U,S. timber supplies and rising demand for softwood lumber

tTt"t UNIreo Sreres has more softI. wood trees than you can shake a stick at. Analysis bf U.S. Forest Service data indicates the South has nearly 3.5 billion tons of standing pine grade and pulpwood inventory on private, operable timberlands. That's about 140 million truckloads. Coastal Oregon and Washington, a region with 103 open softwood mills, has over 68 billion bd. ft. (over 400 million tons) of standing softwood grade inventory on privately-owned timberlands. And these numbers represent but a fraction of total U.S. forest stocks.

Forisk conducts research on the impact of local supply events (such as natural disasters) and trends (such as increased forest growth rates or plantation acreages) on timber markets to forecast timber and delivered log shipments. For the near-term, states with the most severe pine grade oversupplies show how stumpage prices become less sensitive to increases in demand in those states for which a quantitative basis exists for significant excess inventories.

Alternately, analysis of coastal markets in the Pacific Northwest indicates less quantitative evidence for dampened log prices in a region buffeted by robust export demand.

Forest Supplies & Demand

What do we think about the potential impact of forest supplies on timber prices across the United States in the short and long-term as housing markets recover and forest harvesting increases?

In evaluating the potential for softwood grade oversupplies or constraints, Forisk uses the "removal year" metric-accessible inventory divided by removals-to identify a local market with a potential supply imbalance. The removal year estimates how many years it would take to deplete standing inventories, given a set level of removals per year. For example, if we assume one extra year's worth of standing inventory, it would take four years of removals at 25Vo above the long-term average to deplete the backlog.

In the Pacific Northwest, estimated changes in operable inventories on private lands have been modest, with Coastal Oregon and Washington averaging l6 years of softwood grade removals on the stump on private lands alone.

The results in the Northwest change slowly for two reasons. First, the U.S. Forest Service analyzes onetenth of Oregon and Washington's forests each year. Therefore, we are continually looking at an average l0year forest. Second, Northwest markets have supplemented domestic downtime with increased export volumes, reducing the impact on net harvests. We note that the total removal years in the Northwest are higher when operating public forests are included, but we focus on private lands to better reflect harvest respons-

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