Soaring Lumber Costs Break Half-Century Price Slump

Record-high lumber costs are lifting southern timber prices from a long slump, according to The Wall Street Journal (subscription).

What’s going on: “Saw timber rose to $26.44 a ton during the fourth quarter, according to TimberMart-South, a pricing service affiliated with the University of Georgia’s forestry school. Though saw timber prices have bounced 18% from the 50-year lows of summer 2020, they remain well below the $40-plus that big logs fetched two decades ago.”

Prices of lower-grade pine timber, used for paper and cardboard, have risen even more sharply than saw logs, thanks to soaring e-commerce purchasing (and shipping) since the start of the pandemic.
A hot housing market and problems producing lumber in British Columbia led to record prices for southern yellow pine two-by-fours this week.

The background: “The weighted average price paid to southern landowners for all types of timber rose 21% over the past year to its highest level since late 2007, just before a speculative housing bubble burst and the mortgage market unraveled.”

That bust ruined the demand for lumber as many trees planted in the 1980s were ready to be cut, sending prices plummeting.
The pandemic-induced housing and renovation boom has helped boost those prices—and driven increased investor interest in timberland.