What Can We Expect From The Timber Market in 2024

Its human nature. When we want to buy something, we want to time it when the market is low. When we want to sell something, we want to sell at the market high. So, if you sell your timber in 2024, are you selling it at a market high or low?

I think the best way to begin this conversation is to go back and look at the timber markets in 2023. No, lets back up a little further for context, because in the 30 years of selling timber, I have never witnessed as much market turbulence as I saw since 2020. During the first quarter of 2020, the timber market was good and we were busy. Then covid hit and the market for hardwood lumber plunged 25%. However, beginning in September of that year the market took off, and over the next 12 months lumber prices rose almost 70%. It was crazy and we were crazy busy. Then, in 2022 rising inflation and supply chain issues caused the market to drop, and it continued to slide throughout the year. Its always hard to sell in a down market because buyers (the ones I sell to) pay for the timber at the contract signing and don't like paying a price today for timber when its likely to be lower when they begin logging the timber.

So, back to 2023. The declining timber prices caused mills to lose money and consequently dozens of them shut down. This created a new problem, but it was not bad for forest landowners. The loss of production meant the remaining mills could not keep up with existing demand. Demand was low, but production was lower, and this caused prices to remain steady for most species and others to rise, especially, white oak. The average prices paid for my timber sales in 2023 were the highest of my career.

That has me optimistic for 2024. New housing starts increased in November, and inventory of existing homes sales is low. This will spur more new home starts. Mortgage rates on 30 year loans are below 7%, and if rates drop as they have reported, that will help as well. I have also had several sawmill owners tell me that China is back buying lumber- and the U.S. exports a lot of lumber. The last reason I am optimistic for 2024 is white oak. This species has gotten so high. Its the reason my average 2023 timber sales prices were better than any in my career. The lack of white oak supply, coupled with demand by veneer buyers, lumber buyers, and stave mills have been the reason for this species rise. Most woodlands have some white oak, but those who have 20-50% of this species are getting the best prices I have seen in my career. 2024 is an election year and anything is possible, but white oak will carry the day, and I expect average prices paid for timber to remain elevated.

Kraig Moore, ACF

1/16/2024