Fall 2000 Volume 9, Number 3
INDIANA’S CONSULTANT FORESTER’S STUMPAGE TIMBER PRICE REPORT
by John Seifert, Purdue University
This stumpage price report is provided on a semi-annual basis and should be used in association with the Indiana Forest Products Price Report and Trend Analysis written by Dr. William Hoover in cooperation with Indiana forest product companies. Dr. Hoover's report is published in this issue of the newsletter.
Stumpage price data was obtained by a mail survey to all known professional consulting foresters operating in Indiana. Reported prices are for sealed bid timber sales only, (not negotiated sales) between a motivated timber seller and a licensed Indiana timber buyer. The data represents approximately 10 to 15 percent of the total volume of stumpage purchased during the February 16,2000 to August 14, 2000 period. "
The results of this new stumpage price survey are not meant as a quarante that amounts offered for your timber will reflect the range in prices reported in this survey. The results simply provide an additional source of information to gauge market conditions.
The sealed bid timber sale process is for trees marked by a professional forester. The species, number of trees and volume in a sealed bid sale are determined prior to the notice of sale. A notice is sent to licensed timber buyers who then offer a price for said trees at a predetermined time and place. Under conditions deter-mined in the bid notice, the owner then accepts or rejects the bids. Upon acceptance of the bids by the owner and fee paid, the owner then conveys the right to cut the advertised trees to the purchaser. This is frequently referred to as a lump sum sale.
This report reflects "spot market" prices, not the average price paid by timber buyers. The bidding process used by consultants "spots" the maximum amount any buyer is willing to pay for a particular lot of timber at a particular time and place, not the average price paid for timber. High bids frequently reflect an urgent need for timber because of special orders for lumber or veneer, low log inventories at the buyer's mill, poor logging conditions due to wet weather, or other special conditions.
Hardwood lumber is sold in a highly competitive commodity market. Competition comes from mills within the state, region, and hardwood lumber producers in the Lake States, Northeast, South, and Southeastern production areas. This market competition means that the cost of stumpage in other producing regions deter-mines in part the amount Indiana mills and loggers can pay for stumpage. If all timber were sold on a bid basis the spot market would no longer exist and the average of the highest bid price offered would be lower than now observed. This explanation isn't meant to deter you from seeking the best available price. It's meant to explain the apparent discrepancy between the two price reporting systems.
SEALED BID PRICES
The prices reported are broken into three sale types: high quality, average quality and low quality. A high quality sale is one where more than 50 percent of the volume is number 2 or better grade red oak, white oak, suger maple, white ash, black cherry, or black walnut. The average sale is considered one that is not a low or high quality sale. The low quality sale has more than 70 percent of the volume in number 3 grade or is cottonwood, beech, hickory, elm, sycamore, hackberry, pin oak, aspen, black gum, black locust, honey locust, catalpa or sweet gum.
A total of 199 sales were reported for this six-month period. Figure I shows the number of sealed bids offered by sale type. A total of 1119 bids were received for the 199 sales. The figure also reflects what foresters have been suggesting, higher quality timber offered for the sale, increases buyer interest and the number of bids offered. The average number of bids offered per sale was 5.7 for this period. Seventeen sales were completed by negotiation after the seller rejected all bids.
A total Doyle stumpage volume of 14,627,766 was sold during this period Figure 2. The average volume per sale was 72,550 bd.ft. for high quality, 75,861 bd. ft. for average quality and 64,988 bd. ft. for low quality.
Value by sale is reported in Figure 3. Total timber value sold was $6,567,046.60. Average sale value by type was $38,534,$30,725 and $15,578 respectively.
Average price by sale type is reported in Figure 4. The price reported is per 1000 board feet (MBF) of standing timber. To obtain a price per board foot, divide the price by 1000. An average price of $502.00 per thousand (MBF) is also the some as 50.2 cents per board foot. The average price reported for all sales and type was 46.0 cents per board foot stumpage. Price ranges by sale type are reported in Figures 5-7. Also below is the statistical summary for all three sale types.
