Timber Market Report September 2020

It falls to me to write the first Timber Market Report in what is perhaps only the “end of the beginning” of the Covid-19 pandemic.

The immediate impact of the COVID 19 lockdown was severe but timber harvesting and processing certainly returned to a version of normality quicker than many other industries. Given the status of production forestry in the manufacture of critical products including pallets, medical packaging, biomass energy and indeed construction boards for the Nightingale hospitals, timber harvesting restarted and continued through lockdown relatively unimpeded, with the backing of the Scottish Government. A number of major sawmills and board manufacturers were offline for a period however most have now returned and order books are strong.

Since the gradual reawakening of the economy, standing timber prices have strengthened and have essentially regained all the lost ground pre-COVID-19. The past two weeks, perhaps last few days, have seen sawlogs prices reach (almost) unprecedented levels with a critical shortage in availability of sawlogs leading to sawmills competing hard for supply. The shortage stems largely from sawlog demand from Ireland where the felling approvals process has all but come to a halt. Additionally, strong US demand is soaking up Scandinavian volume which used to find a home in the UK. The situation in Ireland is worth a Google search for those with an interest and certainly shows the impact legislation can have when it is not adequately considered.  Overall, log prices are £20/t up from only a number of months previous.

Back in Scotland the market for the smaller end of the tree, generally utilised for biomass energy or board manufacture, is perhaps merely ticking along with prices down around £5/t from the peak of the last couple of years. This is based on the abundance of sawdust and chips available from the booming sawmill sector replacing use of small-diameter round timber. There is also an impact from the markedly poor wholesale energy price limiting industrial-scale biomass demand.

The exceptionally strong log price is more than replacing the relatively moderate biomass prices leading to excellent prices for standing timber overall, particularly “loggy” parcels. Only time will tell how long this will last in the midst of a global pandemic but as an industry, we will continue to make hay while the sun shines.

The current strong demand has, however, highlighted an issue common throughout many land-based industries – the age profile of our operators. With contractors working at or approaching capacity the availability of skilled machine and chainsaw operators is being pushed to its limits. This is only likely to become more severe given the impending exit from the industry of an ageing cohort of skilled machine operators, chainsaw operatives and wagon drivers. With a political focus on woodland creation, woodland carbon storage, biomass energy and a strong processing and logistics sector the industry does provide numerous opportunities. It is the responsibility of all those in the forestry sector to demonstrate the opportunities available to operatives to secure our industry into the future.

Ross Kennedy, Harvesting Director, RTS Forestry

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This article has been published in the Autumn 2020 edition of the Farm Woodland News.  Download a copy to access all articles.  Subscribe to receive newly published editions via email by using the form here.