Futures?

Joseph Zorzin redoak at forestmeister.com
Sat Aug 29 04:30:46 EST 1998


Larry Caldwell wrote:
> 

> I confess I don't understand lumber marketing at all.  My brother-in-law
> is a buyer for a lumber yard.  Last spring he told me wholesale lumber
> prices doubled in about a 6-week period, while I was watching a steady
> decline in log prices.

There is a big time lag- as you go down the chain of production from the
final use of the wood (housing, furniture, pulp, etc.) to the mills, to
the woods, to the landowner. And it partly depends on how much material
each level has stored, and the constant shifting of sources from other
areas. In one valley prices may be going up, the nearby valley prices
are going down. The wood business must have the most volatile pricing
structure of any business.

Lumber might be up, while the paper industry is down. And here in the NE
it's really crazy because on any typical timber sale, some of the
product may be exported to Europe for premium furniture stock, some
might go to nearby veneer mills, some will go to pulp, some to local
mills for common construction lumber, some to the firewood market. I
have a lot of respect for those who have to pay up front for timber,
then manage to move those logs.

On the 1 big sale I had last winter, the buyer had it all figured out
ahead of time- where each log was going- and he had contracts signed for
each log- to protect himself- passing the problem of the volatility of
the market to those guys.



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