Timber - Worth its Weight in Gold?
The news that all forestry investors have been hoping to hear for almost 18 months is now upon us! In a year that many will remember where the new normal is just not normal, music to the ears of any forestry investor will be upward pressure on timber markets. Since 2018, foresters and woodland managers have seen a degree of uncertainty within timber markets due mainly to the effects of tree pests and diseases, especially in Germany where large quantities of unplanned felling has been necessary to remove dead/dying trees before they degrade. Importing timber has been a cheaper option and so UK markets for homegrown roundwood have been shaky at best.
Now that the US consumers have restarted rebuilding their houses and the Chinese economy has recovered a little after COVID19's worst period, the UK seems to be being passed over by the importing merchants as sawn lumber is sucked out of Europe past our empty ports and out to these now expanding markets. As a result of this, the importation of timber into the UK has started to become more expensive again. Endusers can expect to see another price increase and sawmillers looking to satisfy sawnwood markets at home are going to have to secure and produce larger quantities of material if they wish to keep up with demand.
What this trend does to the forestry property market, a market already buoyed by heavy demand and short supply, is anyone's guess. However my crystal ball does not seem to show any evidence of the market weakening.
If you have timber operations planned before the autumn rains set it, then you have a chance to capitalise on the improved prices. Whilst the full impact of Brexit is stil unclear, a focus on UK production may well continue into 2021 and beyond securing British timber as a key foundation of our econonmy.
In terms of the US market, please take a look at this article by the Financial Times to get the low down.