MPI-SOPI Report: Forestry export revenue forecast

Wednesday 15 Jun 2022

SOPI – Ministry of Forestry Situation & Outlook - Forestry export revenue is forecast to decrease 4 percent to $6.2 billion for the year to 30 June 2022. This decline is mostly driven by lower export volumes, despite higher prices, as well as a record harvest in the year prior. Fewer logs were exported due to freight congestion and ongoing uncertainty, putting profits at risk as producers pay for delays. Domestic timber demand is currently elevated due to high growth in residential housing, lowering export volumes as more wood is consumed domestically. In China, the construction market has contracted and is facing near-term uncertainty due to COVID-19 lockdowns. However, over the forecast period, demand is expected to rise as infrastructure projects increase and logistics issues ease.

New Zealand’s forestry export revenue is forecast to decrease to $6.2 billion for the year to 30 June 2022, down 4 percent from the previous year. Slowing production is contributing to the decrease despite high prices.

Log export volumes are expected to decrease 15 percent, while domestic processed consumption volumes are expected to increase 12 percent in the year to 30 June 2022. With high shipping prices and ongoing supply chain disruptions, New Zealand’s export outlook remains uncertain.

Log harvest volumes are set to be 34.4 million cubic metres in the year to 30 June 2022, down 10 percent from a record 37.7 million cubic metres last year. Roundwood available for harvest is expected to remain at historically high levels over the forecast period.

China’s lockdowns, the Russia- Ukraine conflict and the COVID-19 Omicron variant are driving higher uncertainty. While exporters benefit from rising export prices, they are also affected by increased operating costs, high shipping prices and port congestion. This puts downward pressure on profits and is disincentivising roundwood removals.

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Source: Ministry for Primary Industries SOPI Report June 2022

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