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Timber Market Remains Soft, UK Ag Economist Says
By
Terri McLean
 LEXINGTON,
Ky., (Nov. 15, 2006) – The timber market in Kentucky has been
“somewhat soft” this year, in large part due to a sharp drop in
stumpage prices for red oak and a continued decline in prices
for white oak, said Greg Halich, an agricultural economist at
the University of Kentucky College of Agriculture. Red and white
oak are the state’s two most important commercial timber
species.
“Here in Kentucky, red and white oaks make up roughly half of
the total harvested sawtimber volume,” Halich said. “Those are
the two main markets that are down right now.”
Stumpage prices are the prices landowners receive for their
standing timber. They are helpful in evaluating market
opportunities for forest landowners who may be considering
harvesting a timber stand.
Prices for white oak have been in decline for about 10 years and
are not expected to reverse anytime soon, Halich said. The drop
in stumpage prices for red oak, however, is a recent phenomenon,
with prices decreasing nearly 25 percent in the past two years.
Consequently, he advises forest landowners to hold off
harvesting medium and high-quality stands of red oak.
“A nice benefit of timber ownership is that timber can be held
for long periods of time without harvesting,” Halich said.
“Prices will hopefully rebound in the next five years for the
red oak species, and so it probably makes sense to wait to
harvest these stands. White oak stumpage prices, however, have
been down for nearly a decade. Waiting to harvest higher quality
white oak stands would be much more risky.”
On the other hand, lower quality red and white oak stands might
be good candidates for harvest. Markets for pallet lumber and
railroad ties, where much of the lower grade oak is sent, have
remained strong, Halich said.
“Stumpage prices for lower quality oak stands have not dropped
as sharply compared to higher quality oak stands,” he said.
In contrast to the declining stumpage prices for oak, prices for
hard maple and black cherry have been rising. But these species
make up a much smaller percentage of the harvested timber volume
in Kentucky – 6 percent for hard maple, about 1 percent for
black cherry – and have less impact on the Kentucky timber
industry. Nevertheless, landowners with mature stands of these
species may want to take advantage of the higher prices, he
said.
“Stumpage increases for black cherry have been phenomenal in the
past 10 years and can easily be three to four times that of oak.
Now is a good time to consider harvesting these stands,” Halich
added.
Stumpage prices for yellow poplar, hickory and walnut have
remained relatively stable in recent years and “there is no
reason to either cut stands quickly or wait in the hope that
prices will increase,” he said. Hickory is normally associated
with oak stands and is typically harvested when the more
significant oak component of a stand is cut.
Recommendations for ash are more difficult to make, Halich said,
because stumpage prices for this species dropped sharply in the
1980s and then leveled off. Compounding the price drop is the
potential infestation of the emerald ash borer, a pest that has
devastated ash stands in southern Michigan and northern Ohio.
“Unless a biological control can be found, the borer will
eventually move into Kentucky,” Halich said. “Forest landowners
whose stands have a heavy ash component face a dilemma: waiting
in hope of rising stumpage prices but with the possibility that
their stands may eventually become worthless. Salvage cuts just
ahead of the borer’s path have the potential to flood already
weak ash markets.”
Doug McLaren, forestry specialist with the UK Cooperative
Extension Service, said that landowners should consult a
professional forester to determine when to harvest their trees,
as well as which trees to cut. A forester considers what is best
for the landowner in terms of prices and market, but he also
takes into account the needs of the forest stand and forest
health.
The timber industry is one of Kentucky’s most important
industries, with 11.6 million of the state’s 12 million acres of
forest classified as timberland. About 78 percent of Kentucky’s
timberland is owned by private individuals who annually sell
about $153 million worth of standing timber . |
Contact: Greg Halich, 859-257-8841
Doug McLaren, 859-257-2703 |
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The UK College
of Agriculture, through its land-grant mission, reaches across
the commonwealth with teaching, research and extension
to enhance the lives of Kentuckians. |
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