texas, Texarkana, southern Georgia and northern Florida are tighter markets with strong demand relative to supply. Eastern Arkansas, northern Mississippi, and northern Alabama are heavily oversupplied on a relative basis. (The upcoming Q2 2018 Forisk Research Quarterly will include a growth-to-drain heat map with market scores for comparative analysis.)


Forisk will teach “Timber Market Analysis” on June 19th in Atlanta, a one-day workshop that details how to track, analyze and rank timber markets and wood baskets. For more information, click here

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