WoodWeek 18 December 2019
Moving to log and wood markets, we have the latest quarterly situation and outlook for forestry from MPI. Our forestry exports are forecast to fall 12.8 percent to $6.0 billion for the year ending June 2020 compared to the year ended June 2019 when prices and volumes were at record highs. This is $0.2 billion higher than the September forecast for year ending June 2020 as log prices are recovering more quickly than expected from their sharp fall over June and July of this year.
After months of industry consultation, Education Minister Hon Chris Hipkins confirmed details for the Workforce Development Councils yesterday. Speaking on behalf of the forest industry, Fiona Kingsford, Competenz chief executive says her ITO wholeheartedly supports the Minister’s announcement to form six skills-aligned WDCs. “This is aligned to the feedback our industries provided during consultation, so it’s encouraging their views were listened to and to see this structure has been adopted.”
So, after another year of hard work, you can relax for a well-earned holiday with economic indicators moving up on several fronts. In November, the ANZ Truckometer Light Traffic Index rose 1.2% m/m, busting out of its recent plateau. The Heavy Traffic fell 1.5% m/m, but it follows two strong monthly increases.
Also, the monthly ANZ Business Outlook survey of business confidence in December showed a significant improvement on the wider economy and firms’ own prospects, thanks to easier monetary policy and signs of a fiscal policy loosening, along with a warming housing market and a rebound in migration. Firms’ own confidence about their own activity, which is the most reliable leading indicator of economic growth, rose four percentage points to a net 17 percent expecting higher activity over the year ahead. This was the strongest reading since April 2018.
To ease you into the holiday break, we have a delightful holiday comedy routine we can all identify with from Michael McIntyre and a few extra lines and humour graphics to end the year. THANKS to all of you for your loyal support!
Finally – our WoodWeek Summer holiday dates: Today is our last WoodWeek issue for the year. We will be back with more good wood news for you on Wednesday 15 January 2020. Have a very Merry Christmas and Happy New Year. See you again in 2020!
This week we have for you:
Cat dealer launches new brandNew Zealand’s Cat® dealer marked a new era at a special event in Auckland last week where Chief Executive Grant Whitelaw revealed a new company name, Terra Industrial New Zealand Ltd, and outlined a vision for a revitalised future based on new ownership, customer passion for Cat® products and expanded customer solutions.
“We are building on a magnificent legacy of 90 years. The company has a great history in working with customers to help build New Zealand, and we are taking this forward as we draw on new resource and expand our customer offering,” he said.
The expertise and experience of Sime Darby, who owns some of the world’s leading Cat® dealerships, will bring new strength to the company.
Customers have shown they have real pride in owning Cat® equipment, and the company would be introducing some industry-firsts in helping them get more value from the equipment than they realise is available.
As a first step, the company is launching a new customer portal to give easy online access to vital information about things like fuel efficiency, machine locations, hours on equipment and oil lab results. It will also be moving to a more solution-focused model of helping customers solve problems as well as providing machinery, he said.
The name Terra, coming from the Latin words terra firma, reflects the company’s connection to the land and to the grounded nature of its people and our relationships.
“Caterpillar brings us the power of unparalleled world-class Cat® products and systems, and we are here delivering the power on the ground through our people, places, product and solutions,” Mr Whitelaw said.
The new name and brand will appear on Terra Industrial’s digital channels almost immediately. While the website and email addresses are changing, contact the team as usual as messages will be automatically redirected. Phone numbers and branch locations remain the same, but the signage on Terra Industrial’s branches, vehicles and uniforms will be progressively updated over the next six to 12 months.
MPI forestry exports updateThis week we bring you the latest MPI export updates from their quarterly publication "Situation and Outlook for Primary Industries" (SOPI) - The short summary is:
Forestry exports for the year ending June 2020 are forecast to fall 12.8 percent to $6.0 billion compared to the year ended June 2019 when prices and volumes were at record highs. This is $0.2 billion higher than the September forecast for year ending June 2020 as log prices are recovering more quickly than expected from their sharp fall over June and July of this year.
Export revenue is forecast to reach $47.9 billion in the year ending June 2020, up 3.3 percent from the previous year. This forecast is $1.7 billion higher than the previous forecast round, with upward revisions to dairy, meat and wool, and forestry. A lot of these gains can be attributed to rising global commodity prices and the drivers behind rising prices are likely to be sustained through 2020 and 2021.
Following a sharp fall in June, log prices are recovering faster than expected. However the flow on effect on export volumes is expected to restrict forestry sector export revenues in the year ahead.
Industry training leader likes Hipkins planWorkforce Development Councils plan aligns with future of work says Competenz ITO, Fiona Kingsford - “The best possible news” is the reaction of Competenz, one of the country’s largest industry training organisations (ITOs) in the wake of today’s Education Minister Hon Chris Hipkins confirmation of the structure of the Workforce Development Councils (WDCs), which are part of the Government’s overhaul of the Vocational Education sector.
Under the new system, current ITOs will be disestablished, and part of their responsibilities will be handed over to the WDCs. The new WDC responsibilities will include: setting standards for qualifications, unit standards and other skill standards; skills leadership; consistency of assessment and learner outcomes; advising on funding and industry brokerage. WDCs won’t be directly involved with arranging training.
Six industry-led WDCs will be established: Manufacturing, Engineering, Logistics and Technology; Creative, Cultural and Recreation; Primary Industries; Service Industries; Health, Community and Social Services - and Construction and Infrastructure.
Fiona Kingsford, Competenz Chief Executive says the ITO wholeheartedly supports the Minister’s announcement to form six skills-aligned WDCs.
“This is aligned to the feedback our industries provided during consultation so it’s encouraging their views were listened to and to see this structure has been adopted.”
“Competenz will continue to work with the Government, MITO, NZMACITO, Primary ITO, Service IQ and industry representatives to develop the structure and governance arrangements of the Manufacturing, Engineering, Logistics and Technology WDC. This grouping supports the future of work ensuring New Zealand has a strong workforce that has the skills and capabilities to keep pace with automation and technology changes in our industries.”
She says Competenz will also support forestry, journalism, graphic design and signmaking to ensure the same seamless process is undertaken for their transfer to the Primary WDC and Creative WDC.
“Collaboration with Government officials and all relevant ITOs during this process will be the key to ensuring that there’s no disruption to our employers and learners during the transition.
“Please rest assure there will be no change to the current services and support our employers, learners, industry associations and other key stakeholders receive from Competenz throughout the transition. The final date for transition for all functions is 31 December 2022, with all WDCs being established by June 2021,” said Fiona.
She says the Government has confirmed their next steps will be to further engage on the WDC establishment process early next year, and support industry to identify their governance arrangements and Board appointment process for the WDCs.
Source: Scoop News
Global effect from Euro log surplusEuro log surplus contributes to price drops
• A plentiful supply of logs coupled with declining demand moved sawlog prices downward in most major markets around the world in the 3Q/19. The biggest price reductions came in Central Europe, where storm damaged logs flooded the market.
• With falling sawlog prices throughout the world, the Global Sawlog Price Index (GSPI) took a hit in the 3Q/19 and had its third largest q-o-q decline in ten years.
• The European Sawlog Price Index (ESPI), which has been in steady decline for two years, fell another 5.0% in the 3Q/19, as reported in the latest issue of the WRQ.
Excerpts from the Wood Resource Quarterly (www.WoodPrices.com) WRQ - 32 Years of Global Wood Price Reporting
ANZ Truckometer indicator looking goodIn November, the Light Traffic Index rose 1.2% m/m, busting out of its recent plateau. The Heavy Traffic fell 1.5% m/m, but this follows two strong monthly increases.
Annual growth in both indexes is lifting off low levels. It suggests annual GDP growth is going to continue to be unimpressive for a while yet. But things are looking better in a momentum sense.
Audit confirms OneFortyOne’s sustainability(Australia) - OneFortyOne is pleased to confirm that independent forestry auditors have once again found the company and it's forests to be fully compliant with the globally endorsed Australian Standard for Sustainable Forest Management.
OneFortyOne’s Planning & Compliance Manager, Janeth Mackenzie said “Our forests offer vital answers for Australian priorities. Here in the Green Triangle the forest sector provides thousands of direct and indirect jobs, enhances and protects the environment, traps carbon dioxide, and offers recreation and tourism spaces for visitors and locals alike."
"With this in mind it’s important to all the team at OneFortyOne that our forests and management practices are recognised as being best practice, and that endorsement is sealed through our international and independent certification.”
The recent forest recertification audit tests how sustainably the company is managing its Green Triangle forests against 9 key standard criterion and 167 individual requirements.
The recertification process considers how OneFortyOne enhances the region’s long term regional social and economic benefits, improves the local environment and protects important historical and cultural sites within the forests.
“We’ve been certified since 2013 and our continued success is absolutely thanks to the hard work and dedication of our employees and contractor partners who work in the forests every day.” said Mrs Mackenzie.
Judge slams council for lack of monitoringA council's failure to monitor a forestry company has been labelled by a judge as "reprehensible and irresponsible, to say the least" - Environment Court Judge Brian Dwyer made the remark about Gisborne District Council when sentencing Juken New Zealand to a $152,000 fine.
Juken was one of 10 forestry companies prosecuted by the council over damage caused by "slash" - forestry debris - in storms that hit the region in June last year.
Juken pleaded guilty to a charge of breaching the Resource Management Act by discharging a contaminant (slash logging debris, waste logging material and sediment) onto land between June 3 and June 12, where it may enter water.
The offending occurred on the 1096ha Waituna Forest pine plantation, about 30 kilometres southwest of Gisborne, and resulted in debris entering various "protected watercourses" and tributaries of the Mangapoike River, which enters the Wairoa River.
Following the heavy rainfall events on June 3-4 and June 11-12 Juken reported slip damage to the forest and a neighbouring property to the council on June 25.
Council investigators found a raft of breaches of consent conditions, including piles of slash piled in precarious positions, and said the ecological impact on waterways was "extensive" and "severe". The council issued an abatement notice and Juken largely complied with it by carrying out extensive remedial work.
When sentencing Juken in Gisborne District Court last month, Judge Dwyer noted that sediment discharges like those involved here "will make a real but undefinable contribution to the levels of contaminant in the rivers and the sea where it ultimately ends up".
He said the Gisborne region had experienced six major storm and extreme weather events between 1994 and 2015 and the potential for large amounts of slash and sediment to be mobilised and washed downstream "should have been obvious".
Juken failed to comply with Forestry Owners Association Code of Practice as well as its resource consent.
Photo credit: Maarten Holl/Stuff
Carbon Match market updateMarket Update: Getting there on markets - NZUs are fairly well bid to $24.65/$24.70, best offered at $24.75 with light volume trading over the past week.
COP25 is still underway in Madrid and one of the key issues outstanding is to develop a "rule book" for how to implement Article 6 of the Paris Agreement, which is the part of the Paris agreement that would enable international co-operation and the potential recognition or use of international carbon markets.
Article 6 was the only part of the Paris rulebook that could not be agreed at COP24 in December 2018 and there is considerable pressure to finalise the rule book for Article 6 this year in Madrid.
In particular one of the big challenges is accounting guidance on the operation of Article 6.2, which provides for country to country transfers of mitigation. Likewise controversy abounds over Article 6.4, which would provide a new centralised mechanism - effectively a new international carbon market.
With New Zealand's projected emissions over the 2021-2030 period likely to significantly overshoot its current NDC (target) under the Paris Agreement, the issue of how to access, recognise and account for international emissions is very important.
With a likely overshoot of our Paris budget of some 200 million tonnes, we have three ways of closing the gap: grow it, buy it from someone else, or do some really significant dieting so that we can tighten our own domestic belt.
Ideally we would do all three. But currently the NZ ETS is a something of a desert island, a domestic-only market.
Meanwhile the whole idea of international trading of carbon reductions remains fraught. To the economic purist, the concept enables least cost abatement to take place first and is consistent with a more efficient transition to lower carbon economies.
But many parties are concerned that the concept potentially undermines the whole ambition, by creating incentives to assume lower targets in the hope of being able to receive recognition for mitigation transfered to others. To some, the whole idea is just downright distasteful.
Even within New Zealand we can witness a change of approach. It was not long ago that the previous National government exhibited total unwillingness to limit the import of international Kyoto units into the NZ ETS, (even as real carbon prices fell to a matter of cents per tonne). That stance rested on the grounds that a tonne of CO2 and its equivalents removed from the atmoshere was a tonne, no matter where the reduction came from.
But things have changed. Fast forward to recent Select Committee input and it is very clear that the appetite to rely on international carbon markets is tentative on all sides of the house. Indeed the CCRA Zero Carbon Amendment Act states that "Emissions budgets must be met, as far as possible, through domestic emissions reductions and domestic removals."
The question is, at what cost of carbon? Very little has happened at $25 and below.
As it stands today, we don't seem to have a plan to source any significant domestic reductions other than from forestry, whose contribution can scale up only slowly. Sequestration from forestry might at best close 25% of the gap between BAU and the budget implied by our current Paris target.
And then only if confidence among forest owners and other would-be forest landowners is preserved. Instead, landowners who are interested in carbon face toxic politics, cross neighbours and ever greater complexity. Bring out the kid gloves.
NZUs - bid $24.70, offered $24.75.
Carbon Match - every weekday from 1-5pm.
2008 GFC hits Christmas tree industryHow the financial crisis hit the Christmas tree industry – North American families on the hunt for a Christmas tree have little to cheer about this year, as prices are through the roof due to a shortage of trees that can be traced back to the 2008 financial crisis.
The Great Recession put thousands of American Christmas tree farmers out of business, resulting in far fewer seedlings being planted. As trees have a maturity cycle of 10 years, the lack of supply is just now beginning to bite, pushing up US demand for Canadian Christmas trees and causing higher prices for consumers across the continent.
"We’ve got a shortage of Christmas trees," said analyst Paul Quinn of RBC Dominion Securities. "We’ve seen a marked increase in the price for trees because of the lack of supply."
The average price of a tree rose 123 per cent to US$78 in 2018 from US$35 in 2013, according to the U.S. National Christmas Tree Association. Price growth has also occurred in Canada, Quinn said, with sales at Christmas tree farms up by 15 per cent annually for the last five years on average.
The Quinn Farm on Perrot Island just outside Montreal boosted retail prices by $10 this year. Part of the reason was to make up for a decade of stable pricing and rising labour costs, but demand has been growing steadily for the past few years — with a sharp spurt this year — said Stephanie Quinn (no relation to Paul Quinn), who runs the nursery with her husband Phil.
Their top-price Tannenbaums now cost $80 while bargain timber goes for $55, with the price dependent on quality, species and height.
"We’ve been getting a fair number of calls from people who normally buy wholesale trees and haven’t been able to find anybody this year," said Quinn, echoing other direct-to-consumer farmers.
It's what you've been waiting for ... 'Christmas Day'Almost finally this week, we have something you will enjoy. After all, you've worked hard this year and you deserve a reward.
Here is a link to some highly valuable insight into the incredible importance that we all attach to that 25th day of December ... insight brought to you today from one of my most favourite comedians - Michael McIntyre.
... last one ... Life's too short for the wrong job
Buy and Sell
... And finally ... Ever wonder why?
Why ... ???
WoodWeek Summer break dates: Our last WoodWeek for 2019 is today, and we
will be back in your inboxes on Wednesday 15 January 2020. Have a safe and
happy Christmas and New Years.
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