This stumpage 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�s forest products companies. Dr. Hoover�s report is published in the Fall issue of the Woodland Steward.

Stumpage price was obtained via a 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 periods from June 16, 2008 through June 15, 2009.

The results of this stumpage price survey are not meant as a guarantee 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.

WHAT ARE SEALED BID TIMBER SALES

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 inspect the timber and offer a price for said trees at a predetermined time and place. Under conditions determined in the bid notice, the owner then accepts or rejects the bids. Upon acceptance of the bids by the owner and the 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 timber sale. More detailed information on this process is available in Purdue publication FNR-111 �Marketing Timber� or FNR-138 �How to get the Most from Your Timber Sale�. These publications and others are available online at www.ces.purdue.edu/extmedia/fnr.htm.

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 determines 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.

CATEGORIES OF TIMBER REPORTED: 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 # 2 grade or better red oak, white oak, sugar maple, black cherry, or black walnut. The low quality sale has more than 70 percent of the volume in # 3 �pallet� grade or is cottonwood, beech, elm, sycamore, hackberry, pin oak, aspen, black gum, black locust, honey locust, catalpa, or sweet gum. The average sale is a sale that is not a low quality sale or a high quality sale as defined above.

SPECIES ADJUSTMENTS: In the 2008 report some minor adjustments were made in the categories from previous surveys. White ash was previously included as a component of the high quality timber sales and hickory was previously in the low quality group. No changes in the groups were made this year, so the 2009 data should compare well with the 2008 data.

REDUCTION IN SALES DURING THE 2008-2009 PERIOD: In 2009, 247 sales were reported compared to 339 sales in 2008 (283 were reported during the similar 12 month period reported in 2008 � the 2008 reporting period was 16 months). This adjustment of the reporting period was done so that the data could be as up to date as possible when sent to press. We had more consulting firms (16) submit data in 2009 than in 2008 (11 firms). Most of the consulting firms that reported in both years (9 firms) had fewer sales, approximately 80% from the year before. This reduction is in large part due to reluctance among some consultants to sell timber since December due to the economic downturn and its effect on the timber markets. The number of sales by quality type was 82 for high quality sales, 123 for medium quality, and 42 for low quality sales.

BIDDING REMAINS STRONG: In 2009 a total of 1,248 bids were received for the 247 sales. The average number of bids offered per sale was 5.1 bids for this period with 6.4 bids for high quality, 4.6 for medium quality (each showing a slight decrease from the 2008 report) and 4.2 for low quality (an increase from the 2008 report) (Figure 1). For 23 sales in 2009 that were very high quality (defined as sales with 5 percent or more of the estimated volume with potential white oak or black walnut veneer) the average number of bids was 6.4 � the same as for quality sales � down significantly from 8.9 last year. These figures continue to show that higher quality timber offered for sale increases buyer interest and the number of bids offered. This number has been fairly consistent since this survey began in 1999-2000. The reason for the decline in bidding for the medium and higher grades this year appears to be, at least in part, due to a drop in competition for a period in late 2008 to early 2009, possibly due to uncertainty over the economy and the subsequent effects on the timber markets. The volatility for the prices of the lower quality sales was less during this time, and therefore, demand remained fairly strong compared to the higher grades during much of this period.

REDUCTION IN VOLUME / VALUE SOLD, ESPECIALLY FOR HIGHER GRADES: A total stumpage volume of 19,256,439 board feet, Doyle (77% of 2008 report) was sold during the 2009 period � High 5,551,228 board feet (54% of 2008 report), Medium 10,746,917 board feet (91% of 2008 report), and Low 2,958,294 board feet (101% of 2008 report). Some consulting firms have commented that they have delayed some higher quality sales due to the economy and timber markets which likely contributed to the reduction in high quality sales and even medium quality sales offered during the 2008-2009 period. The average volume per sale was 67,698 board feet for high quality, 87,373 board feet for average quality, and 70,436 board feet for low quality, similar to last years. Total timber value sold in 2009 was $7,278,302. Total value by type was $3,176,669 for high, $3,434,688 for medium, and $666,945 for low.

AVERAGE QUALITY APPEARS TO BE IMPACTED THE MOST FOR THE YEAR: The average stumpage price for 2009 for high quality was $572 ($549 median price), $320 ($314 median) for average, and $225 ($228 median) for low. The change from 2008 to 2009 shows a drop of 3% (mean and median price) for high quality, a drop of 16 % (mean) and 13% (median) for average, and an increase of 6% (mean) to no change (median) for low quality. The variance was similar for both 2008 and 2009.

EFFECTS OF THE ECONOMIC DOWNTURN: Due to the drastic change in the economy at the end of 2008, we decided to collect more information on the date of the timber sale. With this information we tried to determine if there was a drop in the price after November. Data collected from the nine consulting firms that conducted a comparable number of sales during the entire period were evaluated.

EFFECTS ON HIGH QUALITY: Prior to the end of November 2008 a total of 37 high quality sales were sold with 2,526,077 board feet for an average stumpage price of $652 ($616 median). Twenty sales were sold from December 1, 2008 thru the end of reporting (June 15, 2009) with a volume of 975,404 board feet and average stumpage price of $524 ($520 median). The stumpage price after December was 80% (mean) and 84% (median) of pre-December prices for high quality timber.

EFFECTS ON MEDIUM QUALITY: Prior to the end of November in 2008 a total of 47 medium quality sales were sold with 4,217,925 board feet for an average stumpage price of $353 ($352 median price). Thirty-eight sales were sold from December 2008 thru the end of reporting (June 15, 2009) with a volume of 4,028,025 board feet and average stumpage price of $285 ($290 median). The stumpage price after December was 81% (mean) and 82% (median) of pre-December prices for medium quality timber.

EFFECTS ON LOW QUALITY: Prior to the end of November in 2008 a total of 16 low quality sales were sold with 1,279,274 board feet for an average stumpage price of $242 ($242 median). Thirteen sales were sold from December 2008 thru the end of reporting (June 15, 2009) with a volume of 614,665 board feet and average stumpage price of $226 ($186 median). The stumpage price after December was 93% (mean) and 77% (median) of pre-December prices for low quality timber.

The weighted average of the stumpage price is the total value ($) for each sales group (high, average, low) divided by the total volume by sales group (Figure 2). The median price is the amount where half of the sales are higher and half are lower (Figure 3). 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 $378 per thousand (MBF) is the same as 37.8 cents per board foot stumpage. The average stumpage price for high quality sale was $572/MBF, $320/MBF for average quality, and $225/MBF for low quality. Price ranges by sale type are reported in Figures 4 � 6 (additional table showing prices for high quality sales that reported less than 5 % veneer). Page 6 has a statistical summary for all three sale types. When adjusting for the price of the exceptional sales (sales with 5% + reported veneer) the average stumpage price for a high quality sale was $534/MBF with a median stumpage price of $502/MBF. The variance also was reduced significantly to $37/MBF.

SUMMARY: Based on the data collected high quality timber and low quality timber held fairly well through last summer and fall with both dropping after December. Medium quality seems to have begun to drop sometime last summer or fall and continued to drop after December. Most of the decline occurred late last year or early this year and indications are that the current prices have stabilized. Demand or at least the number of bids for the timber has generally remained good after a drop that occurred when the timber prices were the most volatile late last year into early this year.

The comment section below is offered to our readers by the consulting foresters who participated in this survey:

• Several comments from firms that have been postponing sales, where possible / appropriate since August, November, and/or December.

• Demand for standing timber has declined somewhat while the value for standing timber has declined greatly. Presently sales are fairly steady.

• Substantially lower prices for all standing timber will likely be the norm for many years to come and stand a chance to never reach prices seen in the past.

• Stumpage is moving, but at vastly reduced prices.

• If you are waiting for standing timber prices to return to 2007 and 2008 levels before selling timber, you will probably never sell your timber.

• Loggers are struggling, having to cut timber now that was purchased for a high price last year. Have extended some contracts to help buyers until markets strengthen.

• Wet weather this spring has reduced delivered logs and has kept some mills from cutting off loggers.

• High grade white oak and walnut and larger diameter material still in demand.

• I have seen more interest from some mills as of May of this year, esp. good Tulip.

• Black cherry took the biggest hit with the recession, down in my sales $0.35 to 0.45/BF, so I am not marking healthy, good quality cherry. White oak and sugar maple also lost about $0.20/BF, since November. I am hoping prices come up this fall.

• Several comments about sales heavy to red / black oak doing poorly.

• Southern Indiana, Kentucky, and Ohio received quite a bit of damage from Hurricane Ike. If you have blown over timber, I suggest having a timber sale to remove the blown over timber, dying timber, and mature white ash before emerald ash borer hit them.

• Now is a good time for landowners to apply for timber stand improvement (TSI) cost share money as funds are readily available thru the local USDA offices.

 

 

 

Consulting Foresters that have contributed to this report in alphabetically order include: Jim Akard, Arbor Terra Consulting (Mike Warner), Christopher Egolf, Crowe Forest Management LLC (Tom Crowe), Forest Management Services, Inc. (Larry Owen), Gandy Timber Management (Brian Gandy), Gregg Forestry Services (Mike Gregg), Haney Forestry, LLC (Stuart Haney), Haubry Forestry Consulting, Inc. (Rob Haubry), Hudson Forestry (Jerry Hudson), Meisberger Woodland Management (Dan Meisberger), Multi-Resource Management, Inc. (Fred Hadley, Thom Kinney, Justin Herbaugh), North Slope Forestry (Don Duncan), Stambaugh Forestry (John Stambaugh), Tree Inc. (Tim Martin), Turner Forestry, Inc. (Stewart Turner), and Wakeland Forestry Consultants, Inc. (Bruce Wakeland).