Stumpage prices for Southern softwood sawtimber look set to rise, reaching inflation-adjusted price levels in 10 years that haven't been seen since the Great Recession, a new research study predicts.

The just-released report, Timber Supply Dynamics in the U.S. South, is a joint project of Forest Economic Advisers and Timberland Appraisal. The authors credit the expected price gain to several factors, including a growing economy, increased housing starts, and issues that will crimp supplies of species grown outside Dixie.

"Southern timber markets are expected to finally begin a meaningful price recovery over the next 15 years," the study declares. "Rising demand by stronger solid wood product markets will push harvest levels on the South's softwood resource above growth and end the expansion in inventory levels. This will create enough pressure on timber markets to support rising prices."

On a peak-to-peak basis, sawtimber stumpage prices will increase between 10% and 16% depending on the region, the study's executive summary says. That will be welcome news for an industry that is experiencing some of the lowest inflation-adjusted prices they've seen in 35 years. In part because of the last decade's housing crash, softwood timber inventories in the South are 20% above where they were 10 years ago, while harvests are 8% below.

There are nearly 194 million acres of woodlands between east Texas and Virginia. Of that total roughly half is in primarily hardwood territory, 23% is in planted pine woods, 14% is in natural pine woods, and 13% is in woods that have both oak and pine. Just a dozen years ago, there was more natural than planted pine, but extensive investment changed that ratio.

FEA and Timberland Appraisal based their forecasts on several assumptions:

  • Real gross domestic product growth will average 2.1% annually.
  • The housing starts rate will rise by about 100,000 units per year, reaching 1.7 million units in 2021, then slumping a bit before recovering to an average of 1.56 million annually from 2021 to 2030.
  • The lack of available timber supply elsewhere will lead to more demand for Southern-grown wood.

Partly from this, the study estimated that U.S. softwood lumber consumption will rise 25% to a peak of 58 billion board feet by 2022, while demand for oriented strand board will rise 36% to 26 billion square feet of product.