NR Market Watch

Douglas Timber Operators

Breakfast Meeting Announcement June 9, 2011 Roseburg Breakfast Meeting featuring our guest speaker Dave Lorenz, Oregon Department of Forestry

 Program:

ODF – Celebrating 100 Years!

 Elmer’s

Thursday, June 9, 2011

7:00 a.m. No-Host Breakfast

 For more information, please contact Audrey at (541) 672-0757

Timber Industry Report                                             May 22 , 2011

China’s 10-12 million housing starts per year, is one of the few bright spots on the horizon, compared to USA’s 523,000 this month.  But, Roseburg Forest Products laid off 240 plywood plant employees.  Mortgage rates do remain low.  See below for details and a six-year span of prices and analysis of lumber, logs, housing, and mortgage stats.

__Prices in Dollars per Thousand Board Feet___

____ Thousands of  Housing Units__

 __ Months of  Inventory of Unsold Homes_

____    Percentage interest rate         _   

More information and interpretation.

China’s demand for logs pushed the price up as much as $100 above expected domestic log prices, according to one source, really putting the price squeeze on local mills trying to acquire logs.  The drop in stud prices was greater than the drop in log price in the last few months, continuing the squeeze.  Fortunately this is abating, as others supply logs to China and log prices fall as we enter this slow-to-come summer.

China’s appetite for logs and wood products was highlighted by Allyn Ford in his annual Chamber of Commerce “State of the Timber Industry” presentation.  It is driven by 10-12 million housing starts in China per year, according to Paul Boardman in “China’s Building Boom.” (http://www.forestprod.org/internationaltrade06boardman.pdf ) He further adds that by 2015, half the world’s new building construction will take place in China.  One third of all Chinese will move into a new home in the next decade.   Very sobering statistic –USA housing starts are currently only 5% of the level in China!!!! 

Domestic mills, especially some of those close to Pacific ports, have ramped up worldwide export shipments. US softwood lumber exports in the first quarter, have doubled in the last year, to 233 Million Board Feet, according to Random Lengths. Further, worldwide Canadian exports reached 1.13 billion board feet in the first quarter, up 50% from a year ago.   As a portion of this, US exports to China in the first quarter, are up 5-fold from last year, and Canada’s China export has doubled in the same period.

Outside of  Swanson Group, most local operators produce almost exclusively for the domestic market.  But the shipments overseas by others ease the competition for local mills selling into the domestic market, in this time of lackluster US demand.   The increased worldwide capacity for lumber products is very helpful locally.

Despite this encouraging activity across the Pacific, Roseburg Forest Products indefinite  layoff of about 240 employees in plywood mills, indicates the severity of the depression in the wood products industry locally.  This large number is way more than the 30 laid off in lumber, and 26 in particleboard, over the last 3 years, according to RFP’s Vice-Preesident of HR, Hank Snow.  This is more employees than the total in many individual family operated mills in Douglas County.

Housing starts and building permits remain way too close to their 2009 lows.  Unsold inventory has shown unremarkable progress, with the “shadow inventory” (homes not on the market due to the price) remaining a concern.  The only bright spot is continued low mortgage rates.

Data reports used with permission of:

¹Random Lengths.  2”x4”x8’ precision end trimmed hem-fir studs from southern Oregon mills.  Price reported is Dollars per Thousand Board Feet  for the most recent week.  One “board foot” of product measures 12 inches by 12 inches by one inch thick.

²RISI, Log Lines.   Douglas-fir #2 Sawmill Log Average Region 5 price.  Current report is for the prior month.  Dollars per Thousand Board Feet of logs are reported using standardized  log measurements from the “Scribner log table.”

³ Dept. of Commerce, US Census Bureau.   New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate.  Current report is for the prior month.   Recent reports are often revised in bold.  Also, major revision made each May, reaching 21/2  yrs back.

⁴Regional Multiple Listing Service RMLS^TM  data, courtesy of Janet Johnston, Prudential Real Estate Professionals  Broker, Roseburg, OR.  Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland Oregon, for most recent month available.

⁵Freddie Mac.  Primary Mortgage Market Survey.  30-year Fixed Rate Mortgages Since 1971, national averages.  Updated weekly, current report is for the prior full month.

Issue  #4-5. © Copyright Rick Sohn, Umpqua Coquille LLC.   For permission to reprint for nominal fee, Email  rsohn@umpquacoquille.com

Timber Industry Report                                             April  28, 2011

So far this Spring, housing starts took off like a……tortoise.  But, home inventories are dropping and 30-year mortgage interest rates are still below 5%.  It’s a good time to  buy a house!!  See below for details and a six-year span of prices and analysis of  lumber, logs, housing, and mortgage stats.

__Prices in Dollars per Thousand Board Feet___

____ Thousands of  Housing Units__

 __ Months of  Inventory of Unsold Homes_

____    Percentage interest rate         _   

More information and interpretation.

The Spring lumber purchase surge appears over. Domestic demand for wood products  just cannot support high lumber prices, so they are weakening.  While there is marked improvement in Housing Starts and Building Permits since February, they are still in the 500 thousands, and some analysts now expect them to stay there, or not get above 650,000 during 2011.

Although log prices reported for March are up, we can expect to see log prices drop, as we move into drier weather and onto dry-weather roads.  The winter supply of logs is only available from limited rock road systems.  Even with off shore demand, log prices may also be nudged down by the lumber prices.

Home sales have improved, as realtors tell me they are much busier, with more people looking, and more home sales closing.  This activity is matched by the decrease in unsold inventory in Portland.  Interest rates remain favorable as well, but what will happen after the federal “quantitative easing” program ends, is unknown.

Banks are still metering foreclosed homes into the market.  There is also an unknown pent up supply of homes that will be listed over time.  These factors will continue to keep the unsold home supply up.  We are still looking for 2 consecutive months averaging below 7% for unsold home inventory in Portland before we can say there is a substantive decrease in unsold home inventories.

Data reports used with permission of:

¹Random Lengths.  2”x4”x8’ precision end trimmed hem-fir studs from southern Oregon mills.  Price reported is Dollars per Thousand Board Feet  for the most recent week.  One “board foot” of product measures 12 inches by 12 inches by one inch thick.

²RISI, Log Lines.   Douglas-fir #2 Sawmill Log Average Region 5 price.  Current report is for the prior month.  Dollars per Thousand Board Feet of logs are reported using standardized  log measurements from the “Scribner log table.”

³ Dept. of Commerce, US Census Bureau.   New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate.  Current report is for the prior month.   Recent reports are often revised in bold from  prior months. 

⁴Regional Multiple Listing Service RMLS^TM  data, courtesy of Janet Johnston, Prudential Real Estate Professionals  Broker, Roseburg, OR.  Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland Oregon, for most recent month available.

⁵Freddie Mac.  Primary Mortgage Market Survey.  30-year Fixed Rate Mortgages Since 1971, national averages.  Updated weekly, current report is for the prior full month.

Issue  #4-4. © Copyright Rick Sohn, Umpqua Coquille LLC.   For permission to reprint for nominal fee, Email  rsohn@umpquacoquille.com

Douglas Timber Operators

Breakfast Meeting Announcement

Please join us for our May 12, 2011 Roseburg Breakfast Meeting featuring our guest speaker Jay Carlson. Roseburg BLM

 Program:

Update on the BLM

 Elmer’s

Thursday, May 12, 2011

7:00 a.m. No-Host Breakfast

 For more information, please contact Audrey at (541) 672-0757

Douglas Timber Operators

Breakfast Meeting Announcement

Please join us for our April 14, 2011 Roseburg Breakfast Meeting featuring our guest speaker Joe Moll With McKenzie River Trust

Program: Opportunities to Work with Land Trusts

Elmer’s

Thursday, April 14, 2011

7:00 a.m. No-Host Breakfast

For more information, please contact Audrey at (541) 672-0757

by Rick Sohn

Timber Industry Report                                             March 24,  2011

We are again near record LOW domestic housing starts and building permits, yet  both  Stud and Log prices increased?  See below for details and a six-year span of prices and analysis of  lumber, logs, housing, and mortgage stats.

__Prices in Dollars per Thousand Board Feet___

____ Thousands of  Housing Units__

__ Months of  Inventory of Unsold Homes_

____ Percentage interest rate _

More information and interpretation.

The domestic fundamentals, like housing starts and building permits, are so bad, how can the market for logs and products be rising?   There is broad consensus that we are climbing out of the Great Recession and will not fall back (except perhaps a typical mild recession in a couple of  years).

Yet,  the building permits number is the LOWEST (after various revisions by the Commerce Department) that we have seen in this Great Recession and since World War II..  The Housing Starts number is not much better, barely higher than the lowest number seen since World War II of  477,000 starts in April 2009.

These stats are corroborated by today’s Oregonian/AP article on new home sales, which hit a low of 250,00 for February, the lowest since records have been kept (starting in the 1960’s), and lower than the 323,000 homes sold last year.  This statistic does not exactly match housing starts.  A healthy number of new home sales would be only 700,000, compared to 1.8 to 2 million for housing starts.  Nonetheless, it is reason for concern.

Another note: the first-time homebuyers tax credit that buoyed the market last year, ended April 30, 2010, and this improved closed sales through the middle of the summer.

In contrast to these alarming domestic housing statistics, lumber prices and logs are both higher.  First, there is an upswing trend in prices that is typical for this time of year. Second, it is almost a broken record, but the increased prices are the result of demand coming from Asia, not only China, but now Japan, due to the earthquake and accompanying severe tsunami damage.  Markets could feel this demand for a couple of years, once the nuclear scare is over, and rebuilding begins.  If New Orleans can rebuild, surely Japan will rebuild with a vengeance.

Fixed rate mortgages continue to rise, but are still attractive.  The unsold inventory of homes on the market in Portland is continuing in the right direction, but real progress will not occur until we have 2 consecutive months of unsold inventory below 7 months, something which has not occurred since the middle of 2007.  We saw unsold inventory dip to 7 months, 11 times since January of 2009.  On appositive note, local builders I have talked to are busy, now, many with repair and remodel.

Data reports used with permission of:

¹Random Lengths.  2”x4”x8’ precision end trimmed hem-fir studs from southern Oregon mills.  Price reported is Dollars per Thousand Board Feet  for the most recent week.  One “board foot” of product measures 12 inches by 12 inches by one inch thick.

²RISI, Log Lines.   Douglas-fir #2 Sawmill Log Average Region 5 price.  Current report is for the prior month.  Dollars per Thousand Board Feet of logs are reported using standardized  log measurements from the “Scribner log table.”

³ Dept. of Commerce, US Census Bureau.   New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate.  Current report is for the prior month.   Recent reports are often revised in bold from  prior months.

⁴Regional Multiple Listing Service RMLS^TM data, courtesy of Janet Johnston, Prudential Real Estate Professionals  Broker, Roseburg, OR.  Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland Oregon, for most recent month available.

⁵Freddie Mac.  Primary Mortgage Market Survey.  30-year Fixed Rate Mortgages Since 1971, national averages.  Updated weekly, current report is for the prior full month.

Issue  #4-3. © Copyright Rick Sohn, Umpqua Coquille LLC.   For permission to reprint for nominal fee, Email  rsohn@umpquacoquille.com

Wolf Creek Job Corps CCC will be holding an Industry Advisory Meeting for our Forestry vocational training program on Friday, March 18th, 2011 at Wolf Creek Job Corps CCC, 2010 Opportunity Drive, Glide, Oregon from 11:00 a.m. t0 1:00 p.m.. Lunch will be provided by our Culinary students.If anyone related to the Forestry industry would like to come and assist with our Forestry Advisory team – they would be very welcome. Please contact Tracy J. Placido, Business/Community Liaison at 541 496-8505 or tplacido@fs.fed.us prior to Tuesday, March 15th if you will be in attendance. If you assist us with recruiting local forestry professional to come to our meeting – we would be much obliged.

The Wood Basics Course, held in Mississippi, provides a comprehensive overview of the forest products industry, covering everything from seed to tree and from production to sales.  By combining classroom training with field operations during a four day immersion schedule, students can expect to improve quickly their knowledge and skills. For more details and sign up information go to NAWLA website.