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2009 Lumber Prices

Started by ARKANSAWYER, January 10, 2009, 01:35:46 PM

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ARKANSAWYER


  Well back in October 2008 the local wholesale buyer for hardwoods shut off taking lumber.  We were getting $700 mbdft for FAS red oak and $825 mbdft for FAS white oak.  With the start of the new year they are taking lumber again.  FAS red and white oak are bringing $550 mbdft.   :o

  Now with log cost at $350 mbdft and sawing cost at $250 mbdft how many mbdft a day do I need to saw to break even with these prices?
ARKANSAWYER

Tom

If'n you count the sandwich for lunch I'd say, "find another wholesaler".  :D

Gary_C

Now I don't know how much overrun and your percent of FAS yield you get, but when I try to calculate the amount you should be sawing, I keep getting negative numbers. Must be something wrong somewhere.  :)
Never take life seriously. Nobody gets out alive anyway.

pigman

At those prices you just need to buy another sawmill  and saw more lumber. ;)
Things turn out best for people who make the best of how things turn out.

beenthere

Many others are just asking for part of the bailout money. They look at it as a simple solution.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Radar67

Quit sawing FAS, or set the price you will pay for FAS logs.
"A man's time is the most valuable gift he can give another." TOM

If he can cling to his Blackberry, I can cling to my guns... Me

This will kill you, that will kill you, heck...life will kill you, but you got to live it!

"The man who can comprehend the why, can create the how." SFC J

Ron Wenrich

Wholesalers are buying lumber, but they don't need lumber.  As long as there is plenty of supply, the prices will remain depressed.  Tie markets are still strong, and your sawing costs are a lot less when sawing ties.  So, what's the price on the common?

I've also noticed there is more of a demand for 8/4 for some reason.  I even sawed a load of 10/4 white oak at a real good price.  

Of course, you could go back to not being able to sell your lumber.  That usually doesn't lower the costs, but it sure puts a crimp in the cash flow.
Never under estimate the power of stupid people in large groups.

TexasTimbers

Quote from: Gary_C on January 10, 2009, 02:32:58 PM
Now I don't know how much overrun and your percent of FAS yield you get, but when I try to calculate the amount you should be sawing, I keep getting negative numbers. Must be something wrong somewhere.  :)

Gary you are forgetting about kerf loss. :D

Arky, ya gots to find either another supplier, another buyer, or both. Or ya gots to find other markets.  :-\
The oil is all in Texas, but the dipsticks are in D.C.

sgschwend

In softwood most sawmill services sell directly to the customer.  Can you develop some of that business?  I know things are a lot different with kiln drying, and other secondary processes.

Steve Gschwend

sjgschwend@gmail.com

ARKANSAWYER


  I sell around 250,000 bdft of pine each year along with about 100,000 bdft of cedar and 150,000 bdft of hardwoods. (mostly oak and walnut)  Most years in January and February and into eary March we saw grade wood and ties to pay the bills.  When things warm up and construction picks up we go back to mostly pine and cedar.
  With the prices they are paying for grade my averge load of grade will bring about $350 mbdft.  That will just cover the log cost.  Ties figure out to $0.52 bdft and FAS is just paying $0.55 bdft.   Drop the price paid for logs and no logs will come in.  Only can dry about 2,000 bdft a month and it sells good.  But do not think my local market can stand much more right now.
  I may get a contract to cut 7x9x17.5' switch ties which means I can cut 1x6 side wood as I sell lots of it as fence boards.  But not much fencing going on till spring.  The white oak side wood  can cut 6/4 for trailer deck boards.

  I thougt this would be one of them things like hauling watermelons.  If you pay a dollar for a melon and sell it for $0.90 each you can make more money by buying a larger truck to haul more melons at one time.
                Going to be very few sawmills come spring.
ARKANSAWYER

sgschwend

The way you put it you are stuck in the middle. 

That is a un-workable system!

Around here logs prices are down, so loggers are looking for other options, they are doing as well selling cast offs as firewood.
Steve Gschwend

sjgschwend@gmail.com

TexasTimbers

Not knowing your local market, and about 50 other considerations, I can't offer anything of value. But even if I spent 6 months at your side I doubt I could come up with anything you have not already thought of.

Hang tough, keep the tiller steady, and sleep well knowing He will come through for you. 
The oil is all in Texas, but the dipsticks are in D.C.

Dave Shepard

We got word from our forester that red oak and ash are bringing a "premium" right now. Not sure what that means. I hope to here more next week. We have a lot of good ash on a couple of our jobs, and my neighbor has a ten acre stand that is nice, but last he tried to get it logged, it wasn't worth the cost of logging. I've heard from a number of sources that the mills that are running are having a hard time getting what they need. I guess they need to up their prices.
Wood-Mizer LT40HDD51-WR Wireless, Kubota L48, Honda Rincon 650, TJ208 G-S, and a 60"LogRite!

Corley5

Mills up here don't want any grade oak logs.  The market for lumber just isn't there.  Sugar maple and basswood logs are still moving good and mills are having a hard time getting enough to keep running.  Prices on both are down on the avg. 20 bucks a thousand from last summer as of last week.  Hardwood pulp is moving good too.  I'm not selling any so I don't know the prices but basswood pulp is paying 16 dollars a ton on the landing.  Not much but it's a couple more sticks out of a sawlog tree.  Aspen 8 and 10' sawbolts which used to pay alright might as well be put in the pulp wood pile now.
Burnt Gunpowder is the Smell Of Freedom

Tom

Corley5,
Dumb question maybe, but:
Could you still cut lumber from your best logs and store it to wait for a better price, or store the bucked logs for a better price and keep the operation going on selling the tops, etc. for pulp until the price came back up?

It would be great to be able to have your cake and eat it too.  Use up some of this winter time producing and just sell later, while you are on vacation.  :D

Corley5

Maple and basswood logs will stain rapidly once the weather starts to warm up in the spring.  Prices may be lower for this weeks load and in a couple months they could be much lower or maybe higher  :)  We just don't know.  Lumber brokers don't like to buy dry lumber.  It messes up their kiln schedules when it's mixed with green lumber.  That's how it is up here anyway.  So to saw it and sticker it for later sale won't work to sell on a large scale and I don't think there's enough of a local market to get rid of enough of it to make it worth while.  Plus there's large investment in time, labor and fuel to saw and store the lumber for an uncertain market.  All my hardwood pulp, sugar maple and beech, gets decked to season for next winters firewood market.  The sawlogs are the cake that's feeding us  ;) ;D :)
Burnt Gunpowder is the Smell Of Freedom

backwoods sawyer

If you have loans out, it could be better to run a little in the red rather then shutting down.
If you shut down for a period of time you will still have the fixed cost every month. (Loans on contracts, loans on equipment ect) with no income. Where if you are running in the red for a stretch you still have a portion of the income needed for operating cost and fixed cost. This is one where you need to sit down and crunch the books, negotiate log and lumber prices and explore any other options that you may see.
Backwoods Custom Milling Inc.
100% portable. . Oregons largest portable sawmill service, serving all of Oregon, from our Backwoods to yours..sawing since 1991

Ron Wenrich

You can try to negotiate price, but you're not going to get too far.  If you want more for your grade lumber, you'll end up paying as they will stiffen the scale.  What you could slide in during good markets will have to be right on in poor markets.  It happens every cycle.

Premiums for ash and red oak?  Usually, when a forester tells you about premiums, he's trying to get more for stumpage.  Veneer prices are down as compared to a year ago, and their grade requirements are higher.  I'm cutting more veneer rejects now than I have in the past 10 years.  Our veneer logs are gone over by 4 or 5 buyers before they hit the mill.

As long as everyone tries to keep their production up by continual cutting, you'll continue to have depressed markets.  Those that cut on speculation will eventually have to sell their lumber at a discount, just to free up cash.  That further depresses the market while deepening and lengthening the downturn.
Never under estimate the power of stupid people in large groups.

SwampDonkey

Yeah veneer prices here dropped in 2005-6 by $1000 a mbf. We really only have one reliable buyer at the moment, that's Columbia. Most of those far off markets have all dried up. The biggest problem is the logistics of gathering up full loads of prime veneer. It's just not here is large volumes. If you have to chase for 20 logs here, 10 there and so on and not have a centralized depot and guarantee that logs aren't sitting a long time to stain or check then forget it. If the marketing boards didn't do as much as they do with their yards and services they provide then we wouldn't even have a veneer buyer as I see it. The services they provide are a lot cheaper than you and I could provide because it's being paid by wood levies they collect from every producer of wood off private woodlots. Harvest volumes are way down so even those services are carefully scrutinized on a monthly basis. There have been many staff layoffs over the past year at many boards, and a few part timers.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Tom

Ron,

QuoteThose that cut on speculation will eventually have to sell their lumber at a discount, just to free up cash.

How come the fuel and oil people can control the market by stockpiling until demand makes the price what they want?

It seems that the big mills and retail outlets are always the  tail that wags the dog and the dog just keeps walking backwards into the fan.

It's done in timber until loggers go out of business.
It's done in sawmilling until sawmills close.
It's done in the chicken industry until farmers go broke and close up.
It's done on the farm until the land has to be sold for development.

It looks like it gets done because one faction is bigger and has the deeper pockets and the little faction is always chasing after the favors of the bigger faction.  Why can't the little factions make some rules?  Why is it that the sawmills can't wait out the market and make the retailer come to him, with hat in hand?

What would it take to turn the market around and put the producer in charge for awhile?  Are we just too hungry, or do outside world markets make it impossible?

Ron Wenrich

And what would it take for the landowners to take stumpage off the market to dry up the supply of fiber?

The sawmill business is one of those where everyone has "trade secrets" that they won't tell their neighbor.  They're all afraid that someone will take their portion of the pie.  So, information is not freely traded.  Just look at the number of mill men and loggers we have on this board, and you'll see they aren't real interested in swapping information.

Fragmented industries always take the biggest hits in down years.  Producers are never in charge, even the big ones.  There are just too many.  We have 2700 forest products companies and 500,000 landowners in PA.  How many of those do you think will volunteer to sit on the sidelines to help control supply? 

Never under estimate the power of stupid people in large groups.

Tom

I don't know.  Just thought it a pretty good question. :-\

Oh!  I let them have some thinnings for cheap and they want my timber in the swamp.  I won't let them have it.

snowman

Nearly 40 years logging has taught me one thing, save your money in the boom for the bust that is surly coming and don't buy things on credit based on your boom period income or you will lose it in the bust. OK thats 2 things. :D I have seen many loggers buying equipment in boom periods like theres no tomorrow, then when tomorrow comes, they are broke and driving log truck for someone else. Couple mills here have shut down, the largest one is working 1 day a week so its employees can get full unemployment and a days pay and the mill can avoid mothballing expenses.They hope to ride this out, time will tell. Log prices in short, suck. Im sitting this out at home. It's stupid to sell your trees at this price and or wear out your equipment but if you overextended in the boom you have no choice I guess. If thats what you have done you will hopefully learn from this as I did.The hard way. :)

SwampDonkey

I think an entity like the oil industry can control the flow because they have been allowed to by government. Here, if the sawmill companies tried to do what oil is allowed to, the government would step in. They have done so here in the past, where a group of sawmills worked collaboratively to control wood flow and price. The government eventually squashed it because of all the producers started to organize a little. This was in years leading into the 60's. Seems when the oil companies do it something magical about it makes it not seen as price control and everyone is expected to carry on.  When you have no cohesion, or coming together of interested parties you are powerless on your own.  If you don't sell, your neighbor will. He might do it to show he can work for nothing as a one up'n on the neighbor and gets elevated as a top producer, might even get a better price than you. He's now reached preferred status. Only thing is, he didn't tell you he found a program where his wages are subsidized. This is a cost share program, but no one knows about it, just the preferred bunch. ;D If you think everyone is equal, your only fooling yourself. ;)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Tim/South

Growing up in a farming family I always thought that farmers were the only ones who made a product then asked, "What will you give me for it?" at the cattle auction of farmers market.

It seems the wood/lumber industry is also in the same boat.
It also explains why we bought the Woodmizer. Twice the fun.  smiley_whip

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