This post includes ideas and content covered in the virtual Timber Market Analysis class, October 1^st and 2^nd, 2025.

Lumber prices, OSB prices, construction spending, and housing starts are down. Manufacturing input costs, tariff rates, and policy frictions are up. Executives and institutional investors do not allocate capital when the rules of the road are changing. How can they?

Clients tell us that uncertainty slows investment in the forest industry. As part of Forisk’s quarterly call cycle for the Wood Fiber Review, our team talked with dozens of forest industry managers over the past six weeks who are “writing off” 2025, delaying capital projects, and looking to 2026 for clarified policies and stronger markets. Firms making lumber, panels, pellets, paper products, and whole log chips are operating at 50 to 60% in multiple regions. “We’re running to meet our order files,” reported many contacts, and the quarterly financials of public lumber companies confirm that they are shipping more than they are producing, continuing a trend of drawing down inventories (and freeing up working capital).

For timberland investors and forest industry firms, the relative exposure to legislative and economic pain varies across local timber markets. While pulp mills are closing in some wood baskets, packaging firms are investing in others. While domestic #2 delivered sawlog prices in the Pacific Northwest dropped in Q2 according to Forisk tracking, log export prices to Japan remained strong. While forest carbon projects have slowed, timberland deal flow remains steady.

Context matters, too. Forest industry mill closures tell mixed stories. Company mergers, changes in executive leadership, and bruising turmoil from trade disputes provide cover and reasons for making the hard, unpopular decisions related to rationalizing capacity to shutter outdated mills or balance the supply of product with its actual demand. In reality, North America has room to shutter additional softwood sawmills in high-cost regions (e.g., Western Canada), regardless the direction of interest rates in the fall.

Generating healthy returns from well-managed timberland assets means prioritizing timber markets in areas with well-capitalized mills. This positions investors and firms to profit once markets for capital and employment stabilize.