Forest2Mill E-Newsletter
November 2010
In This Issue
Housing Market Update
F2M at Industry Events
BCAP Overview
Matching Payments
Establishment Payments
Quick Links

 
 
Top 3 Stories from the September Issue



INDUSTRY AT A GLANCE
From Forest2Market's Economic Outlook 
The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) has declared the recession over. According to the committee, the recession lasted 18 months, from December 2007 to June 2009.

The $64,000 question remains: where do we go from here? There are two camps of thought on this question. One believes we're in for a prolonged period of sluggish growth over the next few years. Another believes we'll be in a second (or double-dip) recession by the end of next year.

HOUSING MARKET UPDATE
House Sold
Even as housing numbers show signs of a slow but ongoing recovery, foreclosures continue to overshadow positive developments. In early October, all fifty state Attorney Generals, headed by Iowa State Attorney General Tom Miller, launched an investigation into fraudulent foreclosure proceedings. The action was preceded by JPMorgan, GMAC and Bank of America suspending some or all foreclosure proceedings due to inaccurately processed paperwork.

At least some of the problem appears to come from the attorneys' offices that handled the outsourced paperwork. Indications are that the employees were so swamped with foreclosures that they began signing off on affidavits without verifying their accuracy and backdating forms, among other alleged misconduct. Between the potential criminal allegations and suspended foreclosure proceedings, the long-term effects of this investigation could be anything from a blip in the long-term housing recovery to the potential to force bank closings.

MILL2MARKET YEAR ONE SUMMARY
 Mill2Market, a product of Forest2Market
On October 21, we marked the one year anniversary of Mill2Market, the only transaction-based lumber price report in the market. Based on volume and price data collected directly from orders and invoices, Mill2Market has captured approximately 50 percent of the southern yellow pine market since its inception.

In addition to the Mill2Market weekly price report, Forest2Market offers lumber price benchmarks as well. 

View a summary of the last year of data.
F2M at Industry Events

Forest2Market Logo 

  • Pete Stewart will speak about the signs we are seeing that emerging biomass markets in the Southeast are maturing at the Southeast Biomass Conference on the morning of November 4. The conference is being held November 3-4 at the Hyatt Regency in Atlanta.
  • Suzanne Hearn and Bill Nocerino will be holding down the fort at our booth at the North American Wholesale Lumber Association's Traders Market in Chicago this year, which runs from November 3-5. Visit them at Booth 306, or join them for Forest2Market's spotlight, where Bill will provide a demonstration of how lumber buyers and sellers are maximizing their profits with actionable data from Mill2Market, our transaction-based lumber price report.
  • Bill Nocerino will moderate a session at the Treated Wood Council's 2010 Annual Meeting. The meeting is being held at the Sheraton Suites Old Town in Alexandria, Virginia from November 9-10.
  • Gordon Culbertson will speak at Forest Export Markets: Opportunities in China, Japan and Korea on December 15 in Portland, Oregon. The topic of the presentation: A Competitive Analysis between the Pacific Northwest and Southern US Forest Industries: How to produce locally and sell globally; know the market to survive and thrive.
BCAP FINAL RULE RELEASED: OVERVIEW
  Green Fuel
On October 22, the final rule describing the long-term implementation of the Biomass Crop Assistance Program, including both the Collection, Harvest, Storage and Transportation (CHST) matching payment program and the Establishment and Annual Payments Program (EAP), were released.

Under the new rules, program costs are expected to total $461 million from 2011-2026. The financial arm of the USDA, the Commodity Credit Corporation (CCC), expects to spend $61 million on establishment payments, $4 million on annual payments, $132 million on matching payments and $3 million on technical assistance, for a total of $200 million in 2011. In 2012, the CCC expects to spend $61 million on establishment payments, $6 million on annual payments, $132 million on matching payments and $3 million on technical assistance, for a total of $202 million. An additional $61 million will be spent on annual payments from 2013-2026.

THE CHST MATCHING PAYMENTS PROGRAM
Eligible Materials

In order to control program costs and solidify the supply chain for new and additional sources of biomass, the new rules for the Collection, Harvest, Storage and Transportation (CHST) matching payments program give precedence to biomass crops grown in the project areas as defined in BCAP's Establishment and Annual Payment (EAP) program (see accompanying story for details).

The new rule makes a distinction between "contract land," or land that is under EAP contract, and "non-contract land." These new energy crops must meet just two requirements in order to be eligible for matching payments. According to the new provisions, wood or wood waste originating on contract acreage must be:

ESTABLISHMENT PAYMENTS PROGRAM
Project Areas

Because sawtimber and pulpwood have significantly higher value than biomass, converting timberland to energy crops is not feasible. If landowners have marginal land that is currently unproductive, however, participating in this portion of the BCAP program could provide an additional revenue stream.

The new rule provides a list of potential crops that includes, but is not limited to, switchgrass, miscanthus, fast-growing woody poplar, jatropha, algae, energy cane, and pongamia.

The process to qualify for establishment and annual payments begins when project sponsors--groups of producers and/or biomass conversion facilities--submit a detailed proposal that is evaluated by the Credit Commodity Corporation (CCC), the finance arm of the USDA. The ideal project area will be made up of procurement zones for one or more bioenergy facilities.

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