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how do i determine log value

Started by Dave989, February 17, 2016, 11:03:39 AM

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Dave989

I am looking at expanding my sawmill business into selling lumber. My question is how do I determine log value? I would want to be paying a price similar to what other sawmills would be paying, but I don't know how to figure out what other mills are paying for logs. I am considering subscribing to the hardwood market report to determine final sale price. Is their any other resources out their that would help me to keep an eye on the market and stay competitive?
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Dave and Hannah

beenthere

Dave
Do you get any good info from the Wisconsin Marketing Bulletin? I know it isn't the publication that it used to be years ago, but might be an alternative to the expensive HMR.

http://dnr.wi.gov/topic/ForestBusinesses/documents/bulletin/winter-2015.pdf
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

WV Sawmiller

Dave,

   I don't buy logs but I do sell a little lumber off trees I thin or salvage off my property. If I were going to buy logs I'd first have to look at them and estimate how much lumber I could get out of them, how much it would cost me to cut the lumber, how much I could sell that lumber for, how long and how much handling time and effort would be involved before I could sell and finally how much I wanted to make off my lumber. Then I'd offer what I figured what I could pay and cover my expenses and make a profit.

   If my offer was enough the logger could cover his expenses and make whatever profit he figured was fair I'd expect him to sell to me. If my offer was too low I am sure he would tell me and make a counter offer.

   While you do need to be in the ball park on what you pay  there are other factors involved in getting the logger to sell to you vs your competitors. You may be closer and it cost the logger less to deliver to you. Maybe you have a better unloading set up costing him less time. Maybe you pay quicker costing him less carrying charges. Maybe you just treat him with more courtesy and respect.

   I try to be somewhat competitive but do not try sell my lumber or sawing services for less than everyone else. Sometimes I have lumber others can't provide quickly. If someone tells me others sell for less I tell them they know what their product and time is worth and leave it at that. Nor would I expect to pay exactly the same rate for logs. If you can pay enough to make what you want and need and the logger can cover his expenses and expected profit it will work itself out. Good luck.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

bkaimwood

Just Google log buyers Wisconsin... Your results should get several companies for big mills/buyers with bf price charts per thousand updated regularly... I find that I have to pay the highest, and sometimes higher than that just to get what I need from them and sometimes that doesn't work. Establishing a relationship with a reliable, fair logger has been the biggest challenge in my business. Bottom line, loggers don't want to be bothered with small mills, because its just easier to keep sending logs to the same mills they've been sending to for years, with a guaranteed outlet, regular paycheck, and no hassle. There's no benefit to change now and sell to you. You have to try to make one. Persistence can pay off...
bk

Ron Wenrich

Most mills that buy logs do so under a grading system.  The grading system has to do with defect.  The Forest Service has come up with a grading system for hardwood logs, and they also have yield studies which give the yields by species and grade.  I wouldn't hold a lot of credence in the log yield studies, as they change with sawing patterns and areas of the country.  But, the log grading system they use has merit.  Here is an explanation of those grades: 
http://www.fs.fed.us/ne/newtown_square/publications/technical_reports/pdfs/scanned/gtr1.pdf?

Most often, mills develop their own grades.  They then develop prices for those grades.  I've seen them vary price due to length and the amount of defect changes as the logs get longer.  How much to pay for logs will depend on your yield.  You'll get higher value yield from logs that are cleaner.  But, you'll also pay more for those logs.

The formula I have used for mill operations is log value = lumber value - mfg costs - profit.  It is hard to give a firm dollar value.  Your mfg costs will be different than everyone else's.  Your lumber value will vary due to cutting patterns.  You're going to have to develop your prices from there.  You may find that it is more profitable to cut a certain quality of log and leave the others out of the production stream.  It is hard to tell you what the value should be.

The hardwood market report can give you a guideline, but I've always found I could do a little better then their report with the people I was selling to.  You also should have a pretty firm handle on lumber grading when it comes to valuation and sales.  Find a short course in grading and learn how it's done.
Never under estimate the power of stupid people in large groups.

drobertson

I did not read the other posts, mainly because they are way away from me, and I am way away from you, so from a very small independent miller, all I can say is find out what the going rate is for your area, and I know that was your original question, but if you are in it then you should know before starting. Just saying hit some mills that buy logs and go from there, local rates are the only way to find out as far as I can tell, don't under cut, it don't last long, and be prepared to pay more, unless you can pay for tire repairs ect.... some folks may not get this, but in a flooded sawmill area, where logs are premium, then it will start making sense pretty quick.  Big mills pay more than just for logs many times over,, they take care of independent loggers just to keep a steady run of logs, the value is what the market is for your area,  should be easy enough to figure out, just call some local mills and ask what the are paying for logs,,
only have a few chain saws I'm not suppose to use, but will at times, one dog Dolly, pretty good dog, just not sure what for yet,  working on getting the gardening back in order, and kinda thinking on maybe a small bbq bizz,  thinking about it,

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