October 25, 2023

Ag Economy

Timber and Forest Products Industry Snapshot


  • Northeast forest products industry conditions in the second half of 2022 were largely sustained through the first half of 2023. Pricing for both softwood and hardwood lumber have converged to multi-year lows as housing, repairs and remodeling markets navigate higher interest rates and recession uncertainty. 
  • Northeast log prices have begun to come off elevated levels post-COVID for nearly all species in the first half of 2023. The sudden pivot in the hardwood pulpwood market and continued softness in the hardwood lumber market have freed up harvesting crews to focus on softwood species. This supply increase helped catalyze log price decreases, partially offset by logging constraints. Early spring weather in the Northeast was promising for the industry as most operators were able to get into the woods earlier than usual. Shortly thereafter however, wet conditions ensued impacting harvesting activity. 
  • The biggest transition in the Northeast forest products market has been the hardwood pulp and pulpwood market. The unsustainable demand for hardwood pulpwood from pulp and paper facilities and corresponding price levels came crashing down in the first quarter, as slowdowns in industrial pulp and paper production and excess inventory reduced mill purchase volumes. Almost instantaneously, pulp mills went from buying as much wood possible to enacting supply quotas and reduced pricing by up to 20%. Timberland owners and foresters have adjusted harvesting strategies accordingly, and firewood operators have been inundated with supply opportunities. Market participants are tracking this closely. 


  • Eastern SPF lumber prices have maintained price stability compared to historical values and the most recent COVID-19 price cycle. Lumber prices have potentially hit this cycle’s trough and are positioned to build on recent price momentum through the $500/MBF threshold. Log inventory at Northeast sawmills have been generally low, however, log deliveries have been more dependable compared to hardwood sawmills. Log cost decreases continue to lag lumber price changes, resulting in periods of below breakeven performance. Recent price improvement coupled with log cost decreases have positioned mills well for profitability. Mill operators are closely watching the impact of recent Canadian forest fires on log supply and lumber pricing.
  • Eastern White Pine lumber prices, unlike its Eastern SPF and hardwood cohorts, have maintained solid price stability since coming off their highs post-COVID. Industrial grade products continue to experience the most softness in the species, but all higher and value-added products have maintained pricing power. Demand for Eastern White Pine continues to be good, resulting in minimal to no log cost relief for mills. Order files remain sound. 
  • Steady log supply and anemic demand continue to be the primary issues for hardwood sawmill operators. With the hardwood pulpwood market downturn, landowners and foresters are avoiding hardwood stands impacting log supply. Sawmills have adjusted accordingly by rationalizing production levels to reduced inventory that aligns with log supply/sales volumes, resulting in extended downtimes and below capacity production. Hardwood lumber prices trended down during the first half of 2023, with some species, such as red oak, potentially hitting a trough in 1Q. Others, such as hard maple, have decreased price nearly 50% from peak pricing in summer 2022. 

Pulp and Paper 

  • The first half of 2023 was marked by still-elevated inflation and softening macroeconomic conditions. Demand for many pulp and paper products has declined and prices have started to erode, especially for market pulp and packaging paper grades driven largely by weaker industrial production. Here are highlights from the key sectors according to the industry publication, Fastmarkets RISI:
    • North American market pulp supplies are abundant, spot market availability remains widespread, and this year’s oversupply has now driven down prices in softwood and hardwood kraft every month so far in 2023. As the year reached its halfway point, June prices fell $290-335/ton since the beginning of the year. Benchmark northern bleached softwood kraft (NBSK) final March effective list prices declined to $1,430/ton, down $220/ton since March 2023, according to RISI surveys. Southern bleached softwood kraft (SBSK) effective list prices closed at $1,360, down $250. 


  • Logging capacity remains a key hindrance in the forest products supply chain, as the multi-year trend of consolidation and early retirement has impacted the number of operators to haul wood to mills. Several timberland owners and foresters have increased pay to logging contractors in excess of 20% to remain competitive.


  • Commercial timberland transaction activity in the Northeast was quiet in 2023. Timberland valuations remain above long-term averages supported by investors diversifying capital into real estate and timberland in the current inflationary environment. Commercial transaction sizes generally remain within the 1,000-5,000 acre range. HBU and smaller timberland transactions, while down from the post-COVID demand surge, have been sustained, supported by out-of state buyers looking for vacation or second homes. 


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