The Crash!

Ron Wenrich woodtick at lebmofo.com
Fri Oct 31 18:07:04 EST 1997



Jostnix <jostnix at aol.com> wrote in article
<19971029151301.KAA25658 at ladder02.news.aol.com>...
> Will this latest correction effect the timber market?
> 
> I just had to do this comparison with a collection of prices I have filed
> away over the years for Alabama...
> 
> Prices as follows were posted just before the 1987 major correction:
> 
> Pine Sawtimber - $135 per mbf Scribner
> Mixed Hardwood Sawtimber - $76 per mbf Doyle
> Pine Pulpwood - $17 per cord
> Hwd Pulpwood - $5 per cord
> 
> Prices approximately 6 months later:
> 
> Pine Sawtimber - $160 per mbf Scribner
> Mixed Hardwood Sawtimber - $72 per mbf Doyle
> Pine Pulpwood - $14 per cord
> Hardwood Pulpwood - $8 per cord
> 
> I'll leave you to make your own conclusions.
> 
> Steve Nix, Alabama Registered Forester #745
> Check out the Alabama registration site at
> http://members.aol.com/jostnix/rf.htm
>         
>       )(
>     ))}{((
>   ))))}{((((
> ))))))}{((((((
> ``````) (_________John Stephen Nix
> "Everybodys ignorant 'cept on different things"  Will Rogers
> Alabama Forestry Link...http://members.aol.com/jostnix/index.htm 
> http://forestry.miningco.com
> 

Recessions don't have any influence on price.  Inflation or deflation has a
more pronounced effect on prices.  Increased demand causes increased prices
due to scarcity of the lumber.  However, lower demand just means that
lumber won't be produced.  If you check FAS tulip poplar for 1976, you'll
see that the price has not changed much, due to a low demand.  Red oak has
increased about 500% due to high demand.  As supply reaches demand, prices
will subside, but not crash.  As demand lowers, supply also lowers, and
equilibrium is generally reached.

During periods of very low demand, i.e. recession, prices remain stable,
you just can't find any buyers.  There have been times when it was nearly
impossible to sell pallet stock due to poor markets.  It just piles up
until an economic upturn causes more pallets to be produced.

Stumpage will also remain stable, since landowners won't sell below a
certain price, and a lower amount of supply satisfies demand at a given
price.

The hardwood industry is a pure supply and demand with little government
interference.  It works well.

RDW



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