Q: Ron, the 54 thousand dollar question. How do you sell timber at the top of the market?

Ron Wenrich: You can't. Most mills buy timber 1 to 2 years in advance. The fluctuation in lumber prices will even itself out, for the mill, in the long run. If timber prices get too high, buyers will work off inventory or work company lands. When timber prices drop, more buyers can readily be found.

Eventually, timber prices will move higher if lumber prices are sustained at a higher level and timber inventories drop. If timber prices move too high, due to supply, then mills will go out of business as alternatives to forest product materials become competitive. A supply problem also means mills will expand their buying area.

To sell at the top of the market, high quality timber must be available. This means the landowner must let trees grow to a suitable size and quality and refrain from harvesting the better trees before they mature. The landowner should make several thinnings before maturity and the final harvest. This upgrades the forest and provides quality timber for payoff.

Q: Then when is the best time to sell timber?

Ron Wenrich: Sell anytime during an economic expansion. Goods are flowing freely, interest rates are low, and log and lumber inventories are moving. Mills will be more able to pay higher stumpage as well as there is more competition pushing prices up.

During an economic slowdown, timber owners should do other management work . When harvest is recommended the remaining timber will be ready. Low value thinnings may be undertaken. Salvage sales must also be taken whenever necessary. The timber may lose too much value if you wait for the market to recover.

Q: Is there a global connection to prices?

Ron Wenrich: When the value of the US dollar is high against foreign currency, our exported lumber becomes more expensive. This can cause timber prices to drop as demand for importing companies drop. Our products become too expensive.

On the other hand, countries that export to the United States can either compete well or even undercut the US market. Their dollar is cheaper. This can depress demand for US goods and timber.

Q: What is the environmental connection?

Ron Wenrich: Environmental constraints always cause a strain on timber markets. In some cases, it restricts the amount of timber available for harvest. That causes timber prices to rise. If lumber prices can't be pushed up, timber prices will drop, since operating costs have risen. This has been the case in many USFS sales.

Natural environmental disasters can have a dramatic effect on lumber prices. Shortly after Hurricane Andrew ripped across Florida, lumber demand rose sharply to supply material to repair the damage. Lumber prices rose quickly, remained high for several months, then gradually settled as more inventory came into the market.

Ron, thanks for the interview and keep up the good work!