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Pulpwood offers hope despite timber market
MISSISSIPPI STATE -- Overall demand for wood products is down, but one segment of the industry is experiencing stronger demand.
Pulpwood prices are expected to reach, and possibly exceed, $10 a ton during the first half of 2008, which is almost double their level last summer, said Mississippi State University Extension Service forestry economist James Henderson.
“There is increased demand from the pulp and paper industry for pulpwood,” Henderson said. “This increase is being driven by two factors -- the weak U.S. dollar and the subprime mortgage crises.”
The dollar's slide relative to other major currencies has increased overseas' buying power for U.S. products, creating more export opportunities for pulp and paper.
“At the same time, the slowdown in new housing starts because of the mortgage crises has reduced the supply of wood chips from the manufacture of lumber and other wood products used in home construction,” Henderson said.
For landowners, the price increase may be an opportunity to sell pulpwood, but only if there is a need to thin stands, said Extension forestry professor Glenn Hughes.
“Pulpwood is really a byproduct from the production of higher value timber, and landowners don't make a lot from pulpwood sales,” Hughes said. “However, if someone has timber tracts that need to be thinned, this might be a good time to do so. But if you have saw timber, you can wait for better demand and prices.”
Any increase in pulpwood prices may have little benefit for Mississippi loggers because of higher operating costs, said Extension research associate John Auel, who has recently held logger workshops in several areas of the state.
“Many loggers are worried about the economy in general and diesel fuel prices in particular,” he said. “The trucks they use get around 7 to 8 miles to the gallon on a good day, and with on-road diesel prices above $3.50 a gallon, their profits are reduced to zero if they have to haul a long distance.”