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How will investment in the South’s lumber industry affect timber demand in the coming years?
The US South’s softwood lumber industry is in the middle of its largest expansion in over 40 years. During the first half of 2018, plans to build seven new lumber mills have been announced (Table 1). This is in addition to five new mills already announced/constructed since 2016 and numerous investments aimed at increasing capacity and productivity at existing facilities throughout the region. In total, Southern lumber capacity is expected to rise to nearly 24 billion board feet (BBF) of capacity over the next 5 years, a 17% increase relative to the industry’s size at the height of the housing boom in the mid-2000s.
Table 1: New Softwood Lumber Mills in the US South
In addition to expanding, the South’s lumber capacity is shifting to bigger mills owned and managed by larger companies. Historically, the South’s lumber industry was characterized by smaller, independently-owned sawmills. In the mid-2000s, a third of the South’s capacity was composed of lumber mills less than 100 million board feet (mmbf) in size, while mills larger than 200 mmbf accounted for only 20% of the capacity. By 2022, FEA estimates that this will flip, with the share of capacity in smaller mills dropping to less than 20%, and larger mills increasing to over a third of the capacity. And a greater portion of the capacity is being concentrated in larger companies operating multiple mills. Ten years ago, the region’s ten largest companies controlled roughly half of the South’s softwood lumber capacity. They now account for nearly two-thirds of the South’s capacity.
What does this all mean for timber demand going forward? Even with a declining volume of logs needed per unit of lumber output, log demand at southern sawmills will exceed the peak levels of the mid-2000s for much of the next decade due to the strong rise in lumber production expected in the region. In addition, with more production occurring at large-scaled mills focused on maximizing recovery and productivity, the portion of harvest sourced from managed pine plantations will continue to increase.
Article by Rocky Goodnow. Rocky is Vice President of the Timber Service at Forest Economic Advisors (FEA), the leading economic consulting firm for the North American forest products and timber industry. In this role, Rocky is responsible for FEA’s outlook on the North American timber markets. Rocky is the primary author of FEA’sTimber Quarterly Forecasting Service publications and is a contributor to other FEA publications and studies. Rocky has spoken at numerous conferences as a recognized expert on North American timber markets.
Now Is The Time
Lumber prices have soared and, as pointed out in the article above, new sawmills are under construction. What does this mean for forest landowners? It means now is the time for you to plant trees that provide highest growth and log quality for an even more profitable forest for you and your family.
Take advantage of improving markets by planting MCP® today that will give you 70% more sawtimber and 40% more revenue. You invest $75 now and earn $1,000 with more sawtimber per acre. MCP also allows earlier thinnings by 3 to 6 years with 25-40% more volume, meaning an even earlier return on your investment.
There are currently more than two million acres of MCP planted – 130 million seedlings planted this year alone! As shown by this graph from a N.C. State Tree Coop study, production has increased as landowners see the increased benefits of planting trees with greater growth, higher sawtimber potential, and better rust resistance.ArborGen produces 80% of all MCP sold, has the top performing MCP families for all regions in the South and has 20 year data supporting landowner investment inMCP seedlings.
Contact your ArborGen Reforestation Advisor to make a plan for your future now.
ArborGen Taylor Nursery: Open for Business
Nursery manager Gary Nelson described the upgrades and improvements made at the facility since ArborGen took over management in April. Following a barbeque lunch, several people took the opportunity to check out this year’s crop.
The Taylor Nursery now adds a second convenient location for our customers in the Carolinas.
Contact the Taylor Nursery at 803-275-3578 for your seedling needs.
ArborGen Launches New Website
Fresh, new, and live! We get it – choosing the right seedlings is serious business and we’re here to help you every step of the way. Our new website delivers an easy browsing experience that is sure to answer your questions and help guide you to the information you need.
New Reforestation Advisor, Jonathan Wall
Connect with Jonathan at: email@example.com
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Get in touch with a Reforestation Advisor to explore your options!
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