Market Changes since June Forecast. Things are finally starting to look up (but when you are in such a deep hole, it’s hard to look anywhere but up). Over the last three months, housing starts are up by 9 percent from the previous three months, but down by 43 percent from the same period last year.
Timber Sales Prices. Composite DNR stumpage prices (based on composite log prices) reached a low in April of just $130/mbf. From that point composite stumpage prices have increased by 28 percent to $165/mbf. Still, this is 37 percent less than stumpage was last year at this time.
For the first two months of the new fiscal year the average prices for DNR timber sales was $183/mbf due, in part, to the fact that the department held a number of low valued September 2009 Economic and Revenue Forecast – Washington State Department of Natural Resources 8 of 45 sales from the market. We now expect prices to average $165/mbf for the full year—up $30/mbf (or 22 percent) from that forecast in June. We also increased the forecast sales prices in FY 2011 by $15/mbf (or 9 percent) to $180/mbf.
Sales Volume. DNR has made no change to our planned sales level. In fact, our sales program is off to a very good start this year, having sold in two months 144 mmbf or 15 percent of the full year’s target sales volume of 744 mmbf.
Forecast Removal Volume and Prices. Based on our latest purchasers survey (conducted in early August), purchasers currently plan to harvest 29 mmbf or 5 percent more than we forecast in June during FY 2010. Most of that increase is being brought forward from FY 2011. There is very little change in the forecast volume harvested during the current (2009-11) biennium (up just 4 mmbf or 0.3 percent from that forecast in June).
Because of the increase in forecast sales prices described above, removal prices during the current biennium are up by $15/mbf or 8.3 percent.
Bottom Line for Timber Revenues. As a result of the increase in forecast removal prices, forecast timber revenues are up by $19.5 million for the biennium or 8.7 percent.