What has driven lumber prices up so high?

[eskimo2]

I went to the lumber yard last week to get materials for a new project; when I saw the prices I just went back home.  $33 for a sheet of ¾ BC plywood, holy cow!  I think I paid less than $20 a few months ago.  What caused them to go up so high?  What is the forecast for future lumber prices?  When can we expect them to come back down to reasonable levels?

eskimo

[Ripsnort]

Sierra club.

[Pongo]

Softwood lumber tarrifs that bush imposed.

[TheDudeDVant]

And fuel prices... More money for Exxon/Mobile!!

[Thrawn]

*Grits teeth*


Protectionism and corporate welfare from your "right wing", "republican", "captialist" President.

[Curval]

hmmmm...and here I thought there was free trade between the US, Canada and Mexico?  Guess not.

[muckmaw]

Anyone got any sources or are we speculating/Bush bashing?

[eskimo2]

I figured that fuel prices going up had some impact, and I recall some environmental “don’t cut down all the forests B.S.”, but there has to be more to it than that…

eskimo

[Ripsnort]

Source: http://www.vardaman.com/greensheets/int6j93.php
JMV:  For most of the 1980's timber prices in the south stayed the same or fell, but recently they've suddenly jumped a noticeable amount. Do recent events herald a new trend?
 
 
RAS:  They may. We may be witnessing a confluence of forces that could precipitate a significant upward trend of timber prices. The recent increases in timber prices in the south are, almost surely, an outgrowth of the politically mandated reductions in timber harvest in the Pacific Northwest, generated by environmental concerns.

Timber harvests in in the west are declining dramatically due to restrictions imposed because of a host of environmental concerns that include, but are not limited to, the spotted owl. Other factors include new restrictive state forest practices acts. The regional short-falls in the west are likely to be exacerbated by harvest reductions in British Columbia that are also being triggered by political concerns precipitated by environmental factors. Of course, short-falls in western harvests imply a tightening of supply throughout North America and beyond. Analysts are now beginning to predict that next year will see an increase in economic activity in the US and perhaps in parts of the Pacific Basin.

The outcome of a modest increase in economic activity together with the very substantial supply reduction in the west will almost surely be seen in price increases for wood well in excess of general inflation, at least for a time. In the longer term, however, I believe that it is unlikely that such price increases will persist since higher prices will encourage increased wood supplies from other sources.
 
 
JMV:  What has been the long-term trend of timber prices in the past?
 
 
RAS:  Timber prices, adjusted for inflation, exhibited a long-term upward trend for at least a hundred years before stabilizing in the early 1950's. The trend is documented in the 1962 book TRENDS IN NATURAL RESOURCE COMMODITIES, by Potter and Christy and confirmed by the 1976 work of Robert Manthy in his book NATURAL RESOURCES COMMODITIES - A CENTURY OF STATISTICS. Manthy noted in his study that the trend in timber prices appeared to have stabilized after the early 1950's. This stabilization was upset during the 1970's, a decade in which a number of resource prices that had maintained stability for decades showed sharp upward movement.

You may recall that during this period the "oil shocks" caused many observers to suggest that the earth was running out of many natural resources. In the 1980's, however, not only did these upward trends fail to persist for almost all resources, but the prices of most natural resources exhibited very sharp drops. This period saw industrial wood real prices return to the levels of the 1950's. Today, for very different reasons than in the 1970's, we appear to be poised for another substantial, but probably temporary, run-up in wood prices.
 
 
JMV: Do timber prices keep pace with inflation? If they do, can't investors planning to regenerate their tracts be concerned only with real prices?
 
 
RAS:  The data suggest that since the early 1950's timber prices have roughly kept pace with inflation, albeit with a substantial degree of variability. My own view is that the most appropriate price assumption for timber investors is that future real prices will be constant, i.e., assume that price rises will cover inflation but no more.
 
 
JMV:  Are any published studies available to investors who want to pursue these questions in depth?
 
 
RAS: There are a number of studies that project supply and demand for timber. Among these are the Timber Market Assessment Model (TAMM) of the Forest Service; the Global Trade Model developed by the International Institute for Applied Systems Analysis (IIASA) and now being used by CINTRAFOR at the University of Washington; and our own Timber Supply Model (TSM), which is presented in our book entitled THE LONG-TERM ADEQUACY OF WORLD TIMBER SUPPLY* by Roger A. Sedjo and Kenneth S. Lyon. All of these models are oriented toward the long-term trends and therefore are not, in themselves, particularly well suited to forecasting changes associated with the business cycle. However, Resource Information Systems Incorporated of Bedford, MA does do some short-term forecasting.
 
 
JMV: Some confidently predicted that oil prices would reach $100 per barrel. What will keep timber prices from steadily climbing to the sky?
 
 
RAS: Economists usually explain the cap on natural resources prices by something called the "backstop technology." In the case of oil, the erosion of prices was due largely to the ability of alternative sources to come on stream. For timber, the cap on prices also provided by a backstop technology that has been manifest in a number of ways. Technology has been wood-creating, wood-saving, and wood-extending. Wood-creating technologies not only include silvicultural techniques, fertilizer, and so forth, but also are found in intensively-managed forest plantations. For example, as technology has developed, investors have found it profitable to undertake a variety of wood-creating activities including establishing high-yielding plantations in regions that have not traditionally been important wood producers, e.g., New Zealand, Brazil, and Chile.

Wood-saving techniques allow a given volume of wood to produce more useful products. Examples include pulping techniques that require lower fiber inputs and computer sawmilling that captures value and reduces waste. Finally, wood-extending technology allows greater utilization of inferior resources. Examples include the use of short-fiber in pulp production and the development of waferboard and oriented strand board (OSB) that used previously unutilized species such as Lake States aspen. A more immediate cap on prices than technology has been provided by timber from old-growth sources such as those of the Pacific Northwest and Canada.

With political considerations placing limits on important old-growth supplies, short-term price rises are likely, even in an environment of relatively weak demand. One old-growth source that could provide the wood to offset the declines in western North American would be eastern Russia. Although infrastructure and other considerations suggest that constraints on timber harvests in Russia are severe, higher short-term prices for timber will provide added incentives for major development of the timber resources of this region.
 
 
JMV: If our understanding is correct, the general trend of all commodity prices have been down for decades. Will this happen to timber?
 
 
RAS:  I believe that it is probably more accurate to say that the general trend of most commodity real prices has been flat for many decades. The situation simply reflects the fact that supply side technology has kept pace with society's needs for natural resources. Although I believe that the data support the view that timber has been experiencing an essentially flat price trend that began in the early 1950's and the long-term trend will remain essentially flat, for the reasons discussed above, I anticipate that, in the near- and perhaps intermediate-term, timber prices will rise above that long-term trend.
 

[Red Tail 444]

My house if 15,000 less than a similar house currently being constructed, ans it's smaller than mine as well, with fewer amenities.

Realtor said lumber  / construction expenses, as well as the cost of shipping lumber has gone through the roof. Of course, if you want to blame that (and airline prices soaring) on the spotted owl as well, be my guest

I paid 39 bucks for the exact size and type of plywood as well back in early June, not a nice suprise

[gofaster]

Use more concrete block and drywall instead.

[Jackal1]

Originally posted by eskimo2
I went to the lumber yard last week to get materials for a new project; when I saw the prices I just went back home.  $33 for a sheet of ¾ BC plywood, holy cow!  I think I paid less than $20 a few months ago.  
eskimo

  Man, I can relate to that. We bought a place on the lake last year. I had some projects lined up I wanted to do and was making trips to the local lumber yard pretty regualrly when we first were getting settled in. I priced some 3/4" plywood on one of these trips at $19.50 a sheet. Just a couple of months ago I finaly got around to going after the plywood . I nearly croaked when they added up the bill and found that the plywood was now $36.00 a friggin sheet.

[xrtoronto]

canadian beavers orgnized a union

[DoctorYO]

http://www.randomlengths.com/


buy a subscription..  or in a nutshell

energy costs.  Frt fuel surcharges,  Imports , housing market on fire..  log shortages (or compitition for the same timber) and a weeding of suppliers during our recent recession pretty much sums its up..

where you buy your wood from retail? (Lowes or HomeDepot)

If you need a bundle (44-48 sheets on the 3/4) or more try in the future to use a distributor (Bluelinxco.com formally GP distro)  You prices will be much better..  Ask for a per 1000 sq ft price and multiply that # by .032 (4x8 sheet) and get your price per sheet...  If you have the ability to buy by the truckload (690 sheets approx) then your price will be better than the distributor as you should be going to mill direct or a direct salesman of the mill..



2 cents


DoctorYO

[Thrawn]

Rip did you even read eskimos posts?  


"BC plywood,"



"Softwood lumber dispute

Amina Ali, Sabrina Saccoccio and Justin Thompson, CBC News Online

Web Posted March 2001
Updated Dec. 8, 2003

 
Canada's protracted dispute with the United States over softwood lumber is estimated to have cost lumber producers up to $1.5 billion and thousands of jobs.

Although an agreement-in-principle was reached in December 2003 to end the dispute, one analyst says it may come at the expense of thousands of lumber-related jobs in Canada.

The deal eliminates the 27 per cent U.S. tariff on Canadian lumber, but reduces the amount of lumber Canadian companies can export to the U.S. without penalty. This means Canadian production will have to drop to equal 31.5 per cent of the U.S. market or face a tariff of $200 US for each additional thousand board feet. As it stands, Canadian lumber accounts for 33 per cent of the U.S. lumber market. The deal also calls for:


The return of just over half (52 per cent) of the $1.6 billion US in duties Canadian firms have paid, with U.S. companies keeping the rest.
 
More market access to companies in provinces that change the way they allocate cutting rights to be more like the U.S. model after three years, provided the U.S. government approves the changes.
 
A requirement for Canada to drop its complaints to trade tribunals, where it has won decisions against the U.S. duties."


More can be found here.

http://www.cbc.ca/news/indepth/background/softwood_lumber.html



Bush is a quite simply a communist.  And it's hurting Americans.