COLLEGE STATION, Texas – Landowners may wonder what the record-high lumber prices in the first half of 2018 signal for timber prices. This historically high lumber price leads many to expect higher prices for standing timber, however, the association between lumber and timber prices is loose over short time spans.

Lumber and timber prices should rise and fall closely together, in theory. However, after plotting price fluctuations between 1984 and 2018, Forest Economist Nana Tian and Forest Resource Analyst Aaron Stottlemyer found that differences between lumber and timber prices can be dramatic over shorter periods, such as a quarter or one or more years, though the prices follow a similar pattern over many years. Several factors contribute to the short-term disconnect.

“The price of lumber is primarily affected by the U.S. housing market, which continues to improve since the 2008 recession,” Tian explained.

The U.S. housing market, current lumber production capacity, and reductions in Canadian imports all factor into record-high lumber prices in early 2018. However, timber prices have stayed relatively flat over the last couple of years and the primary reason is the abundant supply of standing timber.

Technological advancement in lumber production can also weaken the correlation between lumber and timber prices. Abundant timber supplies and improved technology result in lower timber prices, even during periods when lumber is in high demand.

“In summary, the combination of housing markets, lumber demand and production capacity, sawmill technology, timber supplies, and local market conditions all contribute to short-term disconnections between lumber and timber prices,” Tian stated.

Read the full report at: https://bit.ly/2AbUkME

###

Contacts:

Nana Tian, Forest Economist, Texas A&M Forest Service, nana.tian@tfs.tamu.edu

Texas A&M Forest Service Communications Office, 979-458-6606, newsmedia@tfs.tamu.edu