Prices for Louisiana timber products should begin a slow improvement once the market absorbs the wood being salvaged from hurricane-ravaged forests, a Mississippi professor predicted at the recent LSU AgCenter Forestry Forum in Shreveport, La.
Bob Daniels, forestry professor from Mississippi State University, said the market is glutted with wood, and that has driven prices down. It is likely low prices are “probably going to persist for the remainder of the year,” he said.
Of the large volume of timber in the marketplace, he said, “The industry is trying to spread that out beyond the damaged areas, so it is affecting the market.”
Prices for saw timber have increased some in north Louisiana, but the prices remain depressed in south Louisiana, he said. Pulpwood prices have declined in Louisiana, Texas and Mississippi.
As for good news, Daniels said prices should start to recover after salvageable timber is harvested.
In addition to low timber prices, the industry also is facing a scarcity of logging crew members, since many are working on hurricane cleanup along the coast.
But recovering from hurricanes Katrina and Rita will require a considerable amount of lumber, Daniels said, citing figures that Katrina claimed seven times the number of homes lost to Hurricane Andrew in 1992.
“Katrina has done more damage than anything we can think about,” he said.
Also on the positive side, demand for softwood timber nationwide was at an all-time high in 2005. A slowdown in new housing construction is expected, “but that's been predicted for the past eight years,” Daniels said.
Mississippi forests suffered severe damage from Katrina as far north as Interstate 20, and light damage was reported all the way to Tennessee.
Roughly 20 percent to 30 percent of downed timber from Katrina will be salvaged, he said. In 1989, about 37 percent of downed timber could be harvested after Hurricane Hugo hit the East Coast.
With warm, dry weather in the winter and early spring to deteriorate wood, the window for salvaging downed timber is closing.
Katrina damaged 14.1 billion board feet, and Rita damaged 3.8 billion, he said. Mississippi suffered the most damage with 10 billion board feet of timber damaged, followed by Louisiana with 3 billion and Alabama with 1.1 billion.
Rita inflicted damage to 1.7 billion board feet in Louisiana and 2 billion in Texas, he said.
Mike Dunn, an LSU AgCenter forest economist, said prices are showing some improvements.
Real prices, adjusted for the effects of inflation, for pine pulpwood have shown a greater decline over time than have real prices for hardwood pulpwood, because of a global abundance of softwood fiber, particularly from the southern hemisphere, and because of global competition from countries with cheaper labor and fewer environmental constraints, Dunn explained. Because of this, imported wood fiber will continue to pose a threat to domestic producers.
Dunn touted the Louisiana Forest Productivity Program's cost-sharing provisions as extremely beneficial to landowners as a mechanism for lowering investment costs and keeping Louisiana landowners competitive in a global market.
Buck Vandersteen, executive director of the Louisiana Forestry Association, also reported that the world's largest oriented-strand-board plant is expected to open next year at Oakdale, La. Its annual production could fill the Superdome halfway to the ceiling, he said, and the number of trucks bringing wood to the plant could circle the globe.
Vandersteen said he's hearing many landowners regret they didn't harvest trees when they were smaller, before they were damaged by the hurricanes.
Vandersteen also warned that Louisiana's forest fire-fighting capability is dangerously low because of budget cuts.
FEMA crews have prevented forest fires from getting out of hand in south Louisiana recently, he said.
State budget cuts have hurt fire protection, he said. “We need a strong LSU AgCenter, and we need a strong Department of Agriculture and Forestry,” Vandersteen said.
About 250 people attended the forum to learn some of the latest research and information in the forest products industry. It was one of three forums around the state coordinated by the LSU AgCenter.