Despite some disparate regional data, delivered prices for roundwood followed a general downward trend based on Forest2Market's 1H2016 data[1]. Favorable weather conditions and low fuel costs during the last four months have freed up supply and nudged prices lower. With the exception of the Northeast/East Canada region, supply has not been an issue on a national basis. The following data compares 1H2016 price averages to the same period last year for our four primary operating regions: US South, Pacific Northwest (PNW), Lake States and Northeast/East Canada. In addition, a comparison for conifer sawtimber between the US South and PNW (West-Side) is provided.

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The Economist's recent article, "Ravaged Woodlands" paints a bleak picture of forests in the American West and the rate at which they are succumbing to wildfires and pestilence. Attributing this dire series of events primarily to the warming climate, The Economist finds hope in a nascent movement in which industry, environmentalists, politicians and governmental agencies are collaborating to develop more proactive forest management regimes. Still, they have little hope that these efforts will make a substantial difference.

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During the last year, Brazil's political and financial situations have deteriorated significantly. Hounded by allegations of administrative misconduct and fiscal irresponsibility, President Dilma Roussef of the Workers' Party (PT) has been removed from office and impeachment proceedings have begun, a process scheduled to conclude by August 2016. On top of the corruption charges, the added perception that President Rousseff had completely lost control of the government is driving the impeachment process.

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In a manufacturing process where over 75 percent of the cost of the finished product can be attributed to raw material costs, constant attention to the details involved in procuring those raw materials is imperative. For a modern wood products operation, this raw material cost comes in the form of harvested timber that has been delimbed and transported to the mill facility as logs on logging trucks. Since these truck deliveries keep the mill's equipment busy-while representing an enormous investment-procurement and supply chain operations can make or break a facility's profitability.

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US housing starts have pretty much maintained a flat pace since the expiration of the Softwood Lumber Agreement (SLA) last October. All things considered, this has been a good thing for both US and Canadian lumber manufacturers, as both sides are still operating within the one-year period when their respective governments are prohibited from taking unilateral action. As is often the case with such complex agreements, a period of doing nothing is preferable to doing the wrong thing as a reactionary measure. That said, we are quickly coming to the end of the one-year "cooling off" period, which has prompted leaders from both nations to address the issue.

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The first half of 2016 is now in the books. As we approach the latter half of the summer, it's a good time to examine how stumpage prices across the US South have performed over the last six months and project how 2H2016 will develop. Pine stumpage prices across the South gained ground during the 1H2016 time period when compared to 2H2015 numbers, while hardwood prices slid. Pine pulpwood and pine chip-n-saw saw prices increased 2.0 percent and 2.6 percent, respectively, while pine sawtimber surged +4.3 percent to $27.03/ton during the first half of this year. Hardwood pulpwood fell, but only slightly (less than 1 percent) during this six-month period, while hardwood sawtimber tumbled -3.8 percent to $20.75/ton.

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Housing starts rebounded in June, mirroring the continued strong, if unexpected, performance of US markets; the Dow Jones Industrial Average (DJIA) closed at an all-time high earlier this week. Oddly enough, this strong performance seems to have politicians and pundits alike scratching their heads. From the Federal Reserve, to European Commission (EU) officials and all the talking heads in between, global economic "uncertainty" seems to be all anyone can talk about. Despite the recent Brexit vote and the upcoming US presidential election, US markets are, incomprehensibly, responding positively to economic uncertainty on a global scale.

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Forest industry performance in May and June was reported by both the US government and the Institute for Supply Management. Total industrial production (IP) decreased 0.4 percent in May, erasing most of April's 0.6 percent gain. Manufacturing output moved down 0.4 percent, led by motor vehicles and parts; Wood Products also contributed with a 1.3 percent drop. Total IP in May was 1.4 percent below its year-earlier level; at nine months of YoY decreases, this is the longest streak in modern US history of IP weakness outside of a confirmed recession.

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Later this year, the South Carolina Forestry Commission will host the 2016 Southern Forest Products Export Conference in Charleston, SC-one of the most important and productive ports cities in the US South. The two-day meeting will focus on uncovering and developing key global markets where Southern forest products can compete. A number of world-class speakers are lined up to address current market conditions in key countries, and share successful export experiences covering a variety of forest products.

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