Forest2Mill E-Newsletter
October 2010
In This Issue
Housing Market Update
Harvest Levels in the PNW's Federal Forests
Pacific Northwest Market Summary
Logging Operations Nationwide
Forest2Market Names Bill Nocerino
Forest2Market Staff at Industry Events
Quick Links

Top 3 Stories from the September Issue
From Forest2Market's Economic Outlook 
Economic forecasters are gradually migrating into either of two camps when it comes to the question of what is in store for the U.S. economy. On one side is the " slow-growth" camp, whose views were summed up in a article that said "the sectors of the economy that traditionally drive it into recession are already so depressed it's difficult to see them getting a lot worse." This camp also appeals to the historical rarity of back-to-back recessions when discounting the likelihood of another contraction. "[The bad data] doesn't rule out a recession," said Ethan Harris, head of developed markets economics research at Bank of America Merrill Lynch Global Research in New York. "It just makes it less likely than otherwise."

Then there are the "double-dippers." Being less upbeat, the double-dip camp is admittedly smaller than its slow-growth counterpart; but its ranks have been swelling of late. This camp views the slowdown in growth of gross domestic product (GDP) since 4Q2009--and especially the downward revision to 2Q2010--as presaging future hurdles the economy must clear before more robust growth can occur.
House Sold
Mortgage rates remained at all-time record lows in September. At the same time, home sales, permits, starts and completions all increased, but this apparently did little to boost builder confidence as it remained at the lowest level in a year for the second month in a row according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) monthly builder confidence index.

"Builders report that the two leading obstacles to new-home sales right now are consumer reluctance in the face of the poor job market and the large number of foreclosed properties for sale," said David Crowe, NAHB chief economist. "However, we do expect that moderate improvement in the job market will help boost consumer confidence and improve conditions for new-home sales in this year's final quarter."
  Historical Logging in the Pacific Northwest
Part One
By: Suz-Anne Kinney
In 2009, Oregon saw the smallest timber harvest since the great depression, and make no mistake, the impact of this decrease is taking a toll. In late August, Swanson announced it would close its Glendale, Oregon sawmill, a move that will affect 55 workers. In addition to the state of the housing market and competition from Canada, Swanson vice president Chuck Wert, cited the lack of timber coming out of federal forest lands as a reason for the closure. "We have no idea what kind of a long-term program for timber there's going to be. So it's virtually impossible to plan around a federal timber supply."

Since I've recently finished reading the book, The Big Burn, by award-winning journalist and natural resource writer Timothy Egan, I thought it might be interesting to look at the early historical record concerning timber harvests in national forests.
Northwest Douglas Fir Log Prices Tracking Downward
Prices for logs delivered to Northwest sawmills are undergoing a pronounced price correction. Following a spring run-up of lumber prices, May's western Oregon and Washington Douglas fir domestic saw logs peaked at an average $531/MBF, the highest levels since 2007. The strong demand for Asian logs drove export prices correspondingly higher. For a short time at the peak, domestic logs eclipsed export prices in some locations.

Export demand has been particularly strong over the past twelve months; volumes to Japan have been flat, but logs to China and Korea year-to-date are up by over 30 percent. This new market share depends heavily upon common grade, second growth, which is traditionally destined for dimension lumber production.
May Face Greater Permitting Requirements under New Clean Water Act Ruling
On August 17, the federal Ninth Circuit Court of Appeals passed down a ruling that defines rainwater channeled by logging roads into rivers and streams as pollution. As a result of this decision, public and private forest owners and logging companies will be required to obtain permits under the Clean Water Act. As the EPA develops permitting standards and processes, which could take as long as two years, entities that own and operate logging roads will likely be subject to additional costs and lawsuits.

While the current ruling affects only those states in the Ninth Circuit--Oregon, Washington, Arizona, California, Nevada, Idaho, and Montana--many are concerned that the decision could become the standard throughout the country. Once concern is that the decision could become precedent, the basis of similar findings being handed down by other circuits. Another concern is that the EPA will adopt the Ninth Circuit's ruling as the administrative standard for enforcing the Clean Water Act nationwide.
Bill NocerinoManager, Lumber Division
Forest2Market welcomes Bill Nocerino to the fold. Nocerino has been named Manager of our Lumber Division. He will handle sales for the lumber market, concentrating specifically on the Mill2Market SM product line, which includes weekly lumber price reports and lumber price benchmarks.

"With current market conditions, buyers and sellers in the lumber trade need transparent and accurate pricing data more than ever," says Pete Stewart, Forest2Market's President and CEO. "For the last year, Mill2Market has reported market prices for lumber in a way that is unprecedented, with price and volume data aggregated directly from orders and invoices. Now, with the addition of Bill to the staff, we'll see more focused emphasis placed on reaching the prospective customers who need this data and on maintaining those relationships over the log-term."
  • Daniel Stuber will make a presentation of the Economic Contribution of Working Forests in Arkansas at the Arkansas Forestry Association's Annual Meeting October 5, 2010 at 1:00 p.m. The meeting is being held at the Wyndham Riverfront in Little Rock.
  • Suzanne Hearn and Bill Nocerino will attend the Southeastern Lumber Manufacturers Association fall meeting on October 5 and 6 at the Hilton Atlanta Airport.
  • Suzanne Hearn will attend the 2010 Biomass Finance and Investment Summit, October 13-15, 2010 at the Almas Temple Club in Washington, DC.
  • Suz-Anne Kinney will make a presentation about the economic impact of Mississippi's working forests during the general session at the Mississippi Forestry Association on October 14. The meeting is being held at the Lake Terrace Convention Center in Hattiesburg.
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