When your date asks to go somewhere expensive, visit the local lumberyard.
While timber market specialists joked about the astronomical price of lumber at a recent Virginia Cooperative Extension webinar, they also explained what is driving the spike and offered insights for Virginia timber owners expecting a cut of those profits.
Neil Clark, Southeast District forestry Extension agent in Southampton County, presented data and anecdotal evidence behind the soaring lumber prices. He said a lack of mill labor and truckers have created bottlenecks in the lumber market, leading to the price spike.
“You can produce lumber flat out, but if you don’t have anyone to truck and haul that lumber out of your mill to the distribution centers for retail, you’re still stuck,” Clark said.
This leads to less lumber availability even if there is plenty of timber.
“When demand is extreme and supply is low, the price goes crazy and increases quite a bit,” he said.
But why is demand so high after decades of steady movement in the timber market? Clark said pandemic-related stress on the supply chain is likely the reason.
“When people started realizing it wasn’t just going to be a two-week break, spouses started breaking out the honey-do lists, and the do-it-yourself folks kicked into gear,” Clark explained. “That brought a good spike there in summer 2020.”
Housing starts are up significantly, further squeezing the lumber supply and increasing the cost of real estate by an average of $36,000 for a new single-family home.
This national trend may spur Virginia forest owners to sell their timber now, but Clark said they need to look at market conditions close to home.
“Wood is local,” Clark said. “Transportation costs are high because 50% of logs are water. It almost doesn’t matter what the market is doing nationwide. What is the market doing 25 miles from your house? Even if the price is high, if you’re not in range of a mill, you lose.”
Clark reported the number of U.S. timber mills have declined as one new mill can displace about 15 older ones.
Bill Osl, chair of the Virginia Farm Bureau Federation Forestry Advisory Committee, said forestland owners know to do their research before making harvest decisions.
“Many resources are available, including forest consultants who can provide you with an estimate of the board-feet, quality, and value to expect for your stand,” he said. “Loggers and local mills will offer quotes by board-foot. And that research has to be done to make sure you get a fair value for your individual stand.”