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In The News

$1.5 Billion in Australian Timber

Australian company New Forests Inc. (with offices in San Francisco and Singapore) is planning a new wave of deals, targeting up to $1.5 billion of Australia’s state-owned pine forests ahead of an expected surge in demand from the U.S. and China. New Forests CEO David Brand told the Wall Street Journal, he is looking at 250,000 hectares (approximately 500,000 acres) of plantations owned by the New South Wales and Western Australian governments—even though they may be unwilling to sell.

Oregon Governor Announces Funding to Reopen Sawmill

The Rough & Ready Lumber Mill in O’Brien was forced to close its doors last year, but it may be reopening soon.

Oregon Gov. John Kitzhaber announced a $5 million funding package made up of tax credits and a state loan that will allow the county’s last sawmill to reopen. Kitzhaber said the funding helps spread the economic recovery happening around urban Portland to rural parts of Oregon.

Once upgraded, the mill will be more automated, employ 67 people, and process the same amount of timber. The mill’s focus will be on smaller logs from thinning and restoration projects.

February 2014 DNR Economic and Revenue Forecast Highlights

Following is an overview of the latest DNR Economic and Revenue forecast.

U.S. Economy and Housing Market

The U.S. economy is still improving in fits and starts. In October 2009, the unemployment rate peaked at 10 percent, dropping back to 6.7 percent as of December, while the unemployment rate for recent undergraduates continues to push 13 percent. Year-over-year Gross Domestic Product (GDP) growth remains modest at below two percent, averaged over the last four quarters ending in December

The recent government shutdown will suppress GDP in this and future quarters. The housing market continues to show positive signs: new housing starts in 2013 averaged 928,000 (up 18 percent over 2012 and 52 percent over 2011) and average U.S. housing prices have increased in each of the last 22 months through November.

The U.S. economy still faces significant challenges. There are still too many unemployed workers, though some have re-entered the workforce; the financial and economic crises in Europe are improving, but several European countries remain in recession; China’s economy has slowed; and the U.S. government still has not implemented a coherent, growth-driven economic policy.

Lumber and Log Prices

Lumber and log prices were up in 2013. While it varied widely, Random Lengths’ Coast Dry Random and Stud composite lumber price averaged $370/mbf—up 20 percent from the 2012 average of $309/mbf.

Pacific Northwest log prices have also moved up sharply after being fairly flat for 2011 and most of 2012. The price for a ‘typical’ DNR log delivered to the mill climbed dramatically to a nominal high of $587/mbf in April, the highest price since 2000. The log price then fell a bit before climbing back to $610/mbf in December, to average $564/mbf for the year—up 18 percent from 2012’s average of $480/mbf.

West Coast Lumber and Log Exports Way Up in 2013

The West Coast timber industry can’t complain about 2013. Log and lumber exports rose sharply in 2013 as Asia increased its demand.

The USFS reported that the region’s lumber and log exports rose about 20 percent last year. Most of the logs were shipped to China, but there was an uptick in Japan’s needs as well.

Washington and Oregon were the big winners and represented 80 percent of the region’s export.

Xiaoping Zhou, a research economist with the USFS, said lumber exports have been on the rise since 2007, but there are no guarantees the trend will continue.

“It all depends on the price of American lumber exports,” Zhou said.

State Forest to Grow

The Gilchrist State Forest south of La Pine, Ore., will be growing larger soon. According to a new release from the Forestry Department, the Oregon Department of Forestry plans to buy 28,800 acres, using $10 million in bonds and money from the federal Forest Legacy Program. The purchase will happen in increments over two years.

When complete, the Gilchrist State Forest will be 72,200 acres. The ODF says it can be managed to preserve habitat for deer and other species, generate revenue from logging and thinning, and provide hunting and other recreational activities.