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Bid Sales Still Perform Well in Periods of Market Decline

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Bid Sales Still Perform Well in Periods of Market Decline

We’ve seen an active hardwood market this year, both in terms of ups and downs.  A steady trend of stumpage price increases began in the beginning of the year and continued pretty much until the whispers of tariffs and trade negotiations began in the summer months.  Lumber markets reacted quickly, as the uncertainties with China and other nations that import our hardwoods quickly led to speculation of price increases and consequently lower demand.  Stumpage markets lag behind lumber markets a little but followed the same general price trending through the first three quarters of this year.

Despite the recent ebbs and flows of the hardwood market, our clients still benefited from selling timber using the bid process.  Below are several recent examples of stumpage (standing tree) bid sales we conducted within the last several months.

Timber Sale “A”

A recent timber sale (“Timber Sale A”) in central New York once again demonstrates how wide a bidding range can be, even with relatively few bidders.  FORECON cruised and marked a timber sale that contained approximately 109,420 board feet (Doyle Log Rule), with a mixture of sugar maple, basswood, red maple, white ash, and a variety of lesser valued species.  The sugar maple trees were very large, averaging about 329 board feet/tree, the basswood about 317 bf/t, the red maple about 368 bf/t, and the white ash about 171 bf/t.  A bid prospectus containing a list of the number of trees and volumes by species, along with terms of the sale and sale maps, was mailed out to prospective bidders.

The results were are follows:

Even though we had relatively few bidders (4) participate in this sale, the bid results were excellent.  The high bid was 274% higher than the low bid, with 2 bids below the average and 2 above.  It was estimated that the sugar maple brought over $1,118/Mbf (Doyle); basswood came in at about $80/Mbf; red maple at about $479/Mbf; and white ash at about $799/Mbf.

 

Timber Sale “B”

Here’s another recent timber sale (“Timber Sale B”) in southwestern NY that also sold very well under the competitive bid format.   We also cruised and marked this timber sale, and it contained about 96,797 board feet (Doyle Log Rule). There was a mixture of red oak (462 bf/t), white ash (170 bf/t), red maple (208 bf/t), hemlock (223 bf/t), black cherry (420 bf/t), and a variety of other miscellaneous species.

A bid prospectus containing a list of the number of trees and volumes by species, along with terms of the sale and sale maps, was also mailed out to prospective bidders.

The results for this sale were as follows:

The bid participation in this sale was a lot stronger(15 bids), and the high bid was 72% higher than the lowest bid, with 4 bids above the average, and 11 bids below.  It was estimated that the red oak brought about $823/Mbf (Doyle); white ash about $470/Mbf; red maple about $411/Mbf; hemlock about $59/Mbf; and black cherry about $1,176/Mbf.

Please keep in mind that results depend on a variety of circumstances; species of timber, quality of timber, access conditions, and prospectus terms are just some of them.  The timber markets in our region remain very active, and we will continue to bring more insight into bidding results in subsequent posts.

As always, if you have timber you may be interested in selling, and want a long-standing professional forestry firm representing your best interests in the process, please don’t hesitate to call any of our FORECON offices.  Our foresters would be very happy to speak with you about the markets, and more importantly, your goals and objectives for your land.

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2018-11-17T13:38:28+00:00

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