Production in the Western U.S. has remained high, at least partly because Japanese demand for log imports from this region has fallen sharply. Decreased demand for log exports has reduced log prices in the Western U.S., making it possible for mills to continue production even at lower prices. Another factor which has helped to build an over-supply of lumber in the U.S. has been a rapid decline in lumber exports. Softwood lumber exports have declined steadily during the 1990s, from a peak of 7.8 million cubic meters in 1989 to only 4.3 million cubic meters in 1997. In 1998, exports have fallen to less than 3 million cubic meters, due to the weak Japanese market.
Brazil is by far the largest source of wood products for the U.S., from Latin America.
In 1997, Brazil supplied nearly one-half of the solidwood products, by value, imported from Latin America. Although our focus today is on softwood lumber, hardwood products are still an important component of forest products exports. And Brazil is by far the most important source of softwood lumber imports in the U.S., from non-Canadian sources. Imports from Mexico have fallen sharply, but imports from several European countries, especially Austria, have increased rapidly. This European lumber had been destined for Japan previously, but of course that market has dried up in 1998.