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MARKET WATCH

Douglas Fir Log Prices Reach Record Highs in Pacific Northwest

Posted by Joel Swanton on December 5, 2017

Prices for Douglas fir logs in the Pacific Northwest (PNW) have spiked to their highest levels since Forest2Market has been reporting them via our Delivered Wood Raw Material Price Benchmark for Northwest US and Southwest Canada. Prices are at levels not seen for over twenty years, when the Spotted Owl crisis drastically reduced PNW federal harvests by 90 percent. Prices in October crested the $770/MBF mark, and they have consistently remained above the $700 level since early 2Q2017. We predict high-quality Douglas fir logs in some regions of western Oregon and Washington will be near the $850/MBF price level during December and into January.

Lumber prices remain high amid stable housing demand and remodeling activity, the ongoing Canadian lumber dispute, and a recent move by the Chinese government, which instituted a 5 percent reduction in domestic harvests. All of these factors will likely lead to further demand for PNW logs. However, 2017’s harsh winter followed by a devastating fire season have constrained harvests. Consequently, log inventories are low and demand has exceeded supply and driven prices to highs not seen in decades.

In addition to the influences highlighted above, National Forest timber sale volumes continue to be artificially constrained in the PNW. The FY2017 timber sale program only offered 2.918 BBF, which was roughly 50 percent of the allowable harvest plan—a 3 BBF deficit. As lumber markets have strengthened, the growth in demand has shifted entirely to available timber from private forest land. There is little wiggle room as western private harvests are already nearing sustainable long-term harvest levels. This is a boon for landowners and loggers, as mill buyers struggle to capture the measure of supply demanded by their facilities. This situation will likely continue well into 2018, and at least as long as lumber prices hold at current levels.

As a result of these factors, Doug fir log prices are at much higher sustained levels than they have been at any time in recent years. In October 2017, the weighted average price for delivered domestic logs was $772/MBF. This is $111/MBF higher than October 2016 and a whopping 140 percent increase over the low of $322/MBF, which was posted in the wake of the Great Recession in April 2009.

Douglas fir export logs have also remained high during the same period, as strong demand from buyers seeking export logs for China and Japan has also driven competition. Figures through September indicate exports are on pace to at least equal those of 2016. In October 2017, the weighted average price was $806/MBF, which is 16 percent higher than the October 2016 price.

 

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The combination of all of these factors has created a perfect storm; demand from greatly improved markets for wood products has outstripped sources of logs in the timber-constrained Pacific Northwest.  


delivered price benchmarks

Topics: Pacific Northwest, Douglas fir log prices

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