2014 Indiana Consulting Foresters Stumpage Timber Price Report

This stumpage report is provided annually and should be used in association with the Indiana Forest Products Price Report and Trend Analysis published in the Fall issue of the Indiana Woodland Steward.

Stumpage prices were obtained via a survey to all known professional consulting foresters operating in Indiana. Reported prices are for sealed bid timber sales only (not negotiated sales) between a motivated timber seller and a licensed Indiana timber buyer. The data represents approximately 10 to 15 percent of the total volume of stumpage purchased during the periods from April 16, 2013 through April 15, 2014. This report has been published annually since 2001.

The results of this stumpage price survey are not meant as a guarantee that amounts offered for your timber will reflect the range in prices reported in this survey. The results simply provide an additional source of information to gauge market conditions.

Information on the categories of timber and data reported in this article may is available in the online version at inwoodlands.org.

Sale Activity Continues to Increase: Eighteen consulting firms reported data in 2014, compared to 17 firms in 2013.  Annual reporting during 2009-12 included 16 to 21 firms. Fourteen firms that have reported since 2011 showed an increase in the number of sales from 277 to 318 sales during the period. All consultants that reported had sales in this reporting period.

In 2014, 330 sales compared to 289 sales in 2013; sales from 2008-12 ranged from 206 to 290 (Figure 1). The approximately 15% increase in the number of sales is likely due to the strong timber markets and an increase in landowner awareness of forest health concerns, particularly emerald ash borers. These sales figures and the data presented below do not include negotiated sales. In 2014, firms reported 14 negotiated sales with 1,323,866 board feet selling for a combined $400,885. This was a slight increase from 2013 (13 negotiated sales; 1,308,470 board feet; $303,300).

There were 100 high quality sales during the 2014 period compared with 80 sales in 2013 and 101 sales in 2012. A total of 178 medium quality and 52 low quality sales were reported for 2014. Average quality sales numbered 167 and 157 in 2013 and 2012, respectively. Reported lower quality sales were 43 and 32 in 2013 and 2012, respectively. The steady increase in the lower and average quality sales over the past few years is a good indicator of the market strength. The number of high quality sales doesn’t follow market conditions as closely.

Bidding Increases But Still Down From Historical Average: In 2014, a total of 1,523 bids were received on all 330 sales for an average of 4.6 bids per sale, a significant increase from the 4.2 bids per sale in 2013 but still down from the average of 4.9 bids per sale and 5.1 bids per sale in 2012 and 2011, respectively (Figure 2). The number of bids is also significantly lower than averages from all sales since 2000 (5.1 bids per sale).

The 2014 average of 4.6 bids offered per sale includes 5.8 for high quality, 4.4 for average quality, and 2.9 for low quality. The 12-year averages are 6.2, 4.7, and 3.2 bids per sale for high, average and low quality groups, respectively.

The reduction in bids the last couple years is likely due to an increase in the volume on the market, and a higher number of lower and average quality sales which historically draw less interest (i.e., fewer bids). The decline over the 12-year average is due to a decline in the number of sawmills and producers that were unable to survive the recent recession.

Sales Volume Stays High: The total stumpage volume 28,931,192 board feet (BF) sold during this period is up from 2013 – 28,650,085 BF, 2012 – 25,164,871 BF, and 2011 – 24,367,251 BF. This is up considerably from the 17,687,648 BF reported during the 2010 reporting period and 19,256,439 BF reported in 2009. The volume of timber reported is also up from the volume of around 25 million board feet sold in 2008 and 2006 (pre-recession).

The volume of high quality sales totaled 8,583,450 board feet (plus 104,200 BF negotiated) is very similar to levels for the last few years (2011-13), but still below the 10 million board feet levels of 2008 and 2006. Average quality sales totaled 17,690,376 board feet (plus 633,890 BF negotiated) and were up slightly from 2011-13 (14,077,574 to 16,811,195 BF), but up considerably from the 11 to 12 million board feet from 2006-10. Part of the change in the volume of high and average quality sales since 2008 is due to shifting the ash from the high quality to the average quality category. Lower quality sales dropped slightly from 2,657,366 board feet (plus 585,776 BF negotiated) from 2013 (3,113,243 BF; especially with an increase in the volume of negotiated sales of over 220,000 BF), but still up considerably from 2011 (2,065,026 BF) and 2011 (1,690,740 BF), but very similar to the 3 million board feet reported in 2006, 2008-09 when negotiated sales were included.

Value: Total timber value sold in the 2014 reporting period was $12,363,424 (plus $400,885 negotiated sales), an increase from 2011-13 ($10,494,377 to $10,678,849) and up considerably from 2010 and 2009 ($6,889,190 and $7,278,302, respectively). Value of high quality sales in 2014 ($5,155,836 plus $80,000 negotiated) was up from 2013 ($4,171,085) and 2012 ($4,968,313), but down slightly from 2011 ($5,257,530). For average quality sales, the value in 2014 was $6,661,852 (plus $214,836 negotiated sales).  This figure was up from 2013 ($5,689,825), 2012 ($5,118,780), and 2011 ($5,052,387).  Value of low quality sales in 2014 ($625,736 plus $106,049 negotiated) was similar to 2013 ($633,467) and up considerably from 2012 ($472,184) and 2011 ($368,932).

Stumpage Prices Return to Prerecession Levels: The average stumpage price for this period for the each category was very similar to the prerecession levels seen in 2008. High quality 2014 – $591/MBF vs. 2008 – $591/MBF, average quality 2014 – $377/MBF vs. 2008 – $382/MBF, and low quality 2014 – $235/MBF vs. 2008 – $213/MBF. The average for all sales was down slightly in 2014 ($427/MBF) compared to 2008 ($448/MBF), but were equal to 2006 ($427/MBF).

Last year the data appeared to show a drop in the stumpage prices for timber sales which contradicted the comments from most consultants. That decline was in large part due to the reluctance of many consultants to sell certain timber during 2009 and 2010. This created a backlog of very high quality sales, particularly sales with black walnut or larger white oak and resulted in a larger number being sold in 2011-12. This year there were 13 sales (3.9%) that brought over $1.00 per board foot, up from the 3 sales (1.0%) in 2013 but much lower than the 16 sales (5.5%) in 2012 and the 19 sales (7.0%) in 2011.

The number of low quality sales continued to increase with 52 sales reported in 2014. This number has steadily increased since the recession began with 25 sales in 2011, 32 in 2012, and 43 sales in 2013. The number of high quality sales also increased to 100 sales, up from 80 sales in 2013 and nearly identical to the 101 sales in 2011-12. The markets for the higher quality timber improved quicker than the average and lower quality timber sales.

One of the most important factors on when to sell a specific tree is the condition of the tree – Is the tree increasing in value or declining? Is its condition (health and vigor) going to improve, decline, or stay the same? What impact will that tree have on the future stand (is it competing with a better future crop tree or will it be a benefit or negatively impact natural regeneration)?

Stumpage Prices: The stumpage prices varied for all sales, high quality sales, average quality sales, and low quality sales held from April 16, 2013 thru April 15, 2014 (Figure 3). High quality sales generally have a wide range of stumpage prices due to higher quality timber or potential veneer which can greatly influence stumpage price. All sales, low, average and high quality can be affected by sales with a potential veneer component. It is important for landowners to realize their timber typically will fall within the range of stumpage prices, but probably will not fall into the outlying values. This makes it important to work with a professional forester when selling timber so that you know what you have. For example, a few walnut trees can greatly distort the value of a low quality improvement sale that is dominated by low-value pallet material.

The weighted average stumpage price by sale type (obtained from this survey in 2000, 2002, 2004, 2006, 2008, 2009, 2010, 2011, 2012, 2013, 2014) is reported in Figure 4. The weighted average of the stumpage price is the total value ($) for each sales group (high, average, low) divided by the total volume by sales group. The median stumpage price by sale type per year is also reported in Figure 4. The median price is the amount where half of the sales are higher and half are lower. The price reported is per 1,000 board feet (MBF) of standing timber. To obtain a price per board foot, divide the price by 1,000. An average price of $377 per thousand (MBF) is the same as 37.7 cents per board foot stumpage. The average stumpage price for all sales was $427/MBF in 2014. See Table 1 for a statistical summary of all three sale types.

High Quality Sales: The average stumpage price of high quality sales was $591/MBF, up considerably from the stumpage price of $478 MBF in 2013 but similar to the prices reported in 2012 ($573/MBF) and 2011 ($589/MBF) and equal to the price reported in 2008 ($591/MBF), prior to the recession. The median stumpage price this year of $583/MBF is also up significantly from the 2013 stumpage price of $485/MB, but very similar to the prices in 2012 ($568/MBF) and 2011 ($592/MBF) (See Figure 4).

Average Quality Sales: The average stumpage price for average quality sales was $377/MBF, up significantly from $338/MBF in 2013 and nearly as high as the level in 2008 ($383/MBF) prior to the recession. This is the third highest level reported since the survey began in 2000. The highest stumpage price reported was in 2004 at $433/MBF. The median price was $368/MBF up somewhat from $354/MBF last year. This is the highest level since 2004 (See Figure 4).

Low Quality Sales: The average stumpage price for the low quality sales was $235/MBF, up considerably from $203/MBF last year and up slightly from in 2012 ($229/MBF) and 2011 ($218/MBF). The median price was $234/MBF which also was up from 2013 ($202/MBF), 2012 ($229/MBF), and 2011 ($217/MBF). The stumpage prices are the third highest reported since the price report began in 2000 with only 2010 and 2004 reporting higher prices. In 2010 the stumpage price ($239/MBF) was slightly higher than this year but the volume of timber sold was considerably lower, thus driving up the price. The stumpage prices reported in 2004 for low quality sales were the highest ($266/MBF) since the survey began. The 2004 prices reported were the also the highest for all categories (See Figure 4).

Summary:

Timber Markets: This year’s data indicates that overall markets are very positive. Prices, for the most species, have returned to levels prior to the recession (although not quite to the housing boom levels) so more timber is going on the market. The larger trees and better quality timber has the most demand as usual. Demand for some species, such as black walnut, white oak, and hickory is strong. Red oak and sugar maple are in more demand and the prices continue to improve. Good “white” soft maple continues to do well. Emerald ash borers continue to spread across the state with mortality visible in most areas, negatively affecting the ash prices. Black cherry markets continue to improve but they are still down from historical highs a few years ago.

World Market: Fortunately much of the timber from Indiana is high quality and in demand throughout the world and Indiana’s forest industry has positioned itself well to compete in the global marketplace.

Lower Quality Sales: Demand for low quality timber has been very strong this year, particularly if the timber is near the mill or if good access is provided. However, the higher operating costs associated with fuel prices are still having an impact on the prices paid. It is important to remember that low quality sales are generally improvement cuts where trees are harvested that are impeding the growth of future higher value crop trees, therefore, the opportunity costs of leaving the trees may cost more in lost productivity of crop trees, so it is often not advantageous to delay selling lower quality if the price is reasonable.

Smaller Inventory: The industry still seems to be carrying a smaller inventory than they did prior to 2008 so they continue to cut sales quicker than in the past, creating more of a spot market for timber sold. Most, if not all, of the consultants are moving forward with sales that they delayed due to the recession although there is still some reluctance to market black cherry.

Forest Health Concerns: In today’s global economy we continue to be impacted by new, often exotic pathogens that threaten the forests. Emerald ash borers, Asian long horned beetle, and thousand cankers disease are potential threats that could or are causing significant problems. It is important to be aware of these threats but also to understand that these threats may or may not be imminent. Forest health issues make professional advice even `more important to get an unbiased update on the current status of each threat as it relates to your property.

The comment section below is offered to our readers by the consulting foresters who participated in this survey:

•     Ash markets continue to be impacted by the spread of emerald ash borers throughout the state. The markets depend on how long trees have been infested and the size and the quality of the trees. The value tends to drop drastically when the bark sloughs from the tree.

•     White oak demand is still strong, especially for quality or larger quarter sawn logs.

•     Sugar / Hard Maple continues to improve, especially in areas that tend to produce white wood. Good market for sugar maple especially if it is clean.

•     Soft maple is moving very well, especially if white.

•     Black cherry markets are still improving but not where they were.

•     Black walnut markets extremely good at present. Walnut was in high demand over the winter months and the spring of 2014.

•     Red oak has been moving well although the markets are still a little volatile. A lot of talk about red oak pricing increases. Demand for red oak is improving, especially for larger quality timber.

•     Tulip (poplar) affected by past drought is causing dieback and mortality showing up this spring in southwest Indiana IN. I am not happy about how hard I must thin the tulip stands, but the injury is so severe that they must go. Loggers will have to cut sales heavy to poplar/tulip asap. Demand remains strong despite high production, but some mills are asking for less.

•     Hickory markets are very good, especially if large clean trees.

General Market Comments:

•     The timber market is very strong at the present time. Landowners who have been holding off on selling trees should give serious thought to getting some professional advice during this high price market.

•     Timber markets have improved over the last year. Good quality red oak, white oak, and walnut sold very well.

•     Smaller trees are harder to sell with buyers more interested in larger trees.

•     Larger diameter trees in high demand due to lower production costs.

•     Higher quality sales with larger timber continue to draw more interest as usual

•     Better access and contract terms continue to result in higher stumpage prices

•     Good access draws more interest due to the rough winter and a reluctance of farmers to give up access through crop ground.

•     Demand strong for low grade timber especially when it’s close to the mill.

•     Sales are heavy for Ash and Poplar/Tulip for obvious reasons (see above).

General Management Comments:

•     Woodland clearing (converting to cropland) is even more widespread due to high corn and soybean prices.

•     Invasive plants (bush honeysuckle, tree-of-heaven) continue to spread at disastrous levels overrunning unmanaged woodlots. Too many stands are being cut with no thought of control and the stand is overrun within a year or two of the harvest, negatively impacting the long term health and productivity of the woods.

•     Seeing a lot more high-graded woods where young walnuts are cut prematurely.

•     Seeing more cut over stands with diameter limit cuts common.

•     Seeing more equipment upgrades in the field with existing logging crews adding more machines and personnel.

•     Seeing a shortage of producers (loggers) to meet demand. Mills says they could handle more input but there seems to be inadequate number of crews.

Consulting Foresters that have contributed to this report in alphabetically order include: Arbor Terra Consulting (Mike Warner), Crowe Forest Management LLC (Tom Crowe), Christopher Egolf, Gandy Timber Management (Brian Gandy), Glen Summers, Gregg Forestry Services (Mike Gregg), Habitat Solutions LLC (Dan McGuckin), Haubry Forestry Consultant, Inc. (Rob Haubry), Multi-Resource Management, Inc. (Thom Kinney and Doug Brown), Meisberger Woodland Management (Dan Meisberger), Pyle Timber Sales and Management (David Pyle), Quality Forest Management, Inc (Justin Herbaugh), Ratts Forestry (Chuck Ratts), Schuerman Forestry (Joe Schuerman), Stambaugh Forestry (John Stambaugh), Steinkraus Forest Management, LLC (Jeff Steinkraus), Turner Forestry, Inc. (Stewart Turner), and Wakeland Forestry Consultants, Inc. (Bruce Wakeland).

Table 1. Statistical Summary for High, Average, and Low Quality Sealed Bid Timber Sales, April 16, 2013 thru April 15,