Fuels Planning: Science Synthesis and

Integration

Economic Uses Fact Sheet: 7

Markets and Log Prices

United States

Department

of Agriculture

Forest Service

Rocky Mountain

Research Station

Research Note

RMRS-RN-20-7-WWW

September 2004

Economics Team Co-Leads:

Roger Fight

Jamie Barbour

USDA Forest Service

Pacific Northwest Research Station

620 SW Main Street, Suite 400

Portland, OR 97205

Fuels planning: Science synthesis and integration, an interagency research/management partnership to support the Ten-Year

Fire Plan, led by Russell T. Graham, RMRS,

and Sarah M. McCaffrey, NCRS.

Synthesizing

Scientific Information

for Fire and Fuels

Project Managers

Pacific Northwest

Research Station

Markets and prices for logs vary widely across the West, fluctuating from place to

place in response to regional variables and hauling costs. They also exhibit temporal

variability, going up and down with the housing market and other uses of wood.

The places where wood from fuel reduction treatments will likely have sufficient

value to cover treatment costs are the places where logs command higher prices.

These tend to be areas where a mix of mills can provide competition among

buyers and can offer a range of uses for the various raw material coming in. Therefore, where you are located will likely determine whether you have opportunities

for some fuel reduction projects to be self-financing or whether you will almost

always have to pay for fuel reduction projects from other sources. Furthermore,

the material from fuel reduction treatments tends to be at the low end of log

values. When wood product prices are down, the least valuable wood tends to get

priced out of the market first and comes back in last when the market turns up.

Even places with active log markets will likely experience wide swings in their

capacity to finance treatment costs solely through the wood removed. Due to this

volatility, log prices may be one of the more difficult data items needed for My

Fuel Treatment Planner (My FTP). While wood products are well-defined commodities whose price differences can be mostly accounted for by different characteristics and transportation costs, markets for logs are less well understood.

The information for this fact

sheet was provided by Roger

Fight, Geof Donovan, and

Richard Haynes at the Portland Forestry Sciences Laboratory, USDA.

Map of mills in Oregon and California.

The availability of a nearby functioning infrastructure can make the difference in

whether a fuel reduction project is selffinancing (map courtesy of P. J. Daugherty).

Log Markets Are Local

Probably the most important variable in

whether there is a reasonably functioning market for logs is whether there are sufficient local mills that can use the full range of logs that

come from fuel reduction treatments. Also, a

sufficient number of local mills can provide

enough competition that the value of logs can

be passed along to forest owners/managers in

bid prices. The size of area that is relevant to

providing competition for logs is defined by

the cost of hauling logs to mills. At some point

the hauling cost eats up so much of the value

that it is not possible to cover the hauling cost

and have sufficient value left to pay for harvesting costs. When there is only a single potential buyer of the material, bids only have to

be high enough to convince the seller to sell

and do not have to be high enough to outbid

others. Sales in areas with limited or no competition for logs often go at minimum bid rates.
The Fuels Planning fact sheets are based on preliminary findings. Information from fact sheets will be synthesized in an upcoming publication.

Economics Team Fact Sheets

Look for fact sheet topics from the Economics Team including prescribed

fire costs, harvesting, log hauling, NEPA and other regulations, wood utilization, economic impacts on communities, markets for wood, and harvest equipment requirements.

Fuels Planning: Synthesis and Integration

This fact sheet is one in a series being produced as part of a larger project

supported by the USDA Forest Service to synthesize new knowledge and

information relevant to fire and fuels management. Fact sheets address

topics related to stand structure, environmental impacts, economics, and

human responses to these factors. Information in the fact sheets is targeted for the dry forests of the Inland West, but is often applicable across

broad regions of the country. For more information, please visit our Web

site at:

www.fs.fed.us/fire/tech_transfer/synthesis/synthesis_index

Is There a Market for Low-Value Logs?

Another important variable is the presence of a market

for low-value logs that are not cost effective to use for

solid wood products. A wood-fired electricity generation

plant can create such a market. Tops and limbs are not

readily used for pulp chips because of problems with debarking and getting the bark content down to an acceptable

level. But if there is a market for energy wood it is likely

that tops, limbs, and small trees would all be treated together

and become dirty chips suitable only for energy.

When the price for pulp chips is up it is much easier to

sell low-value logs. The price of chips can vary widely

over the economic business cycle, however. The current

global supply conditions for chips make it likely that the

price of chips will tend to remain relatively low for most

of the foreseeable future.

Log prices in the Pacific Northwest Region, both west of the Cascades

(PNWW, blue diamond line) and east of the Cascades (PNWE, pink square

line), have shown high volatility, especially since the 1970s. Meanwhile,

the price of chips has been falling steadily since 1995 and is expected to

remain low (graph courtesy of Richard Haynes and Judy Mikowski).

Small tree removal. The presence of a wood-fired electricity generation

plant can increase a local market for tops, limbs, and small trees (photo

credit: John Szymoniak).

Caveats

Markets are changeable and local, so users should not

use default prices but should find out local price data

and update this information regularly. The prices provided with My FTP are based on a limited number of

mills and will probably be out of date. My FTP includes

a mill map and a listing of the names and phone numbers for those mills. Except for the crudest of estimates,

it will be necessary to check with the local mills to see

what is being paid currently in your area. Those mills

will most likely give you prices in Scribner scale. My FTP

is set up to use Scribner log prices. A few mills may pay

for logs based on green tons. If this is a common situation a future upgrade of My FTP will probably handle

pricing in green tons.

(Stumpage)

Dollar/thousand

board feet

Year

(Chips)

Dollars/short ton

Sawtimber stumpage price for the Pacific Northwest 

and chip price from the Columbia-Snake Customs District