timber sale process and current market conditions

Timber Sale Process and

Current Timber Markets

Bob PetrzelkaGretchen Cline

“It needs to be fair for both the Timber Seller

and the Timber Buyer for the

sale process to be effective…”

Why landowners decide to sell trees? “We’ve never sold any trees and wonder if we

should be doing something out there…” “It looks like some of my oaks are dying…” “The windstorm that came through in July

broke a lot of the tops out of my big trees…” “Things were tight this last year and we could

use the cash…” “A man stopped by and offered to buy some

trees and I just don’t know what to do?”

Reasons to Sell TreesForest Management

Biologically Mature

Economically Mature

Income

There is a BIGdifference between when a tree can be sold and when it should be sold.

Where to Begin?

Meet with a professional forester to determine if a harvest is recommended

Gifford Pinchot1st Professional Forester in

the U.S.

Skinned by fallen branch

Dead/dying

Poor quality

Frost crack

Multiple-stemmed

Wind damage

Cherry tree to harvest

Cherry tree to keep

Bid Notice

Aerial Photo of Timber Sale

Sale Results

Detailed Timber Sale

Contract

What to Expect?

Selective Harvest

White Oak Tree

Tops and side branches are cut off and left in the woods

De-limbing Tree

Skidding tree out of woods

Skid Trails or Logging Roads

Logs displayed out in field

Logs stacked in piles

Timber buyer entering in data

Loading trees for transport

Cottonwood log protecting Walnut

Not acceptable to have tops over fences

Or an excessive amount of damage to residual stand

It should NOT look like a tornado went through your woods

Lump Sum vs. Grade & Yield

Lump Sum Sale. Trees marked and tallied by a forester are sold outright, with payment in advance. Potential buyers know which trees they are bidding on and the estimated volume. Lump sum sale is the best method for most forest owners.

Grade & Yield. Payment is based on the quality and quantity of the logs removed after the harvest is complete.

The World Economy has a Direct Effect on Timber Prices

It is widely accepted by industry that nearly 50% of the grade lumber produced in the U.S.is exported, with a much higher percentage of higher grade lumber being exported, and that these exports have been a driving force behind the increase in lumber prices since late 2012

Source: The International Hardwood Lumber Market, Dec. 1, 2014Author; USDA Economist -Bill Luppold

“White Oak prices were more the result of lower supply than higher demand..” March 4, 2016 Source: Hardwood Market Report

“The cabinet, moulding/millwork, and wood component industries are among the busiest domestic markets, with demand weakest from the wood furniture and pallet sectors. .” March 4, 2016 Source: Hardwood Market Report

”Exporters’ comments are mixed, as European business is sluggish, and China’s post New Year outlook is not yet clear.March 4, 2016 Source: Hardwood Market Report

Recent Timber Industry Headlines

Source: Penn State Extension

Source: Penn State Extension

Used with permission from Mark Barford, Executive director of the NHLA

Species $/Bd. Ft.

Black Walnut $1.50 - $3.00

White Oak $0.40 - $0.60

Red Oak $0.25 - $0.40

Black Cherry $0.45 - $0.65

Sugar (hard) Maple $0.35 - $0.55

Silver (soft) Maple $0.25 - $0.45

Ash $0.25 - $0.35

Basswood $0.20 - $0.30

Hickory $0.25 - $0.35

Elm $0.20 - $0.30

Aspen $0.15

Current stumpage prices / board foot.

Recent Comments from Timber Buyers on Prices and Markets

• “The quality of the timber is changing and the trees that we are cutting are much smaller than 20 years ago.”

• “It is becoming very hard to find loggers to cut the jobs, no one wants to do the job anymore”

• “If you’re willing to look for it, there is a market for all species.”

• “In regards to the White Oak market, current demand exceeds production.”

• “Even though the demand for Black Walnut has been exceptional for the past few years there is no sign that it is softening.”

Important Points to Remember

Determine what your individual objectives are for your timber.

Work with a professional forester to mark, scale, and administer the sale.

Be aware of fluctuation in timber market prices

Harvesting your timber should be seen as a beginningnot an end to the management of your woodland.

Questions?