Anybody Buying Yet? Where’s the Bottom?

[Foxtrot1]

Staffing issues? That has been a common theme in a lot of industries and timber is certainly a tough job. There was significant excess capacity in 2024. Prices reacted accordingly. I'm not a fan of government intervention/assistance, but we have tariffed Canadian lumber for 40 years and it still dominates. They can cut logs cheaper than we can. I also think there is a US government loan program available for mills. The souther pine industry has a lot of large investment funds involved and they run pretty lean. The only real solution is the same with every other industry. Get as big as you can to build scale, squeeze workers wages and try to charge customers more. Anyone who has spent time in a NF will see the previous runs at extracting timber. Change is perpetual. Also, a quick search shows other firms expanding capacity. Very location dependent.

We've lost 6-7 major mills across the region since spring. Both fiber and dimensional lumber sawmills. Pulpmills continue the trend of moving offshore. We haven’t protected the market to try to keep it here, while dimensional lumber imports get tariffs to drive their price up. With the loss of mills and weak demand from the housing market, most mills are restricting how much each logger can deliver to the mills. So they have been running on 60% production for months now. Fuel, insurance, and equipment/parts (from tariffs) costs have also skyrocketed this year.

A regional economic analysis publication estimated cost to cut, skid, and load 1 ton of wood at roughly $19 last year. The avg pay rate was $13.50. All the recent mill closures and fuel increases haven't even had time to take effect on those figures yet.

 

[elkduds]

Can't really say what this means as far as long term implications, but the forest industry is in free fall in the wood basket of the world. Just lost another large mill in the region yesterday. In meetings with dealers, they expect equipment foreclosures to skyrocket in the next 60 days. Everyone always talks about farmers having it tough, but there's usually lots of hand outs to help. The forest industry gets passed over when its time for Uncle Sam to "help". I dont think anyone has a plan to get thru this, they are just standing back and watching the dominos fall.

Despite the dry winter, this snowball is rolling downhill, enlarging with every rotation.