Knowledge Exchange

Ag Economy



  • With stable mortgage rates and rising incomes in the first half of 2021, housing starts continued to increase steadily. Despite the strong demand for new homes, there has been a precipitous decline in softwood lumber prices in the second quarter, due to a softening in the repair and remodeling sector and an increase in lumber supply, as mills started to add additional shifts. Since March, the price for Eastern Spruce/Fir 2x4’s has declined from $1,600/MBF to $800/MBF. Despite the decline, prices are still above the long-term average price and break-even level for mills. For perspective, Eastern Spruce/Fir 2X4s were selling for $450/MBF one year ago. Demand is anticipated to stay strong throughout 2021, because of a housing stock that has been underbuilt since the 2008 financial crisis, attractive long-term interest rates and accelerating wage growth.
  • Strong demand, low inventory, and limited surge capacity on the supply side continues to drive Eastern White Pine pricing upward. Normally Eastern White Pine pricing is very rational with minimal price variability, but this hasn’t been the case recently. Since June 2020, Eastern White Pine Standard 1x12 has increased $625/MBF or over 94%.
    Hardwood lumber demand has lagged the record softwood lumber price increases but has steadily risen across all major species since the Summer 2020 price trough. Demand increases are attributable to improved export markets (i.e. Asia), repair and remodeling expenditure growth, and elevated commercial and industrial construction activity. Furthermore, prices were buoyed by production constraints due to reduced hardwood log supply during 2020 and into the first half of 2021.
  • A combination of an underbuilt housing stock since the ’08 financial crisis, historically attractive long-term mortgage rates and good wage growth continues to support housing starts in excess of 1.57 million units.

Pulp and Paper

  • There is little change in overall end use paper markets, with free sheet, super calendar and newsprint remaining under pressure and declining, while tissue, container board and packaging have been returning positive margins.


  • Despite good demand for Spruce/Pine/Fir (SPF), White Pine and some Northern Hardwood logs, 2021 will continue to be challenging for many logging contractors as a result of the loss of an important low-grade market in Jay, Maine (Pixelle plant), reduced capacity of a few other low-grade markets and the Nine Dragons mill in Old Town, Maine not meeting its production targets.


  • The sale of recreational timberland remains strong throughout the Northeast. Improved consumer liquidity and savings, steady credit access, and the current low interest rate environment continues to provide tailwinds for landowners to execute sales on smaller properties. Elevated land sales have bolstered profitability and liquidity for timberland owners throughout the Northeast.