Most industrial stock is produced at a price less than top stumpage value but is higher than chip and pulpwood prices. There are several factors that effect lumber prices. Suppliers are in a constant battle to control inventory. Sufficient log inventory must be kept at a level that assures little downtime associated with log supply. This means that timber inventory must be managed to meet log demand.
Trees have to be bought, to supply logs, to provide inventory, to meet the needs of lumber demand.
Not an easy task. Lumber demand cycles are largely due to economic conditions. As housing starts increase, more demand for the forest product creates a scarcity, which causes prices to rise. This will entice more production. Conversely, when demand drops, inventories at the mill level increases.