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Historic hardwood prices, Part II...Updated to '08

Started by Clark, October 13, 2009, 01:31:58 PM

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Clark

Update:  I got a hold of the person in charge at the Ohio DNR and was able to update the prices to 2008 (Thanks to Mr. Sabula).  Apparently they store the more recent years prices at a slightly different website. 

As you'll notice, the year 2002 is missing.  Apparently funding and who was going to take care of this project got in the way of collecting data.  In addition, the high and low prices are missing for year 2001.  Also, the Excel file has been updated.

Sometime back in a similarly titled topic I asked for information about where to find historic hardwood prices.  A big thank-you to forum member caz for giving me a link to the an Ohio DNR website that had archives of hardwood prices back to 1960.  Also a big thank-you to jrdwyer for a link to more information that I may use in the future but it simply proved too much to tackle both sources at once.

What I did with this information is compiled prices (average and range) for six species (white oak, black walnut, yellow poplar, cherry, hard maple and basswood) in Ohio.  All prices were from the fall of the year.  To keep things relatively simply but maybe less exact, I used the statewide average given and the range of prices for all log grades.  All prices were for logs delivered to the mill and in Doyle scale.   

All prices were corrected for inflation using data from the Bureau of Labor Statistics.  The data I had corrected everything to the average for 1982-1984.  I don't know why they choose those years but it doesn't really matter as long as everything is properly corrected.

Several bumps were encountered.  Basswood has 39 years of data (every other species has 40) because they didn't report a price in 1960.  In 1972 prices were given in International scale so I  corrected for that using their data from 1975 (the first year they gave both Doyle and International in a neat fashion, ie - data compiler friendly fashion).

Anyone who wants to see my original data is welcome to it.  I have it all in one Excel spreadsheet and would be happy to email out.  I would upload it to the FF but I don't see a place where I can upload an Excel file...unless someone knows something I don't, which is very likely.  Without further ado, here are the charts:















This information is not meant to be diagnostic or predictive.  It is only meant to show how prices for hardwood have changed over the years and potentially the interplay between species (although 40 years more data may show that better!)  More will probably be gleaned from this data and I welcome any and all observations but want to make it clear that this is not to be used to assess potential future prices of hardwoods.

Clark

EDIT: Thanks Jeff for the tip.
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nas

Very interesting, thank you Clark.  It would be interesting to see the last few years and what kind of a drop there is compared to other low years.

Nick
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Jeff

You can attach the excel file by using the Additional Options...  link beneath your posting box.
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Ron Wenrich

Just curious is if you had access to any other species, most notably red oak.  Red oak lumber had very limited markets until 1974.  We had a recession then, and the ring porous woods came into demand, because they were cheaper. 

Interestingly, I found a chart that shows inflation and recessions in the US.  Here's a look:

http://inflationdata.com/inflation/images/charts/Annual_Inflation/inflation_and_recession_chart.htm

Even though your data is inflation adjusted, the price fluctuations still seems to follow the inflation rate.  Does the inflation cause prices to go up faster than the inflation rate? 
Never under estimate the power of stupid people in large groups.

scsmith42

Very nice work Clark!  Thanks much for sharing.

Scott
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Clark

Ron - I did have access to more species including red oak, but decided to choose a species mix that would encompass the spectrum of higher and lower prices.  My thought on red vs white oak is that white oak will probably be used as a cheaper substitute for red oak, especially when the price climbs.  I could be way off on that one but besides cooperage, I don't know of any special uses for white oak that red oak isn't used for.

I had also noticed that the prices tended to climb sharply when inflation was higher.  In these charts, 1979-1981 is notable, with 1972-1974 less so.  I don't know why this is, but have a feeling that economist types would call it "real price appreciation".  I had considered factoring that into the data but quite frankly I loathe economics and decided that I didn't want to do that much more work.  The law of diminishing returns had exercised its power on me!

Clark
SAF Certified Forester

Gary_C

Quote from: Clark on October 14, 2009, 10:46:29 AM
  I could be way off on that one but besides cooperage, I don't know of any special uses for white oak that red oak isn't used for.


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WDH

Adjusted for inflation, there is nothing to get excited about  :'(.  Sad, from a landowner perspective. 
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Ron Wenrich

When I started to work mills in the early '70s, we had little use for red oak.  When I did my first procurement forestry work, I was told "Don't buy any red oak".  White oak was a good buy, since it was used in veneer, and a lot of it went for export.

But, the recession in 1974 changed all that.  Red oak came into its own, thanks to boomers building houses, and not wanting the maple and pine they grew up with.  Red oak got to be more expensive than white oak due to demand.  Clear finishes came in and white oak wasn't a good substitute.  It still remained good on the export to Europe market.

In 2000, the markets started to turn back to the maples.  I guess Gen X was buying houses and furniture.  Or the boomers got tired of oak.  But, white oak is now worth more than red oak.

I thought the red oak would be an interesting study.  One thing for sure, it goes to show that managing for a specific species is still a crap shoot. 

WDH

Maybe prices didn't make much of a difference, but the commodity kept up with inflation.  That means that it was better than many interest bearing accounts, and the growth was all gravy. 

Sometimes we overlook the growth factor, and the importance of passing from one grade class to another.  The value for pulpwood is a lot less than sawtimber, but veneer quality still fetches a good price.  You have to look at the larger spectrum of growing into better quality classes along with growth.  A lot of good timber gets wasted due to premature cutting.
Never under estimate the power of stupid people in large groups.

WDH

Quote from: Ron Wenrich on October 14, 2009, 05:40:23 PM
You have to look at the larger spectrum of growing into better quality classes along with growth.  A lot of good timber gets wasted due to premature cutting.

This is especially true in the South where hardwood is clearcut.  The 10"-12" tree that is 25 - 30 years along in the process of becoming a sawlog gets cut just as it is starting to get there.   The 12" cherrybark oak may be the most important tree in the stand.  Instead, it get sold as pulpwood for $5.00/ton.  10 years down the road, it could be worth 8 times more than that. 
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

SwampDonkey

Ron's take on the increase in price from one grade to the next better is fine and dandy assuming your forest can grow enough quality hardwood to make it worth separating. Most of the clearcut hardwood here is sent for pulp, it ain't worth any more. Of course site is a big factor and climate even more so. On our best sites we certainly can grow a larger percentage of quality hardwood assuming the owner doesn't decide to high grade or cash in for a new car that depreciates from day one. Hardwood in the area we are thinning right now is growing in sandy soil and suffers during dry summers. Red spruce on the other hand grows like white pine, cedar does well to, and is a larger tree on these upland sites than in bottom land. I'm not real impressed by the fir, it's a nutrient demanding tree and also doesn't do well on dry soil or wet, needs to be somewhere in the middle. Under all that sand is heavy clay. The sand comes from the grinding action of the glaciers that pulverized granite boulders. Many boulders are scattered on top of the ground or just near the surface of the soil. All the difference in night and day between my soil at home and in the outback. Down below Napadogan is good soil again and no boulders. That's where I found some birdseye this summer, ash and black cherry.
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Ron Wenrich

There are areas in our state that are more suited for pine or hemlock, but they persist in trying to grow hardwoods.  The result is low quality, and slow growing stock.  That stuff never even makes it to the pulpwood markets.  It just hangs around in the woods, taking up growing space.
Never under estimate the power of stupid people in large groups.

jrdwyer

Clark, Thanks for posting this data. It would be interesting to show beyond 2000 as big swings have occurred with walnut, red and white, maple and cherry in nominal prices.

I have walked through many woods that verify these historical prices, especially hardwood forests that had white oak and walnut which were heavily cut in the late '70s and early '80s. The remaining stands contain a higher percentage of red oak and hard maple.

As far as an investment, medium to higher quality hardwood forests generally beat the inflation rate by 1%-1.3%. This is based on on unit prices of delivered products in Indiana over the last 50 or so years. Add in average growth of  3% and the numbers are pretty decent compared to ohter investments. What reduces the rates of return are the costs associated with buying and selling forestland. Here is my take on comparing investments in hardwood forestland to other investments:

Jeff, have you used Opera 10 with this message forum? It is extremely slow to enter posts, so bad in fact, that I switched back to Firefox while typing.


Clark

I have emailed the contact person on the Ohio DNR website about data beyond the year 2001.  No response as of yet and I'm not holding my breath.  Maybe someone on here has the hard copy of those reports?  I'd love to update it to within a year or two of now but obviously need data...

Clark
SAF Certified Forester

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