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On March 17, 49 senior managers from the Forest Resources Association’s leadership gathered in teams to discuss with members of Congress the issues that affect the business of supplying mills with raw material and the survival of forest-dependent communities. The ten teams visited approximately 60 congressional offices, representing districts and states with strong forestry interests.
“We’ve concluded that we need to take things up at the policy level when technical solutions can’t get us where we need to be,” commented FRA Chairman Dick Carmical, of The Price Companies, who participated on the Fly-In’s Arkansas/Texas team. “We made persuasive, effective contacts and moved some key issues forward.”
FRA’s Fly-In focused on three issues: (1) building support for truck weight reform on the Interstate system by urging passage of the Safe and Efficient Transportation Act of 2011; (2) urging Congress to pass a legislative “stay” of the recently issued Boiler Maximum Achievable Control Technology rule, which threatens to burden a clean industry with heavy compliance mandates that bring few public health benefits; and (3) raising awareness of the Administration’s proposals to place new obstructions on the independent contractor relationships that form the basis of U.S. wood supply chain management.
To find out more, log on to www.forestresources.org.
DNR Revenue Forecast
The DNR released its Economic and Revenue Forecast in March for the Fiscal Year 2011, Third quarter. Below is the summary.
Lumber, Log, and DNR Stumpage Prices. Since the November Forecast, seasonally adjusted West Coast lumber prices have increased by 27 percent. During that same time, log prices increased by 20 percent. We expect lumber and log prices to remain strong over the next six months because of strong export demand. Actual DNR timber sales during November through February averaged an eye-popping $365/mbf, almost $113/mbf or 45 percent more than forecast in November. In March, sales prices averaged $420/mbf.
DNR Timber Stumpage Prices. The forecast average timber sales price for FY 2011 was increased by $80/mbf or 30 percent from $265/mbf to $345/mbf. This was due primarily to higher than expected sales prices in November through March but also to higher forecasted timber sales prices for the remainder of the FY 2011.
We continue to be pessimistic about the recovery of the U.S. housing market and its impact on stumpage prices over the next two to three years. Recent strength of DNR timber sales is attributed to high export demand for lumber and logs. While Federal law prohibits direct export of unprocessed logs from state trust lands, log exports of private logs has an indirect impact on DNR stumpage prices by reducing the residual supply to mills from private lands. We expect export demand to continue to dominate Washington’s timber markets for the next two or three years. Therefore, we have increased the FY 2012 through FY 2014 stumpage price to $300/mbf.
Timber Sales Volume. We made only minor changes (less than 1 or 2 percent) to our planned sales and removal volume forecasts.
Bottom Line for Timber Revenues. As a result of the increase in forecast timber removal prices, forecast timber revenues are up from the November Forecast by $16.7 million, or 10 percent, for FY 2011 and up $75.0 million, or 23 percent, next biennium.
Lease and Other Non-Timber Revenues. There was no change in the upland lease revenues. DNR did hold two hugely successful geoduck auctions where prices averaged over $10/lb and netted $3.1 million more in revenue than was forecast in November.
Risks to the Forecast. While the stumpage prices in this forecast have been significantly increased, we now believe that the upside potential on stumpage prices is about equal to the downside potential. As for our planned timber sales volume, almost all the risk is on the downside due to environmental and operational concerns. At this point in time, we judge the downside risks to the overall forecast to be greater than the upside risks.
Pacific Logging Congress
The 102nd annual meeting of the PLC will be held at the Fairmont Kea Lani, in Maui.
The theme for the 2011 convention is “This Is My Office — Around the Pacific Rim”, reflecting the concerns about a quality work in the industry’s future.
Make your plans now to join us in Maui, reserve your room at the Fairmont Kea Lani and send in your paid convention registration by August 1st, this will qualify you to be entered in a drawing to receive the 3-nights convention dates free (Nov. 5, 6, & 7). www.pacificloggingcongress.com
Allyn Ford’s Address
Rex Storm reported in the Associated Oregon Loggers Newsletter that in May, Roseburg Forest Products CEO Allyn Ford delivered his eighth annual “state of the timber industry” address to the Roseburg Area Chamber of Commerce.
Ford noted that this cycle is the worst since the Great Depression; and when the housing market recovers, it will be a challenge to find enough skilled workers.
On the bright side, Ford also said an increase in housing starts is predicted for 2012.
And although China’s demand for logs has increased log prices at Oregon Mills, Northwest mills may face less Canadian competition as Canada sells logs to China instead of selling more forest products to the US.
MLA Annual Meeting
The Montana Loggers Association annual meeting held May 20 at Lake Polson, was fun and informational. Rex Anderson was elected this year’s president and gave the Keynote Address.
Although the industry is suffering in that part of the country, some of the speakers pointed to innovative solutions on the horizon. Like Ken Verley, President of Tricon Timber, who talked about the investments the company is making in activated carbon.
Attendees also got to enjoy an afternoon of golf and Rex Anderson’s inaugural BBQ at the Smoke House Bar and Grill.
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