Timber Markets in 2022

“The preacher man says it's the end of time, And the Mississippi River, she's a-goin' dry, The interest is up and the stock market's down…”. Those opening lines in the Hank Williams Jr. song A Country Boy Can Survive sums what people are feeling regarding timber markets in late 2022.

There are numerous market indicators driving this gloomy feeling. In 2022, the Dow Jones Industrial Average has dropped from an all-time high of almost 37,000 to under 28,000; 30-year mortgage rates have more than doubled, and inflation has quadrupled.

Sounds like gloom and doom, doesn’t it? It’s not… at least right now. We’ll see how much a potential recession impacts markets for the future. Timber markets, especially for pine sawtimber, have actually been fairly strong and have slowly gotten stronger. Contrary to all the negative press, if you have mature timber to sell, it hasn’t been a bad time to consider a timber sale. If you look at what is being paid for pine and hardwood logs, prices have improved each year for the last several years according to our Kingwood transactions as well as national timber price trend data sources.

There are two factors to note: high fuel prices and a reduced logging force. Fuel prices reached their highest historical price this summer. The result of high fuel prices is two-fold: less money to the landowner and rapidly declining timber prices for timber farther from the mill. This impact is mostly felt with pulpwood where an 80-mile haul could easily result in prices approaching $0/ton!

The other exception to the good news is the logging force. Several logging outfits and truck drivers have left the industry. We estimate log truck driving force is half of what it was two years ago. With fewer trucks moving wood right now, some logging crews have gone out of business. The long-term impact is a mixed bag of results.

The main impact is that landowners will have to wait longer for a logger to move onto the property due to the smaller trucking force moving less wood. However, a positive impact is that mills stay more stressed for raw material since loggers aren’t moving as much, so pricing may stay strong. If landowners can be patient, they’ll usually see success.

Kingwood encourages landowners to be flexible when it comes to selling timber so when an opportunity presents itself, you can react quickly and capture the benefits. We have numerous examples of client success resulting from us being able to react to market opportunities quickly for our clients. You should always consult your Kingwood forester to get a better read on the markets, because information without understanding your specific situation can lead to poor choices.

In all, Kingwood clients continues to weather stormy market news, putting new meaning to the words in Hank Jr’s. song: “You can’t starve us out and you can’t make us run!”