I am directly responsible for calculating the amount of timber my employer has at a given time over an area of several million acres of private land.  Non-foresters keep asking me if I'm getting rich, and my answer is no- I'm just your basic middle class white collar office worker, and I'll be lucky if my salary keeps pace with inflation, just like everyone else who's along for the ride in this clown world economy.  

Forest landowners are not the reason lumber prices are so high.

In short we, and every other entity that owns forests, are selling trees for about the same stumpage price ($/ton) as pre-pandemic times.  For example, in Southern Yellow Pine stumpage prices peaked way back in the 90's, and have been in rapid decline.  How is this possible?  I believe (along with many others) that from a purely economic standpoint the U.S. has a few million acres of surplus forest.  Compounding this, commercial forest land has become much more productive over time.  Therefore, there are more acres that are also more productive than in the past.  This isn't really a bad thing- it just means that the demand curve will never reach the supply curve, so stumpage prices will be perpetually low for landowners.  If anything, more forest for hippies and hunters to enjoy is a pretty good deal, right?

That said...  Why are lumber prices high- considering also that forest management and logging haven't been affected much by COVID?

The high prices are solely due to the mill/distribution/retail side of the industry.  For those who don't know, the mills/distribution/retail side of the business is almost always a completely separate business from owning/managing forest land.

You can pick your favorite argument as to why this is the case.  Some mills have been shutdown due to COVID, and a lot of mills are unionized, so you can also bash unions/COVID lockdowns.  You can also blame upper level corporate management types for needing to fund their hookers/blow habit at the expense of hardworking blue collar folks.  You can bash truckers for being lazy or greedy- we all know transport prices are up.  You can also bash retailers for price gouging.  You can blame the government/China because they started this whole mess.  I personally think it's a combination of these factors, with the government being mostly at fault for this whole mess.

Should be interesting watching GD bash unions, corporate leadership, truckers, loggers, hippies, hunters, China, trees, and the government!

TL;DR- it's not my fault- blame someone other than the landowners!

Great post!

Thanks for clarifying.  I had read it was because mills closed down.  Appreciate your input.

Well said....and I can confirm this as my nonk owns some timber land and I have two separate family friends that owns a lumber yard.

The squeeze is in the midstream

Excellent post and thank you for it!

I always thought timber cruisers had the best jobs...

Lumber production has a serious bottleneck, kiln drying. You can buy more logs, add a 2nd shift on the mill etc, but other then building more very expensive kilns for a short term bubble, there is no way for mills to really increase drying volume.

Typical of any agricultural endeavor the actual grower of the product isn't the one causing high prices.  I wonder why sawmills/lumber producers aren't popping up everywhere.2x-3x prices for finished product should encourage investment into lumber production.

Post moar.

Yep.  Well I see discussion of lumber prices of this come up in GD and other places a lot.  I'm hoping to build a house in the next two years and will probably go for steel and concrete.

It's frustrating for us because we know that mills can afford to pay us probably 2-3x the current stumpage, but if we demand that, they'll just go elsewhere for trees.  

Very broadly, making consistent money off forest land is only possible on a huge scale because the margins are low and risk is high when a crop takes 15-30yrs to mature.

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I saw an article kind of explaining the situation with mills and retailers.

The mills tried to raise prices along with the retailers, but retailers refused to order, and mills sat on stock.

Retailers ran out of stock, were forced to order at higher prices, and in turn raised their again. It was a big game of chicken after a rush for material last year.

Prices won't line back up to normal until retailers have their stock caught back up and are forced to dial back buying causing prices to go down.

Good post.

Same as the cattle industry.  There were massive highs for beef awhile ago and same low prices for us.

On this Earth Day, one would hope we wouldn't look at trees as a source of money, whose only value is whether it can be butchered for humans' use:

I managed a smallish (50,000 ft/day) sawmill until around June of last year until the parent company went bankrupt. I'm curious how green lumber prices have changed since then. A year ago you couldn't give red oak away, unless it was FAS or pallet stock. That, white oak and poplar were the lions share of what we sawed, being in western NC.

Definitely true, just like building an ammo factory.

If you're a power pole mill or treated lumber mill you've got to deal with what is basically a giant pressure cooker full of toxic chemicals.  Plywood/OSB machines are big and expensive.

Paper mills are another good example- you can only build them near rivers/lakes because lots of water is needed.  A cheap paper mill is easily a billion dollar project.  Shutdowns of paper mills cost millions of dollars- not sure if any shutdown due to COVID, paper making is a continuous chemical process, and stopping/starting it is a huge pain.  No company is going to drop a billion on a mill just to meet demand that might end shortly.

It's not like mills aren't being built- we have seen an uptick in new mills being, but nowhere near enough to meet the demand.

I don’t care what’s causing it. The narrative that needs to be repeated over and over and over again is that it is Biden’s fault. That’s what they do to us. Until we start fighting back, we are never going to win. Someone simply needs to identify some policy that abide administration is responsible for, and lay it at his feet. It doesn’t matter if it’s true.

Farmers get fucked over on price then blamed for being the problem. Whether it's trees or cows, they always get shit on.

Damn man.  You should post more!  

You are like my friend from Bainbridge. I love hanging out with the guy.  Constant info!!!

My dad and I have talked to a couple of foresters in our AO and they said the same thing.
Retail's version of not letting a crisis go to waste.

How much of US lumber supply comes from Canada?
I know there has been a lot of “buzz” about the Canadian boreal Forests and potential harvest cutbacks.
Everyone wants to blame the toilet paper industry for all this wood and wood pricing chaos When it a proven a fact that In Canada, they are not harvesting trees to make toilet paper, they harvest trees in a planned and sustainable way to produce lumber. And then at those sawmills, the leftover wood chips, sawdust and bark then go off to different facilities for further processing.  The wood fibre that ends up going to toilet paper is about one per cent of our overall wood fibre basket.
Said another way; in a forest, there are GOLD (value) trees and COPPER (value) trees.  The lumber industry goes into forests to cut out the “ gold” for lumber and this drives the market.  They will also selectively harvest some “copper” trees or pulp wood trees. These are the smaller trees.
But most of the wood fiber material that ends up at a pulp mill comes from the waste of the lumber industry when process logs into lumber.
All these yippe hippies scream about toilet paper. How many of these hypocrites live in houses made of wood?

I'd actually be pretty curious too.  I work pretty exclusively with SYP, which is much simpler to understand than the mix species hardwood market.  I know down here "hardwood is king", but it can't be managed as exactly as pine.

Nonk? Did a search of that word and it's basically porn. Can you give us a bit of detail on Nonks?

ALL building products are up in price.  Personally, I believe that there are two major factors:

1.  All the scare tactics about COVID have the plant owners freaking out over potential Workers Comp lawsuits.  Let a couple elderly, diabetic, chronically obese people with severe heart conditions croak, and just wait for their families to scream, "OMG! They caught the 'Vid at work!  Pay me!"  To be proactive, the plant managers have instituted all manner of health and safety rules, not the least of which is mandatory insurance-sponsored two-week "observation" periods any time one of the workers thinks they've been exposed to the WuFlu.  This would obviously lead to plants being short-staffed, thus reducing production capability.  To make this short-staffing issue even worse, how many factory laborers are asking themselves, "Why the fuck should I work my ass off down at the factory when I can get fired, sit home, and collect all those sweet, sweet federal unemployment moneys?"  

2.  Xiden.  Remember when he first got selected?  Remember how his desk was constantly full of huge stacks of executive orders, and how the ruling elite had vowed to reverse every single Trump action?  Well, what do you reckon was in those Executive Orders and Executive Actions?  Like Trump or hate him, he had his finger on the pulse of international trade, and our economy.  He knew how to use the carrot and stick method to get factory owners to accede to his wishes.  How many people actually KNOW what was in those huge stacks of documents that Xiden signed?  How will they affect international trade?  How will they affect the cost of doing business here in the good old US of A?  the company I work for, our suppliers and trade partners are all 100% in the dark as to where the prices of materials will be a year from now, or even six months from now.  Hell, some of our suppliers will quote us a materials order, ship it the next day, and between the quote and the shipping, the prices have already changed.

There's just too many unknowns these days.  Everybody's worried about what the future holds.  Well, everybody except for those leftists who never worried about the future in the first place.  Anyway, that's just my two cents.  Probably worth less than a penny, after inflation is figured in.

I assumed supply was driving the price increase, not demand.  And more specifically, mill shut downs being the bottleneck.

Has there been an uptick in shipping lumber overseas?

That's not an opinion OP.  It's fact.

I assumed the riots for the past year had an impact

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1.  Yep.  I work mostly remote because I'm an analyst who can work from home.  Our field guys aren't much affected either.  However, when I go to HQ it's masks, and they're pushing vaccines hard (but aren't requiring it).  It's harder for employers of low-paid or unionized hourly labor, such as most mills.  Especially when you're already struggling to find labor that can pass a drug test...

2.  Yep- I think everyone knows that had T$ stayed in office, the media would be shrieking and blue states doing stupid stuff while life slowly returns to normal elsewhere.  Now nobody knows what will happen.  The internet makes it worse because everyone has so much information in front of them.

Price gouging is a real thing. Somewhere in the chain the prices are being adjusted upward until they reach point where the demand will slow, they'll drop a few percent and business as usual. By then our economy will be in such a shambles no one will care about a two by fucking four unless they can burn it to keep from freezing to death. I'll admit two - three bucks a for a 2x4x8 or ten for 1/2" 4x8 osb is pretty damn cheap. I would expect prices to rise but this  tripling and quadrupling the prices on everything is bullshit plain and simple.

So Doomers and .gov overreaction?
Just like all this mess?

Thanks- I really do think my job is interesting when I step back from the details of number crunching!

OP, can you say what region of Georgia you are in?  My wife is a forester and ran two different forestry related organizations in GA.  Wondering if we have met.  I’m near Athens

Yep, this and also some price gouging/capitalism.  Some people get rich, some people get poor.

It would be funny to watch if I were younger, but now I only want to live quietly out in the country and start a family, which might not be that feasible if things keep going the way they're going in our country.

I have lumberjacks and my family that are saying the same thing also. Reeks of Progressive manipulation, in my humble opinion.

Was thinking the exact same thing but it would have to be someplace with fairly mild winters...for us.

I do wonder if this will push the market for homebuilding towards more light steel framing....

and composite lumber?

Well I'm on the coast, but my employer isn't based in GA.  I did spend a few years in Athens for school though.  Don't want to say much more in the open for PERSEC reasons, but feel free to PM me.

So why aren't new non-union mills popping up left and right and cashing in?  They need space and a sawblade, that isn't a terrible amount of over head.  I know it's a bit more complicated than that but it isn't like a sawmill is a car factory.  I just had a portable sawmill come to my property last week.  

I am seeing Facebook ads for boards locally cut now.  So there are some enterprising people out there starting to get into it.  Seems like there is a huge opportunity for anyone in that line of work, at least for the short term.  

I buy lumber wholesale for one of my businesses.
There's  a shortage of resin which is causing the panel market prices to climb.
Trump (rightfully so) applied tariffs to Canadian lumber which started the ball rolling pre covid on price increases
Fuel prices increase daily which affects trucking, shipping form overseas and production
The exchange rate affects the price of wood coming in from Europe and South America
Plus people were trapped home and did more home improvements which spiked demand
All in all a perfect shit storm
At least this year I can get material

I don't think it's on the side of mills or distribution. As much as you think Georgia might be the center of the universe in this debate. It's all because of the wussies to the north. The Canadians.

On the past year more mills have reopened up around here. Literally mills that have been closed for a decade or scaled back have been opened up. Hexion. The company that makes all the glue for laminate products is using machinery from the 80s to expand production.

Its all the Canadians. Trade between the Canucks has pretty much stopped. Seeing that we've cut back on our own production in favor of importing their stuff, the halt of the lumber industry is felt extra hard here.

We're seeing this with lumber prices. Wait until other global trade in industries we've gutted here in the US stops.

Good info.  Thanks for the post.  You should post more often!  I’d personally enjoy learning more about the forestry stewardship.

Anybody priced a thousand feet of "Romex" lately?

Same story.  Same culprits.

Fuck JB.

Thanks for your post.  I've been wondering what was to blame for the lack of supply.  Sounds like market manipulation by the greedy bastards.

I wonder if there is a lucrative market to go direct to the consumer/builder from the mill...

OP is 100% correct

Father just had over 100 acres assessed for cutting.

Guy told him the the landowners and the loggers aren't making then money.

Many mills are non-union, just depends on the individual mill.  While sawmills are somewhat simpler than a paper, OSB or plywood mill, they're still amazingly complex facilities.  Many scan each log in 3d with a laser, and some even X-ray the log, to get external/internal characteristics of each log, then throw it into a complex program that determines the optimum way to saw each log.  This is all managed by a complex optimization program that factors in wear/tear, value of sawdust, chips, bark, current/future markets, etc.  Many mills even have a powerplant that runs off byproducts- some even sell power back to the grid.  I had to program a sawmill optimization program in school as an exercise and it about made me go bald!

Sawing boards locally on a small scale is definitely something you can do- but it's hard to scale it beyond a small business.  People will definitely pay a premium for "designer" lumber though, even outside of COVID economy.  Kind of reminds me of high value hardwoods- where logs are auctioned off one by one.

They are. There are a few larger mills up here in the Montana Idaho that were shuttered or scaled back over the last 2 decades, that are at full on production now. For example, the Kamiah, Id mill was basically closed 5 years ago. And is now running at capacities they never had.

This whole lumber deal is mainly due to Canadian imports. The Canadians flooded us with cheap lumber, decimated our lumber industry because we couldn't compete, and now we have extremely little to no access to them anymore.