Forest2Mill E-Newsletter
May 2010
In This Issue
Housing Market Update
Pacific Northwest Update
Version 1 of BCAP
Pete Stewart Gives Keynote Address
Quick Links

Top 3 Stories from the April Issue
From Forest2Market's Economic Outlook 
In the most recent survey of manufacturers by the Institute for Supply Management, 59.6 percent of firms said business was improving, up from 56.5 percent in February.

The ISM's report on industry performance in March indicates that overall activity for wood and paper products improved. For the wood products industry, increased production led the charge. New orders and a backlog of orders accounted for improvement in the paper products industry. Production in the paper industry retreated, however.

Shipments in the industry also increased. According to the Association of American Railroads' (AAR) Rail Time Indicators report, the volume of U.S. rail traffic rose from January to February, and is approaching 2009 levels. Year over year, both primary wood products and lumber showed an increase in shipped volumes in February.
House Sold  
As the Weekly Application Surveys conducted by the Mortgage Bankers Association (MBA) predicted last month, sales of both existing and new homes rebounded in March. According to the National Association of Realtors (NAR), existing home sales were 6.8 percent higher on a month-over-month basis and 16.1 percent on a year-over-year basis. The U.S. Census Bureau and Department of Housing and Urban Development reported new home sales were 26.9 percent higher on a month-over-month basis and 23.8 percent stronger on a year-over-year basis (Table 1). The NAR's pending home sales index climbed in March as well, up 8.2 percent versus last month and 17.3 percent over last year.

Martin Yun, chief economist with the NAR, had this to say about the state of the market: " The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten. We need a second surge to meaningfully draw down inventory and definitively stabilize home values."
By: Gordon CulbertsonForest2Mill August 2009
Log prices in the Pacific Northwest are showing continued strength. In April, Douglas fir log prices increased by $30-35/MBF across the Westside region. Prices in Southwest Oregon increased by $85/MBF since the beginning of the 2010; 2S grades were particularly strong. Prices for preferred sawmill lengths are now equal to peeler lengths, erasing the price premiums for veneer logs that held sway through most of 2009. By a slight margin, Southern Willamette Valley and Southwest Oregon domestic prices are now the highest west of the Cascades.

Supported by price gains for lumber and plywood and limited supply, log prices are likely to increase during May as well. Because lumber and plywood prices are the highest they've been for five years, domestic log prices will exceed $500/MBF, a level that has not been reached since late 2008.
VERSION 1 OF BCAP: The Final Tally
Wood Chips
The final matching payments have been made to biomass suppliers under the initial rules for the Biomass Crop Assistance Program, and the 60-day comment period on the proposed rules has expired. On April 8, the FSA released the final tally for the Collection, Harvest, Storage and Transportation Matching Payments Program.

The FSA:
- Approved 5,479 agreements; 94 percent (5,145) for forest-generated material
- Made payments of $170,112,607 through April 8, 2010; 92 percent ($156,254,515) for forest-generated material
Q: Which states received the highest total matching payments? Answer

Q: Which regions received the most funding? Answer

Q: Why were payments so heavily weighted toward forest materials? Answer

Q: When will the USDA release the final rules and restart the BCAP program? Answer

Q: The $170 million question: What did the American taxpayer get for the $170,112,607 in BCAP matching payments? Answer

Q: How can the goals of the BCAP Matching Payment Program be met? Answer
Wood-Based Biofuels, Biomass and Bioenergy Conference
Forest2Market President and CEO Pete Stewart opened the Wood-based Biofuels, Biomass and Bioenergy Conference in Baton Rouge on April 22 by reviewing the state of the forest products industry and looking at demand from European and domestic sources. The conference was organized by the Louisiana State University AgCenter's Forest Products Development Center.

Because of the announcement by Point BioEnergy that it will supply European markets from a $124 million, 450 million ton pellet facility in Baton Rouge, Stewart's discussion of the pellet industry was of particular interest. Read an article, written by Ted Griggs and published in the Baton Rouge Advocate, about the pellet industry portion of Stewart's keynote address here.
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