WoodWeek – 12 May 2021

growing info milling transportation forest products

Click to Subscribe - It's FREE!

Greetings from your WoodWeek news team. Our economy, industries and businesses have, in so many respects, been impacted by the unpredictable effects of the Covid pandemic. Its ongoing effect continues to deliver a turbulent ride of both good and bad new experiences. So, it goes for our log export industry. New Zealand log exporters had a record supply month in March with over 2 million cubic metres exported to China and April/May are looking similar.

Nothing has changed with the Australia/China situation as logs are still banned from being imported into China from our trans-Tasman friends and, in fact, there appears to be a deepening rift as all sorts of accusations are getting thrown around from both sides. European log exports are stymied by container freight cost increases and lack of available containers, so it is very unlikely we’ll see any significant supply increases from there.

Meanwhile and ANZ commodity report shows costs are up too. "The forestry index gained another 3.5% in April to hit an all-time high. The high cost of shipping and relatively strong NZ currency do mean returns at the wharf gate have previously been stronger than they are at present, but producers are still receiving a good return. Global demand for timber remains very high and supply restrictions from some countries mean NZ logs are highly sought-after at present."

Interest is still running hot as with just a month until our next conference. Registrations are continuing to pour in for our Carbon Forestry 2021 Conference in mid-June. We recommend you register before this event sells out. The pace of discussion on carbon forestry options and best practice is growing and will accelerate when the feedback comes from the first feedback round by the Climate Commission as they refine their planned advice to Government for action. Click here to register yourself or your team for our conference before time runs out.

Subscribe a friend | Unsubscribe | Advertise Here
Share |

This week we have for you:

Recent Comments

Forest 360: Exports in uncharted waters

(OPINION Forest 360) - Throw away the compass captain, we’re now officially in unchartered territory. While most in the game were expecting flat to slightly increased export prices for May, there were more than a few double-takes when prices were released by export companies at around $10/JAS above April levels. This puts A grade in the $160’s/JAS which is the highest since the extremely short price spike of ’93. This is not because of low shipping costs or foreign exchange rates, it’s purely a supply and demand imbalance situation caused by strong demand in China and poor supply from other regions.

New Zealand log exporters had a record supply month in March with over 2 million cubic metres exported to China and April/May are looking similar. Nothing has changed with the Australia/China situation as logs are still banned from being imported into China from our trans-Tasman friends and, in fact, there appears to be a deepening rift as all sorts of accusations are getting thrown around from both sides. European log exports are stymied by container freight cost increases and lack of available containers so it’s very unlikely we’ll see any significant supply increases from there. The European lumber exports to China (which complete with logs) are also significantly down as supply is diverted to the US to cope with the housing boom created by US Govt stimulus packages.

China is entering its hot season which generally sees demand reduce by 15-20%, however as NZ enters winter, we too see supply levels reduce therefore the overall balance is likely (fingers crossed) to be maintained. Current inventory in China continues to recede with most commentators putting levels at 3.8Mm3 and demand at 80Km3 per day.

Nanaia Mahuta mentioned in a speech a few weeks ago that NZ exporters should look to diversify away from China rather than risk a similar issue that Australia is battling with. This was reiterated by the Prime Minister last week, albeit with a bit more tact. Let’s hope they can keep their comments in check going forward and that they’re not softening us up for crack at our major trading partner. The economic effects that Australia are feeling now with their breakdown foreign relations with China would pale in comparison with what we would experience as a country if China were to take similar action economically against us.

Local sawmillers are having a few sleepless nights as higher export prices force them to increase their already increased log purchase price levels. This will undoubtedly flow onto price increases for wood-based building products in the medium term – if there are any products left on the shelf.

Congestion throughout the supply chain remains an issue, primarily due to a lack of labour. This was demonstrated on a recent visit to a major port where, due to lack of staff, a log vessel was getting loaded 50% of the normal load rate. This flows through with inability to scale and unload trucks and trains in a timely manner (as the same people that load vessels unload trucks and trains) resulting in longer wait times, less uplift in the forest and ultimately lower productivity. While we are seeing less reliance on labour with increased mechanisation and the advent of robotics for log scaling (each export log must be measured), skilled people will always be required and are an important piece of the puzzle.

The government has announced the re-branding of Te Uru Rakau to Te Uru Rakau – New Zealand Forest Service. Te Uru Rakau was setup in 2018 under the MPI banner to focus on and grow the forest industry with a strong focus on dealing with climate change and our commitments under the Kyoto protocol. The head office will now be moved from Wellington to a new build Rotorua in an effort to get closer to the core of the industry. While any government directed change is generally slow, it does show a commitment by the Minister to the sector and has been well received. It is hoped that this will assist our sector with better policy, funding and a focus on getting more people into what a great industry with a vast range of career paths.

All in all, labour issues aside, we’re having a dream run. Returns to forest owners have never been consistently better, low interest rates are helping contractors expand and upgrade their machinery and carbon prices keep creeping up. Who knows what the rest of 2021 will bring? We have demonstrated our resilience as an industry and its important to bank your wins, as we know too well that Murphy is always waiting around the corner.

Comment on this story    

ANZ Commodity Index: Take me higher

Take me higher - The ANZ World Commodity Price Index lifted 2.3% m/m in April to extend its record high. The lift in the index was driven by stronger prices for beef, lamb, logs and aluminium. In local currency terms the index gained 2.2% m/m, supported by a 0.3% reduction in the Trade Weighted Index (TWI).

The forestry index gained another 3.5% in April to hit an all-time high. The high cost of shipping and relatively strong NZ currency do mean returns at the wharf gate have previously been stronger than they are at present, but producers are still receiving a good return. Global demand for timber remains very high and supply restrictions from some countries mean NZ logs are highly sought-after at present.

Global shipping costs remain elevated due to congestion at ports and strong demand for commodities. The Baltic Dry Index – a lead indicator of economic activity – shot up 49% in April. There are early indications that the cost of exporting goods from NZ to Asia may be stabilising but it is still challenging to get product to market. Moving goods to Europe or the United States is even more difficult.

Source: ANZ

Comment on this story    

Using pine to nurture native forest

73 million trees ‘not nearly enough’, says company using pine to nurture native forest - Twelve years ago, New Zealand Carbon Farming was just a concept. Now, it is one of the country’s biggest landowners, and its business model – planting permanent forest – is looking more prescient by the day.

The company was founded in 2010. By late 2019, a Radio NZ investigation looking for the country’s biggest landowners concluded it was New Zealand’s ninth largest landholder, with 28,365 hectares. If the same survey was taken today, the company would have vaulted up the ranks.

It now owns close to 46,000 ha, and manages another 44,000 ha on behalf of farmers and other landowners, giving it control of some 90,000 ha. If nothing else had changed since 2019, its land holdings would place it fifth on RNZ’s list, excluding land it manages for others.

Yet few people have heard of the company, which has deliberately flown under the radar until recently. Its business model is intriguing. First, it finds marginal or unprofitable farmland, then buys it or partners with the landowner. Second, it plants a cover crop – usually pine.

The pine trees aren’t for harvest. They’re to supply a carbon-rich nurse crop, allowing native forest to regenerate underneath them. While slow-growing native seedlings take root, the faster-growing pine supplies a speedier – and increasingly profitable – source of cash from carbon credits.

A cover of pine trees “creates the right environment for indigenous trees to flourish beneath that umbrella and regenerate over time,” says NZCF co-founder and director Matt Walsh.

Why pine? “There's a lot of it around, so it's relatively easy to do research on pine trees,” he says. “New Zealand has 100 years of history of growing pine trees so we know exactly how to grow them and how fast they'll grow and so that helps reduce the risk. Along the way, they store a lot of carbon... [particularly] over the next 70 years [when] the planet needs the most help”.

The sale of farmland into forestry is deeply unpopular in some rural communities, where people fear loss of farming jobs. Slash from floods hitting plantation pine is also getting a bad reputation for its environmental impact on East Coast beaches. Yet Walsh says his company isn’t buying fertile, flat land – it wants the steep or erosion-prone plots, which aren’t producing employment anyway. The trees won’t be clear-felled and, he says, each forest plan is tailored to conditions.

More >>

Source: Stuff News

Comment on this story    

Research shows surging seedling sales

Research Shows Growth In Tree Stock Sales - Latest research by Te Uru Rākau - New Zealand Forest Service shows seedling sales hit almost 92 million seedlings in 2020, 3 million more than the year before, says Acting Deputy Director-General Henry Weston.

The findings are an annual survey of tree stock sales from commercial forestry nurseries, called the 'Provisional Estimates of Tree Stock Sales and Forest Planting'.

“The increase in seedling sales is positive, as it shows continued strong interest in tree planting. Tree planting is a vital tool in efforts to boost environmental gains, and help New Zealand to reach its economic potential, particularly our recovery from COVID-19,” says Mr Weston.

Tree stock sales reported in 2020 totalled 91.9 million seedlings, compared to 88.8 million sold in 2019. The main increase was in radiata pine where sales rose by 4.4 million seedlings.

“Our estimates suggest the increase in 2020 could see seedling sales reach 100 million seedlings in 2021.”

Mr Weston says Te Uru Rākau – New Zealand Forest Service’s research also shows the majority of planting in New Zealand was on class 6,7 and 8 land, which isn’t considered productive farmland.

“It’s important to consider planting the right tree in the right place, as it can be used to stabilise land, stop erosion and create additional income for farmers or foresters through things like the Emissions Trading Scheme.

“Te Uru Rākau - New Zealand Forest Service would like to acknowledge all of the nursery managers, forest owners, managers, and consultants who supplied information for the survey.”

The report is available online here: https://www.mpi.govt.nz/dmsdocument/44971-Provisional-estimates-of- tree-stock-sales-and-forest-planting-in-2020

Comment on this story    

New forestry scholarships announced

New Forestry Scholarships Encourage More People Into A Career In Forestry: Te Uru Rākau – New Zealand Forest Service has announced three new Ngā Karahipi Uru Rākau – Forestry Scholarships being offered through Toi Ohomai Institute of Technology in the Bay of Plenty starting 2022.

The scholarships will encourage more women and Māori into a career in forestry and wood processing.

“Forestry and wood processing plays a key role in supporting New Zealand’s economic future and response to climate change,” says Debbie Ward, Director, Business and Spatial Intelligence, Te Uru Rākau – New Zealand Forest Service.

“Our scholarship programme provides a pathway to ensure more qualified and skilled people join our workforce as it undergoes transformation.

“We are proud to partner with Toi Ohomai to offer the new scholarships for those enrolling in a Diploma in Forest Management. This is a way of opening the door to a career in forestry, and also create more opportunities for women and Māori.

“By increasing diversity in higher-level study through the new Toi Ohomai scholarships, we help ensure the forestry and wood processing sector better reflect the diversity in our local communities.”

The diploma course covers a range of topics to prepare students for management roles, including business planning, forest health and management, supply chain and harvesting, and operations management.

Toi Ohomai Institute of Technology Faculty Dean of Primary Industries, Trades and Infrastructure, Brian Dillon, says the Institute is excited to partner with Te Uru Rākau – New Zealand Forest Service to offer these scholarships to students.  

“We know the forestry workforce is an ageing one and there is a focus to attract the next generation,” says Mr Dillon. 

“We are seeing more interest from local Māori who, once qualified, can go on to manage their iwi land. This scholarship will benefit not only the recipients, but their iwi and wider communities.

“There are clear pathways from entry level forestry study through to New Zealand Certificates in Forest Harvesting operations. Several of these graduates continue on to study the Diploma.

“We are the only provider in New Zealand to offer the Diploma in Forest Management. We are excited to see the prospective scholarship students and look forward to their journey with us and Te Uru Rākau – New Zealand Forest Service.”

The new Diploma scholarships complement the existing Bachelor of Forestry Science and Bachelor of Forest Engineering degrees offered through the University of Canterbury since the establishment of the scholarship programme in 2018.

To date, 22 recipients have been awarded scholarships, and the first students are expected to complete their qualifications at the end of 2022.

Applications for all scholarships are open 1 June 2021 to 15 August 2021. Those with a strong interest in forestry, strong community involvement, and who are committed to a career in the sector are invited to apply.

For more information about Ngā Karahipi Uru Rākau Scholarships, please visit http://www.mpi.govt.nz/fo restryscholarships, email mpiforestryscholarships@mp i.govt.nz or phone 0800 00 83 33.

Comment on this story    

BMO: Update and reporting on Rayonier Q1

Q1 = bit light, but no fundamental issue. 1Q EPS of $0.08, below BMO/consensus at $0.10. Adjusted EBITDA of $69.5mm missed BMO's $71.5mm and consensus at $73.4mm. Southern Timberland drove shortfall. RYN sounds very confident and is targeting the top of the FY2021 guidance range: $285-315mm. NZ and US export businesses are strong. RYN lacks direct exposure to wood products. BMO is on the sidelines with a Market Perform rating. Boosting TP to $36 and increasing estimates for healthy log markets.

New Zealand (NZ) - Slight beat. Adj. EBITDA $21.2mm; BMO at $19.2mm, 4Q20 $16.8mm, 1Q20 $10.2mm. 1Q harvest vols +25% y/y (export +44%, domestic +7%) driven by a normalized level of harvesting after COVID reductions. Export sawlog prices increased 28.2% y/y and 16.1% q/q due to stronger demand from China driven by Chinese restriction on Aussie logs. Domestic sawlog prices increased 16% y/y and 10% q/q driven primarily by FX. Excluding FX, prices increased ~4% y/y.

Source: BMO

Comment on this story    

Whether its lumber or timber - its going off big-time

Lumber or timber ... tomatoe or tomato - whatever you call it wood products are going off everywhere you look. In this update from our long-time trusted correspondent, Russ Taylor in Vancouver, he looks out even further than the current price peaks.

Ongoing Surge in Lumber Demand Is Creating Unbelievable Prices! - In late July 2020 I wrote an article in the WOOD MARKETS Monthly Report (my last-ever editorial) where I posed the question if W-SPF 2×4 #2&Better Random Lengths (FOB BC Mill) lumber could achieve the US$1,000/Mbf threshold (US$645/m3, net) in the COVID-induced rally that had started. At that time, W-SPF was trading at US$678/Mbf – or just over two-thirds of the way from the $1,000 target. In fact, the rally lasted only another -4-5 weeks into early September before prices peaked at US$955/Mbf. Close, but no cigar.

However, this was not the end of the price cycle – as many, if not most, had expected. Prices of 2×4 bottomed out at $530/Mbf in late October 2020 and then the second price wave started. W- SPF prices rose to $927 on January 8 before slumping for two weeks to $785.

Then the third (and current) wave started where prices have increased every week since (aside from holding steady for five weeks at $1,025) and at the time of this writing (May 1) prices were sitting at $1,420/Mbf (US$917/m3, net). Ironically, this is also just over two-thirds of the way to the next threshold of $2,000 but with extraordinarily strong momentum. Is a $2,000 price ($1,292/m3, net; or ~$1,375/m3 delivered US East Coast) for SPF possible during this cycle? Prices have increased $400/Mbf in the last five weeks (to April 30) – if this sizzling pace (averaging $80/week) were to continue, we would be there in nine weeks, or the end of June! As the graph shows, the recent torrid pace in April is unprecedented, but anything seems to be possible this year.

There are several reasons why this bold outlook has potential! More >>

Source & Image credit: Russ Taylor Global and Random Lengths

Comment on this story    

European forest observers get it wrong

Is forest harvesting increasing in Europe? Yes, but not as much as reported last July in a controversial study published in Nature. - The study Abrupt increase in harvested forest area over Europe after 2015, used satellite data to assess forest cover and claimed an abrupt increase of 69% in the harvested forest in Europe from 2016. The authors, from the European Commission's Joint Research Centre (JRC), suggested that this increase resulted from expanding wood markets encouraged by EU bioeconomy and bioenergy policies. The publication triggered a heated debate, both scientific and political, as the EU Parliament and Council were discussing the Post-2020 EU Forest Strategy.

In a response published in Nature, 30 scientists from 13 European countries have discovered evidence that throws into doubt the conclusions of the JRC study. In Concerns about reported harvests in European forests, Palahí and colleagues demonstrate that the large harvest changes reported by JRC result from methodological errors.

These errors relate to satellite sensitivity improving markedly over the period of assessment, as well as to changes in forests due to natural disturbances - for example drought and storm related die-back and tree- falls - being often attributed wrongly to timber harvests.

More >>

Comment on this story    


Buy and Sell

... and finally ... funny you should say that ...


I’m looking to buy a new compass.
Can anyone point me in the right direction?

My mate’s that argumentative, he only eats food that disagrees with him.

I'm hiding from doing exercise. I'm on a Fitness Protection Program.

I've just come back from a car boot sale. The only thing I bought was an old record album called "The sounds wasps make". When i got home and played it i thought to myself, this doesn't sound anything like the sounds wasps make. Then I realized I was playing the Bee side.

Cowboy: "Well, I suppose you've been all right. You've been a decent horse, I guess. A bit slow sometimes, but a decent horse, and..."

Horse: "No, you idiot! I didn't ask you for FEEDBACK! I said I wanted my FEEDBAG!"

That's all for this week's wood news.

If you enjoy WoodWeek - pass it on. Go on - tell a mate to subscribe – it’s FREE!

John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

Share |

We welcome comments and contributions on WoodWeek. For details on advertising for positions within the forest products industry or for products and services, either within the weekly newsletter or on this web page, please contact us.

Subscribe! It's Free!
Advertise Here
Copyright 2004-2021 © Innovatek Ltd. All rights reserved
Bookmark and Share