2019 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. 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, 2018 through April 15, 2019. This report has been published since 2001.

The results of the 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

Categories of timber reported: The prices reported are broken into three sale types; high quality, average quality, and low quality. A high quality sale has more than 50 percent of the volume in # 2 or better red oak, white oak, sugar maple, black cherry, or black walnut. The low quality sale has more than 70 percent of the volume in # 3 (pallet) grade or is cottonwood, beech, elm, sycamore, hackberry, pin oak, aspen, black gum, black locust, honey locust, catalpa, or sweet gum. The average sale is a sale that is not a low quality or a high quality sale as defined above.

In the 2008 report some minor adjustments were made in the categories from the previous surveys. White ash was previously included as a component of the high quality sales and hickory was previously in the low quality group. No changes have been made in the categories so the 2019 data should compare well with the data collected since 2008.

Slight increase in sales activity: There were 15 consulting firms that reported in 2019 which is a decline from 16 that reported in 2018 and from the 18 firms that reported since 2015. The two firms that did not report this year represented 8 sales and the new firm represented 5 sales. The main 14 firms have reported every year since 2011. The data from 14 firms has historically represented over 95 percent of the total sales reported making the data very consistent.

In 2018-19 there were 230 sales (plus 6 negotiated sale) compared to 212 sales (plus 8 negotiated sales) last year which was a significant drop from the 310 sales (plus 16 negotiated sales) held in 2016-17. The number of sales has been declining for several years; 339 sales (plus 20 negotiated sales) in 2015-16, 368 sales (plus 12 negotiated) in 2014-15, and 330 sales (plus 14 negotiated) reported in 2013-14.

The decline in the number of sales may be due to several factors including but not limited to 1) recommendations by some foresters to delay their sales until invasive species are controlled as the disturbance created during the harvest tends to exacerbate the spread of the invasive species and increases in control costs, and 2) a decline in the number of sales in northern Indiana which may be due to a decline in the ability to still salvage the ash mortality caused by the emerald ash borer.

Volume of Timber Sold: The total stumpage volume sold increased to 21,123,950 board feet (plus 710,410 board feet in negotiated sales) from 19,630,108 board feet (plus 642,774 board feet - negotiated sales) in 2018 which is still less than the 24,700,232 board feet (plus 983,276 board feet in negotiated sales) reported in 2017 and 29,044,240 board feet (plus an additional 1,257,863 board feet in negotiated sales) reported in 2016 and a drop from the record high reported of 36,773,866 board feet (plus 683,235 board feet in negotiated sale) reported in 2015. Historically the average amount sold each year has been around 25 million board feet (with the exception of the recession years in 2009 and 2010).

The volume for the high quality sales totaled 7,650,681 up from 6,819,117 board feet reported in 2018 and down slightly from the 8,089,611 and 7,728,890 board feet reported in 2017 and 2016. The highest total was reported in 2015 at 11,861,259 board feet. The volume reported between 2011 and 2014 was between 8.5 to 8.7 million board feet.

The medium quality sales totaled 12,168,667 board feet in this reporting period is nearly the same as last year 12,075,284 board feet witch was down from the 14,928,599 board feet reported in 2017 which was down significantly from the 19,782,273 board feet reported in 2016 and just over half of the 22,606,525 board feet reported in 2015. An increase in ash on the market due to mortality or pending mortality caused by emerald ash borers likely influenced the high volumes sold in 2016 and 2015.

Lower quality sales increased to 1,304,602 board feet from last year’s 735,707 board feet which is more in line with the 1,682,002 and 1,533,077 board feet reported in 2017 and 2016 although down significantly from 2,486,082 board feet and 2,657,366 board feet in 2015 and 2014, respectively. Historically the volume of lower quality sales has generally been around 3 million board feet.

Value of Timber Sold: Total timber value sold in the 2018-19 reporting period increased significantly to $14,057,036 from $11,878,170 and $12,272,227 reported in 2018 and 2017. The value, however, is similar to the $14,939,352 reported in 2016. A record high of $19,207,898 was reported in 2015. The high quality sales brought $6,966,410, the medium quality $6,635,847, and the low quality $454,779.

Interest in Sale Stays High: A total of 1,393 bids were received for the 230 timber sales for an average of 6.06 bids per sale which is nearly identical to the average of 6.07 bids per sale last year which was up considerably from the 4.83 bids, 5.14 bids reported in 2017 and 2016 and 4.62 bids per sale received in 2015 and 2014. The high quality sales received 6.93 bids per sale down from the 7.85 bids last year but up from 6.3 and 6.4 the previous two years and the 5.82 and 5.85 bids received in 2015 and 2014. Medium quality sales received an average of 5.67 bids per sale this year up from 5.23 bids reported in 2018 and up considerably from 4.3 bids in 2017 which had been very consistent for several years. The number of bidders on the low quality sales also increased to 4.1 bids per sale up from 3.6 bids last year and the 2.8 bids per sale which had been fairly consistent since 2014.

The high number of bids reflects the strong market for the all timber. More competition, typically results in a higher stumpage price which is reflected in the data.

Stumpage Prices (Table 1): The average stumpage price was the highest since the report began in 2001 for all the sales and all the categories of sales. The average stumpage price for all sales was $666/MBF which is up from last year’s record stumpage price of $605/MBF.

The average stumpage price for high quality sales increased to $911/MBF ($856/MBF median value) for the reporting period which is up from $844/MBF (average and median value) last year and up from an average stumpage value of $682/MBF (median value of $713/MBF) reported in 2017. The previous record high was reported in 2016 with a value of $814/MBF (median value of $744/MBF).

The average stumpage price for the medium quality sales was a record $545/MBF (median value $483/MBF) up from a record high $490/MBF (median value $459) reported in 2018 and $422/MBF (median value of $424) reported in 2018 and 2017. Prior to 2018 the highest average stumpage price for the medium quality stumpage was $433 reported in 2004.

The average stumpage value for the low quality category was also a record at $349/MBF (median value $359/MBF) which was a significant increase from the $275/MBF (median value $284/MBF) and $272/MBF (median value of $286/MBF) reported in 2018 and 2017. The previous record high was reported in 2015 at $290/MBF. The range for the stumpage prices for the low quality sales has generally been between $200-$230/MBF since 2001. Although demand for timber has been good resulting in part of the stumpage increase, the high stumpage price for black walnut and the inclusion of a few walnuts trees in the lower quality sales appears to have driven much of the price increase.

This year there were 35 sales (15.2 % of all sales) compared to 29 sales (13.7%) last year that brought over $1.00 per board foot. The percentage of higher value sales reported the last two years (15.2 % and 13.7%) is up from the 9 to 10% conducted the previous three years. This increase is due to the high prices associated with black walnut and to a lesser degree white oak with foresters and landowners trying to take advantage of those high prices. These very high value sales are generally outliers that distort the average stumpage value all the sales, which is why the median value is often the best indicator of value for most woods and sales. The highest stumpage price reported for a sale this period was over $8 per board foot (all black walnut). The lowest price was $160/MBF or 1/50th of the stumpage price for the highest individual sale. This indicates the significant difference in the value of each tree.

Landowners should keep in mind that markets are only one factor to consider when selling timber. The condition of the tree is the most important factor that determines when it is the right time to sell a specific tree (is the tree increasing in value or declining? – is the trees condition (health and vigor) going to decline, stay the same, or improve?). Trees should be sold based on their problems or lack of potential rather than their current value. Another factor to consider when selecting harvest trees is what impact that tree will have on the health, vigor, and resiliency of the future stand? (Is it competing with a better tree or will it benefit or negatively impact natural regeneration, etc?). The lower quality sales are generally improvement harvests (commercial weeding) and the opportunity cost in lost productivity of the forest by not conducting these sales can be significant. Ideally, you should sell your good trees when they have reached their peak or highest potential. Someone asked me at a field day when to sell high dollar trees; part of the answer is you don’t sell trees based on their value, that $1,000 tree will never be worth $2,000 or $5,000 if you cut it now. You need to evaluate the risk of growing the tree forward and the potential reward (which can be over 10 % annually) and decide is the reward is worth the risk? It often is. If done properly the value per board foot should increase in subsequent sales along with the financial productivity, quality and value of the trees in the woods. Many of the sales reported in this report have come from woods that have been well managed for many years, through several harvests. This is likely part of the reason there are fewer low quality sales reported and part of the reason high prices are reported. Good forest management definitely provides higher returns.

The stumpage prices for all sales, high quality sales, medium quality sales, and low quality sales held between April 16, 2018 and April 15, 2019 are reported in Figure 1. The curve indicates the range in values that the sales fall into. The jagged line at the higher end of the high quality and all sales lines is evidence of the variations in value some trees, especially high value walnut can have on the price.

All sales; low, medium, and high quality can be affected by sales with potential veneer or by the presence of a few high value trees, particularly black walnut and white oak. It is important for landowners reading this report 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 who works for you when selling timber so that you know exactly what you have, an educated seller and an educated professional buyer generally results in a very successful sale.

The weighted average stumpage price by sale type (obtained from this survey in 2000, 2002, 2004, 2006, 2008-19) is reported in Figure 2. The weighted average of the stumpage price is the total dollar value for each sales category. The median stumpage price per year for each sales category is reported in Figure 3. 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) for standing timber.

Comments: Tariffs are still part of most discussions at this time. Indiana exports a considerable amount of high value timber and China is the largest importer. Exported timber is generally higher quality and higher value, therefore, some species (red oak, black cherry, and black walnut) will be impacted more than the lower quality timber (pallet) and specialty uses (staves, quarter sawn, etc) that stay in the domestic market. Because of the uncertainty and the volatility of the market related to the tariffs it is even more important to work with a professional forester that is looking out for your long term financial interests.

Standing timber prices often vary during the year and can change rapidly based on supply and demand. The prices are influenced by many factors including the tree species, the tree quality and size, where you are in the state, the distance to various types of sawmills, the access to infrastructure, and the accessibility of the trees (steep slopes, water crossings, drainage, etc.), the size of the harvest, the terms of the sale, etc.

At this time the tariffs and threats of tariffs have impacted the timber markets with some species affected much more than others. For example, the markets for red oak have been very volatile due to the uncertainty about the tariffs. This report and the comments below are merely a snapshot in time and the markets can change quickly. It is therefore very important to work with a forester to get an up to the minute view of the existing markets.

Several consultants indicated, as the data shows, the markets this year have been some of the best they have seen with most, but not all, species doing well. We do not know what the complete impact of the tariffs will be or how long the impact will last. The tariffs may be only a short-term blip impacting the markets for several months or they may affect the markets for years, no one knows and no one likes uncertainty. When there is uncertainty, risk increases, and when risk increases the markets generally contract.

•   Black walnut continues to be good although it may have dropped slightly for the lower grades.

•   Red oak demand has dropped considerably likely due to the tariffs with nearly 75 % of exported red oak from Indiana going to China.

•   Cherry markets appeared to be climbing out of a decade long slump last year (since the 2008 recession), but they have dropped back due the drop in exports tied to the tariffs.

•   Ash prices for live trees have been good, however, many of the better logs have been exported so the prices have recently dropped.

•   Hickory prices have generally been good although the markets are fluctuating. A longer contract (2 years) tends to bring a better price as it lowers the risk for the timber company when markets are volatile.

•   Tariffs have mainly hurt red oak and black cherry with the lumber prices being affected more than the standing timber prices. A reckoning of the lumber price and standing timber price eventually will come.

It is anticipated that the following species will not be affected as much by any tariffs.

•   White oak remains very strong with high demand for most grades due to diverse markets including barrel staves, ties, and quarter sawn. White oak markets don’t seem to be affected much by tariffs.

•   Poplar demand remains good and steady, especially for larger trees. This species grows quickly and at higher densities and volumes per acre therefore proper management can yield high returns.

•   Sugar maple demand is good, especially for white wood. Sugar (Hard) maple has strong domestic markets.

•   Low grade (pallet) demand has been good. The markets should be okay as the economy stays strong.

The following are general comments.

•   The wet weather the last couple years has caused major issues with timber harvesting. It is important to work with the timber companies to ensure the process works for everyone.

•   Landowners need to have invasive species controlled prior to any harvesting. They are a slow moving wildfire that inflates (expands) rapidly after a disturbance such as a harvest.

•   Quality timber continues to sell well and draws more interest and a much higher price from buyers. This further demonstrates that management pays large dividends.

•   A few good trees can attract buyers to sales that are generally low quality making them possible to sell. Essentially you make money commercially weeding the woods.

•   Sales with low volumes are hard to sell unless some high quality timber is present or access is desirable.

General Comments on Forest Management:  Several of these comments have been made in years past but they are still very true today.  

•           Have a plan to manage your woods so you and your heirs know what you have and what to do, now and in the future.   Timber is a valuable asset that can appreciate rapidly and the income deferred until harvest then taxed favorably as a capital gain in most cases so do your research and work with a professional consulting forester.  Grow quality it pays.  Patience can be an extremely valuable attribute.  Procrastination can be costly if there are problems that need to be addressed like invasive species – early detection allows for problems to be addressed quickly and cost effectively.

•           Check with the local USDA – Natural Resource Conservation Service office in your county, technical and/or financial assistance may be available to help develop a detailed Forest Management Plan.

•           Plan early and thoroughly if considering a harvest to allow for control of invasive species, timing the markets, and better access.  Contact the forester early to allow him to schedule the work and provide guidance. 

•           Access and terms are very important when selling timber.  Timber sales that had year round harvest access were in high demand due and the buyers usually paid more for the convenience.  Limitations to access such as “no harvesting during hunting season” and “no access when crops are in the field” will reduce bidders and result in lower bids. Give access strong consideration.  In most cases the higher income from the timber will be more than the income lost from the acre or so of crops

•           To receive a premium price for your timber provide timber purchaser plenty of time (possibly 2-2½ years) to remove timber (especially with wet sites and possibly with the unknown affects of tariffs). A good map drawing showing the woods; location(s) of marked timber, access, fences, fields, roads, creeks, and possible staging or yarding areas make the process go smoothly with fewer or no complications.  This is always important as good communication and documentation always pays. 

•           Tenant farmers must be engaged and they must be cooperative for the harvest to run smoothly.  Make sure they don’t work the field after the crops are harvested.  This makes the access difficult or  impossible.  

•           Extreme weather conditions, primarily excessive wetness during the fall and winter have made it difficult for loggers the last couple years making it even more important to have everyone (landowner, forester, loggers, farmers, etc.) involved and willing to be flexible with the process.  A return visit by the logging crew may be necessary when conditions improve to smooth trails and landings.  It may be advantageous to improve or prepare old skid trails during the summer prior to logging when conditions are good. 

•           Invasive plants (especially bush honeysuckle and ailanthus) continue to spread.   Too many stands are being cut without pre-harvest control (poor planning) and the stand is overrun within a year or two of the harvest, negatively impacting the long term health and productivity of the woods.  Invasive species need to be controlled prior to any harvesting.  Cost share assistance is likely available to control the invasive plants thru the local Natural Resource Conservation Service office.

•           Invasive species control is much more difficult and expensive after a timber harvest and the disturbance of the logging quickly magnifies the problem.  Control them first even if it means delaying the harvest for a couple years.  

Consulting Foresters that have contributed to this report in alphabetically order include: Arbor Terra Consulting (Mike Warner and Jennifer Boyle Warner), Crowe Forest Management LLC (Tom Crowe and Jacob Hougham), Christopher Egolf, Gandy Timber Management (Brian Gandy), Gregg Forestry Services (Mike Gregg), Habitat Solutions LLC (Dan McGuckin), Haubry Forestry Consulting (Rob Haubry), Multi-Resource Management, Inc. (Thom Kinney and Doug Brown), Meisberger Woodland Management (Dan and Matt Meisberger), Quality Forest Management, Inc (Justin Herbaugh), Abe Bear, Stambaugh Forestry (John Stambaugh), Turner Forestry, Inc. (Stewart Turner), and Wakeland Forestry Consultants, Inc. (Bruce Wakeland) and Rooted in Forestry (Mike Denman and Andrew Suseland).