Dynamic! That’s the best way we can describe the last several months’ hardwood grade lumber price movements. Below, you’ll see the four-year rhythm between historic price-peaks become more pronounced following the Pandemic. It’s truly impressive, how our region’s landowners, suppliers, loggers and manufacturers met the challenges posed by the most recent market cycle.
The recent run-up – and subsequent sharp decline – in U.S. Hardwood Grade Lumber prices is a function of a global surge in liquidity (pandemic-related stimulus by central banks) and the attendant price-discovery inefficiencies of constrained supply chains. As logistics, labor availability, and manufacturing regained some post-pandemic rhythm, prices stabilized at a new upper bound. Then, as central banks worked to tame inflation by raising their discount rates – thus slowing global economic expansion – lumber prices fell sharply.
Northeastern regional timber markets are not immune from these broader trends. Near-term economic headwinds are impacting our forest products marketplace. The Fed’s relatively sharp increase in interest rates, intended to rein in inflation, seems to be having its expected result as U.S. single-family housing starts (and completions) have slowed. U.S. consumer savings also appears to have dropped off during the past year as inflationary forces have persisted. And, U.S. debt-to-GDP exceeds M2 Money Velocity, making rapid economic expansion unlikely in the near term.
Regional Timber Stumpage Pricing March 2023
Penn State recently published its quarterly timber stumpage price averages. And – although somewhat volatile from quarter-to-quarter – you’ll notice three general themes:
a) the past year’s red oak and red maple stumpage prices have outpaced those of the prior ten years;
b) cherry stumpage pricing has continued to trend downward over the past several years; and
c) the past two quarters’ pricing has softened compared to the late 2021/early 2022 period.