Summer in our region typically sees a mixed bag of market fluctuations; certain species (the maples in particular, but also some oaks and beech) are more readily affected by heat and direct sunlight than others after harvesting, and the demand for these species tends to decline a bit in the hotter months. Also, some sawmills plan temporary shutdowns in the summer for a number of reasons; mill repairs, vacations, and to relieve the effects of demand reduction for reasons just mentioned.
This summer we have seen additional declines in the market due to the continuing reduction in Chinese demand for hardwoods. Though the most recent talks seemed to have been going well, President Trump has announced plans to impose new tariffs on $300 billion of Chinese goods beginning in September, escalating the trade war with Beijing and making investors and, consequently Wall Street, nervous. Apparently, this unexpected move was the administration’s response to China not following through on their recent commitment to purchase more US agricultural products.
Though trade talks have not been declared “dead”, it’s obvious that no solution is imminent. It’s also obvious that the Chinese economy is suffering internally, and even if negotiations are eventually mutually successful, it’s doubtful that Chinese demand would immediately return to the levels we saw at the beginning of 2018. It remains a wait-and-see situation but hope springs eternal; we’ve seen wide market swings in the past, and no doubt will continue to see them in the future as economies and sociopolitical relationships continue to ebb and flow.
As per the Hardwood Weekly Review (July 26, 2019), “Ash, Cherry and Red Oak were still (problematic).” Ash lumber prices are now down $130 since the beginning of the year, and this trend is expected to continue a bit. Cherry prices are down $205 since January 2019, and though a slight decline in 4/4 common is expected to continue through the rest of the summer, there are reports that the thicker cherry products such as 6/4 and 8/4 lumber are selling well at the moment. Hard (sugar) maple still remains the current darling of the industry, and though it has declined slightly (-$40) since the first of the year, it’s pricing has remained quite steady through the summer months where it typically tails off more than it has this year. Soft maple is the only species discussed here that is still above its beginning price in January, now $30/MBF higher (though starting to decline slightly). Red oak has come down $155 since the beginning of 2019, yet has plateaued over the last month or so, as the decline in production has now hit demand levels – a few mills have reported that they have delivered slightly more red oak lumber than they have been processing (HWR July 26, 2019).
The two graphs that follow (Lumber Prices by Species and the Index of Selected Species Lumber Prices) demonstrate the trends we are seeing in the hardwood markets this year to-date. The top graph will show individual species trends, and the lower graph show the composite index of lumber prices for all 5 species in equal proportion.
Even though markets are off a bit, we strongly believe that landowners can still benefit from sound, professional advice from foresters who know the local markets. Please call any of our foresters if you are interested in selling your timber – you will be glad that you did!