2021 Timber Outlook for Arkansas - Dr. Nana Tian Dr. Matthew Pelkki - University of Arkansas at ...
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2021
Timber Outlook for Arkansas
Dr. Nana Tian
Dr. Matthew Pelkki
1/26/2021
Authors
Dr. Nana Tian is an Assistant Professor of Forest Economics in the College of
Forestry, Agriculture and Natural Resources. She has been at UAM since 2019 and
previously worked as the Forest Economist for the Texas A&M Forest Service. Dr.
Tian’s teaching and research involves forest economics and policy, private
landowner certification and forest management, and valuation of natural
resources.
(870) 460-1894 tian@uamont.edu
Dr. Matthew Pelkki is a Professor and George Clippert Chair of Forestry in the
College of Forestry, Agriculture and Natural Resources. He has been at UAM since
2001. Dr. Pelkki’s teaching and research work involves forest-based economic
development, forest management, and forest products and markets.
(870) 460-1949 pelkki@uamont.edu
Copies of this publication are available in electronic format at:
Need link address here
or by contacting the authors at:
The University of Arkansas at Monticello
College of Forestry, Agriculture, and Natural Resources
P.O. Box 3468
Monticello, AR 71656-3468
1
Executive summary
This report summarizes and identifies the status of Arkansas timber industries, potential impacts of
COVID-19 pandemic on forest products markets, and opportunities for further economic development.
The following list highlights the major findings of this report.
Economic Context:
o There was an economic downturn in early 2020 because of the COVID-19 pandemic.
o Energy prices including crude oil price decreased in 2020.
o Despite the pandemic, housing starts showed strong growth in 2020.
o Remodeling and improvement expenditures increased in 2020, with a total estimation of $220
billion, which is 20% above 2019 levels.
o U.S. gross domestic product (GDP) showed a V-shaped decline and recovery in 2020 and in
actual dollars, it currently stands at 2017 levels.
o Unemployment has not recovered to pre-pandemic levels, but should continue to fall in 2021.
o A steady but slow rate of inflation (1.5% per year) over the last five years will continue.
o The Federal Reserve cut interest rates substantially in 2020.
Mills Openings & Closings:
o Georgia-Pacific (G-P) closed parts of its plant at Crossett and a particleboard plant in Hope, as
well as the Sparkle paper towel line.
o Highland Pellets LLC, a Pine Bluff-based wood pellet producer is expanding and upgrading.
o Shandong Sun Paper Co. officially declared the termination for the proposed Sun Bio linerboard
mill at Arkadelphia, Arkansas (TMS AR1) in 2020.
o Koppers Inc. announced it would invest at least $23 million to modernize the North Little Rock
plant in the coming two years since 2020.
o Structurlam Mass Timber Corporation, located at Conway, AR, will spend $90 million to
purchase, retrofit and equip a former steel plant.
o Texas CLT (cross-laminated timber) located in Magnolia, AR, earned certification to manufacture
CLT panels for the building market.
Logging:
o Logging costs increasing South wide in 2020 (1.5%) but in Arkansas the increase in costs is much
higher (6.8%).
o Logger capacity limited for family-owned forestland in Arkansas. REIT and TIMO and other
institutional ownerships are using most of logging capacity.
2Lumber, Panel, and Pulp & Paper Markets:
o Softwood lumber prices, as indicated by the Random Lengths Southern Composite price,
averaged $566/MBF in 2020, which was up 51% from the 2019 average.
o Lumber production costs were up in 2020 except for the initial surge of the pandemic.
o Labor, energy, and wood fiber input costs for industry are expected to rise slowly in 2021.
o Producer price indicators for lumber and wood products and pulp and paper are declining,
reflecting low wood fiber and energy costs in these sectors.
o Producer price indicators for maple and hardwood flooring increased steadily in the last half of
2020, reflecting the increasing demand and increased costs of higher-grade hardwood lumber.
o The framing lumber composite prices have increased by nearly 100% since 2010 and 2020 ended
the year with a 50% year-to-date increase in softwood lumber prices.
o We expect southern lumber production to recover in 2021 in response to sustained housing
demand and strong softwood lumber markets.
o Hardwood lumber production in the South and Arkansas fell to exceptionally low levels in 2020.
Stumpage Prices:
o Stumpage prices in general in 2020 faced weaker markets and continue to reflect the abundance
of wood resources in the South and in Arkansas.
o Stumpage prices for all five major products were down in 2020.
o The annual average price for pine sawtimber remained below $25 per ton.
o Pine chip-n-saw prices continue to fall in South-wide and Arkansas, but Arkansas prices have
been consistently lower than the South-wide average.
o Pine ply logs and poles continue to see stumpage declines in Arkansas and South-wide, with the
Arkansas stumpage markets for these products tracking closely with the South-wide averages.
o Pulpwood prices were down in 2020. Pine pulpwood prices in Arkansas lower than those South-
wide, and Arkansas hardwood pulpwood prices fell nearly $3 per ton (-26%) from 2019.
o Cut and haul prices averaged $20.22 per ton across Arkansas for all classes of timber from 2015-
2020. South wide, the cut-and-haul cost averaged $19.93 per ton.
Potential Markets:
o Wood pellets production will grow with increasing international demanding in biofuel.
o With the popularity and acceptance of sustainable green energy worldwide, there is a likely
increased domestic market for woody biomass based energy.
o Demand for engineered timber will increase with further investments and improvements of
facilities, such as StructurLam and Texas CLT.
o There will not be much change for stumpage prices in 2021 given the oversupply of timber
resources.
31 Introduction pandemic. Based on the U.S. Census Bureau
report, privately owned housing starts at a
The American economy slowly recovered from
seasonally adjusted annual rate in April (1.07
the 2008 Great Recession over the past few
million) down 20.8% from March rate (1.36
years with a relatively strong trend. However,
million). Housing starts rebounded in the
the COVID-19 coronavirus pandemic caused a
summer time and surged in December because
sharp decline in economic activities and forced
of the historically low mortgage rates and pent-
another economic recession this year.
up demanding. According to the latest statistics,
According to the report of “The U.S. Entered a
housing starts in December were at a seasonally
Recession in February”, the United States
adjusted annual rate of 1.669 million, which is
economy officially entered a recession in
5.8% above the November rate.
February 2020, bring the longest economic
expansion on record to an end. The economic Softwood lumber prices had historic increases
growth was uneven in 2020 because of the as remodeling and housing demand outpaced
COVID-19 pandemic. To be specific, there was a production in 2020. These record price levels
sharp drop in the growth of real gross domestic were driven by better-than-expected lumber
product (GDP) in the first (-5.0%) and second demand, as homeowners increased repair and
quarter (-31.4%) of 2020 as a result of the shut remodeling expenditures and were aggressive
down in March and an unprecedented in building new homes. To be specific,
magnitude of the decline in employment and remodeling and improvement expenditures had
production. There was a 7.5 percent rise in GDP a total estimation of $220 billion in 2020, which
in the third quarter of 2020 and if not is 20% above ($37 billion) 2019 levels.
supported by further fiscal relief and stimulus in
Georgia-Pacific closed parts of its plant at
2021 leaves future economic conditions
Crossett that included the bleached board
uncertain.
operations, as well as the extrusion plant,
Forest products industry has a strong woodyard, pulp mill, as well as a significant
connection with the economy through housing, portion of the energy complex. In addition, the
manufacturing etc. Arkansas is third most G-P company shut down a particleboard plant
timber-dependent economy in the nation and in Hope and the Sparkle paper towel line.
forestry is one of the Arkansas’s top Totally, those closed operations affected
commodities. Timber and forest products around 655 workers in this region.
industry is heavily integrated with the whole
Highland Pellets LLC, a Pine Bluff-based wood
economy through a variety of economic
pellet producer, declared an expansion and
activities such as housing, manufacturing, and
upgrade for its plant together with Orion Energy
customer goods. Likewise, timber industry was
Partners LP. This is a long-term contract with
also imperiled by the worldwide pandemic in
capital investment from Orion Energy is $135
2020.
million. Once the upgrade completed, it will
U. S. housing starts especially the single-family have the capacity of producing 675,000 metric
construction is the largest wood products tonnes of sustainably sourced wood pellets per
consuming sector had experienced month-over- year.
month fluctuation in 2020. The aggregate U.S.
In 2016, a Chinese company proposed to open
housing construction markets in March and
Sun Paper, a $1.5 billion paper mill in Clark
April were negative on a monthly basis due to
County. The mill would have created hundreds
the economy lock-down and COVID-19of direct and indirect jobs. However, this certification, Texas CLT products are now
proposal was terminated in 2020 because of the available to the commercial building market.
trade war between these two countries. This facility has been producing CLT panels since
2019 but limited to crane mats, bridge panels,
Koppers Inc., as a global provider of treated
and shoring wall markets without this TP
wood products, announced it would invest at
certification.
least $23 million to modernize the North Little
Rock plant in the coming two years since 2020. 2 General Economic Indicators
The current 157-acre plant is capable of
US gross domestic product showed a V-shaped
processing and treating around 1.5 million
decline and recovery in 2020 (Figure 1) and in
railroad crossties. This new investment will
actual dollars, it currently stands at 2017 levels.
bring more job opportunities and more
We expect, with additional economic stimulus
production such as switch ties, road crossings
and widespread distribution of effective
and framed bridged timbers.
vaccines that the economy should recover to
Structurlam Mass Timber Corporation, located pre-pandemic levels by the end of 2021, with
at Conway, AR, will spend $90 million to GDP growth of 5-6% in 2021 and 2022. Long-
purchase, retrofit and equip a former steel term, GDP growth is expected to be 2-3%, as
plant. This investment will create 130 new jobs indicated by the trend-line in Figure 1.
and will source softwood lumber from
The consumer price index (CPI) shows a steady
Arkansas-grown Southern Pine trees.
but slow rate of inflation (1.5% per year) over
The Magnolia, Arkansas cross-laminated timber the last five years (Figure 2). The Federal
(CLT) facility, Texas CLT, has been certified by Reserve cut interest rates substantially in 2020
Timber Products (TP) in 2020. Having this to stimulate the economy (Figure 3). There is
35
30
GDP Percent Change from Previous Quarter
25
20
15
10
5
0
-5
-10
-15
-20
-25
-30
-35
Jun-14 Oct-15 Mar-17 Jul-18 Dec-19
Figure 1. USA GDP Growth by quarter, 2015-2020.
1Consumer Price Index, Index 1984=100 265
260
255
250
245
240
235
230
Sep-14 Apr-15 Oct-15 May-16 Nov-16 Jun-17 Dec-17 Jul-18 Feb-19 Aug-19 Mar-20 Sep-20
Figure 2. Consumer price index, all urban consumers, all items, seasonally adjusted (1984=100).
6.00
5.00
Annual Prime Interest Rate
4.00
3.00
2.00
1.00
0.00
Aug-15 Dec-16 Apr-18 Aug-19 Nov-20 Mar-22
Figure 3. US Bank prime loan rate, 2015-2020.
no indication of increased inflation of more Unemployment should continue to fall in 2021,
than 2-3% in 2021, and as such, the Federal and by the end of year, we expect
Reserve has shown no desire to raise rates. unemployment levels to reach 4 to 5 percent.
Capital will continue to be make available to the Most of these jobs will be in the service sector
economy through 2021. in urban areas; the current increased labor pool
is not located in rural areas or in manufacturing
Unemployment has not recovered to pre-
sectors, so we do not expect that tight labor
pandemic levels (Figure 4), but the projected
markets in rural manufacturing areas like wood
stimulus and vaccinations should continue to
products is likely to improve.
open the economy by summer and fall of 2021.
216.0
14.0
Unemployment Rate, Seasonally
12.0
10.0
Adjusted
8.0
6.0
4.0
2.0
0.0
Aug-19 Oct-19 Dec-19 Jan-20 Mar-20 Apr-20 Jun-20 Aug-20 Sep-20 Nov-20 Jan-21
Figure 4. USA Unemployment rate, August 2019 to December 2020.
Despite the pandemic, housing starts showed increase, which should sustain a strong housing
continued strong growth in 2020, fueled by market with 1.5-1.6 million new starts in 2021.
years of pent-up demand and stimulated by
lowered interest rates (Figure 5). We expect
lumber prices to ease somewhat and supply
1800
Housing Starts, Seasonally Adjusted Rate
1600
1400
1200
(thousands)
1000
800
600
400
200
0
Dec-14 Apr-16 Sep-17 Jan-19 Jun-20
Figure 5. US Housing starts, seasonally adjusted rate in thousands (2015 through 2020).
3Crude oil price experienced a V-shaped decline The framing lumber composite prices have
and recovery in 2020 (Figure 6) and currently, it increased by nearly 100% since 2010 and 2020
rises steadily throughout December and is ended the year with a 50% year-to-date
around $50/barrel. This upward price increase in softwood lumber prices. (Figure 10).
movement of crude oil is, on one hand, ascribed A very similar trend followed by the structural
to expectation of economic recovery with panel composite price (Figure 11) in 2020. The
vaccinations of COVID-19. On the other hand, US Commerce Department recently announced
the production cuts are expected to continue lower countervailing/anti-dumping duties on
this year, suggesting that crude oil price is likely Canadian lumber from 20.23% to 8.99%; this
to continue increase. should increase the supply and lower the cost
of framing lumber available to builders in 2021.
3 Forest Products Indicators
We expect southern lumber production to
Producer price indicators for lumber and wood recover in 2021 in response to sustained
products (Figure 7) and pulp and paper (Figure housing demand and strong softwood lumber
8) had been declining in 2019, reflecting low markets.
wood fiber and energy costs in these sectors.
Hardwood lumber production in the South and
Lumber production costs were up in 2020
Arkansas fell to exceptionally low levels in 2020
except for the initial surge of the pandemic.
with low demand for lumber due to the
Trends in labor, energy, and wood fiber input
pandemic, but did show growth in late 2020
costs for industry are expected to rise slowly in
(Figure 12), reflecting demand from the
2021. The PPI for maple and hardwood flooring
surprising end of year strength in the US
dropped in late 2019 and early 2021, but
housing market. Supply of most species and
increased steadily in the last half of 2020
grades are adequate to current demand,
(Figure 9). This reflects the increasing demand
however, yard inventories are low, especially in
for flooring and millwork for new housing, and
red and white oak. Oak demand is rising faster
increased costs of higher-grade hardwood
than other species, and fueled by low
lumber throughout the eastern United States.
inventories, prices are likely to move upward in
90.0
70.0
Crude Oil Price ($/barrel)
50.0
30.0
10.0
-10.0
-30.0
-50.0
Dec-18 Apr-19 Jul-19 Oct-19 Jan-20 May-20 Aug-20 Nov-20 Mar-21
Figure 6. Crude oil price, January 2019 to December 2020.
2021.
4PPI Lumber and Wood Products Price 260
255
250
Index, 1982=100
245
240
235
230
Aug-16 Mar-17 Sep-17 Apr-18 Oct-18 May-19 Dec-19 Jun-20 Jan-21
Figure 7. Producer price index for lumber and wood products, 2017-2020 (1982 = 100).
250
Producer Price Index by Pulp, paper, and Allied
200
products: Wood Pulp, 1982 = 100
150
100
50
0
Jan-16 Jul-16 Feb-17 Aug-17 Mar-18 Sep-18 Apr-19 Nov-19 May-20 Dec-20 Jun-21
Figure 8. Producer price index for pulp, paper, and allied products (1982=100).
5200
Producer Price Index by Oak and Maple
Hardwood Flooring, 1984 = 100
195
190
185
180
175
Sep-15 Apr-16 Oct-16 May-17 Dec-17 Jun-18 Jan-19 Jul-19 Feb-20 Aug-20 Mar-21
Figure 9. Producer price index for oak and maple flooring (1984 = 100).
600
Framing Lumber Composite Price
500
400
300
200
100
0
2008 2010 2012 2014 2016 2018 2020 2022
Figure 10. Framing lumber composite index, 2010-2020.
6850
Structural Panel Composite Price ($/MBF)
800
750
700
650
600
550
500
Jul-20 Aug-20 Sep-20 Sep-20 Oct-20 Nov-20 Nov-20 Dec-20 Jan-21
Figure 11. Structural panel composite price, weekly, August to December 2020.
3.4
3.3
Lumber Production (BBF)
3.2
3.1
3.0
2.9
2.8
2.7
Jul-20 Jul-20 Aug-20 Sep-20 Sep-20 Oct-20 Nov-20 Nov-20 Dec-20
Figure 12. USA framing lumber production (BBF), July to December 2020.
7Hardwood lumber production in the South and Considering the continued strong demanding,
Arkansas fell to exceptionally low levels in 2020 lumber exports are expected to continue
with low demand for lumber due to the increase in 2021.
pandemic, but did show growth in late 2020
4 Stumpage Prices in Arkansas and the South
(Figure 12), reflecting demand from the
surprising end of year strength in the US Stumpage prices in general in 2020 faced
housing market. Supply of most species and weaker markets and continue to reflect the
grades are adequate to current demand, abundance of wood resources in the South and
however, yard inventories are low, especially in in Arkansas. In most categories, prices received
red and white oak. Oak demand is rising faster by landowners has continued to decline over
than other species, and fueled by low the last five years. Only mixed hardwood
inventories, prices are likely to move upward in markets seem to show some steady increases
2021. (Figure 25), as high-oak prices are initiating
some substitution in flooring, millwork and
The trade war between the U.S. and China has
furniture markets.
generated a variety of global economic
uncertainty. Framing lumber exports decreased Pine sawtimber prices continued to reflect
significantly due to the trade war and U.S. logs markets with an oversupply of fiber (Figure 14),
and lumbers subjected to 20-25% tariffs. but in 2019 and 2020, stumpage prices in
Specifically, exports of Southern yellow pine Arkansas, historically less than the South-wide
(SYP) lumber down 12% and hardwood lumber average, increased by about 10% to equal the
exports decreased about 9% in 2020 from 2019 South-wide price. Within Arkansas, pine
levels. Detail in 2020 lumber exports, it sawtimber stumpage prices in the Southern half
decreased in early-2020 because of COVID-19 of the state average $2.45 per ton more on the
pandemic and economy lock down (Figure 13) stump than in the North (Figure 15).
and then had an increase trend with economy
open-up and global high demanding.
0.080
0.079
0.078
0.077
Lumber Export (BBF)
0.076
0.075
0.074
0.073
0.072
0.071
0.070
0.069
Jul-20 Jul-20 Aug-20 Sep-20 Sep-20 Oct-20 Nov-20 Nov-20 Dec-20
Figure 13. USA Framing lumber exports, monthly, August to December 2020.
8Pine Sawtimber Stumpage
$26
$25
$ per short ton
$24
$23
$22
$21
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 14. Pine sawtimber stumpage prices in South-wide and in Arkansas, 2015-2020.
Arkansas Pine Sawtimber Stumpage
$28
$27
$26
$ per short ton
$25
$24
$23
$22
$21
$20
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 15. Arkansas pine sawtimber stumpage prices by north and south regions, 2019-2020.
Pine chip-n-saw prices continue to fall in South with the Arkansas stumpage markets for these
wide and in Arkansas, but Arkansas prices have products tracking closely with the South-wide
been consistently lower than the South-wide averages (Figure 18 and 19). Regionally, there is
average and in 2020, Arkansas prices for CNS very little difference in the stumpage price for
were $2.60 less per ton the South-wide average ply logs (Figure 20) and the Arkansas pole
(Figure 16). Within the state, stumpage prices market which exists primarily in the southern
are very similar in the North and South (Figure portion of the state, showed weaker markets in
17). 2020 (Figure 21).
Pine ply logs and poles continue to see
stumpage declines in Arkansas and South-wide,
9Pine Chip-N-Saw Stumpage
$18
$17
$ per short ton
$16
$15
$14
$13
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 16. Pine chip-n-saw stumpage prices South-wide and Arkansas averages.
Arkansas Pine Chip-N-Saw Stumpage
$17
$16
$15
$ per short ton
$14
$13
$12
$11
$10
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 17. Pine chip-n-saw prices in south and north Arkansas regions, 2019-2020.
10Pine Ply Logs Stumpage
$32
$31
$ per short ton
$30
$29
$28
$27
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 18. Pine ply log stumpage prices South-wide and Arkansas averages.
Pine Poles Stumpage
$50
$48
$ per short ton
$46
$44
$42
$40
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 19. Pine pole stumpage prices South-wide and Arkansas averages.
11Arkansas Pine Ply Log Stumpage
$37
$35
$33
$ per short ton
$31
$29
$27
$25
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 20. Pine ply log stumpage prices in south and north Arkansas regions, 2019-2020.
Arkansas Pine Pole Stumpage
$50
$45
$ per short ton
$40
$35
$30
$25
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas
Figure 21. Pine pole stumpage prices in south region, 2019-2020.
12Over the last five years, pine pulpwood prices in economic impacts of the pandemic certainly
Arkansas have averaged $2.66 less per ton than slowed demand for hardwood stumpage in
the South-wide average stumpage price (Figure 2020 where production at Arkansas mills fell
22). Pine pulpwood prices continue to reflect substantially. The growth of hardwood growing
strong supply and weak demand in both stock in the state continues to exceed demand
Arkansas and South-wide (Figure 23). and thus exerts a general downward pressure
Regionally, pine pulpwood markets show very on stumpage prices. However, much of this
little difference between the northern and growth is concentrated in lower quality logs and
southern portions of the state (Figure 23). This trees. Stumpage prices for quality red and
reflects a very limited market for pine pulp in white oak and ash should bring substantial
the north that typically only exists where low- premiums over the prices shown in Figures 24
cost transportation is available to southern and 25. Demand for pallets, and containers is
paper mills. trending upward with the economic recovery
and increased durable goods shipments.
Oak and hardwood stumpages prices remain
Crosstie demand has changed very little in
substantially higher than pine prices (Figures
2020, but demand appears stronger west of the
24-26). Historically, Arkansas stumpage prices
Mississippi River.
for hardwoods have been higher than the
South-wide average although in 2020, the gap Cut and haul prices averaged $20.22 per ton
in prices has declined, and the stumpage prices across Arkansas for all classes of timber from
in Arkansas for hardwood pulp fell to match the 2015-2020. South wide, the cut-and-haul cost
South-wide average. Regionally within averaged $19.93 per ton. Costs to harvest and
Arkansas, hardwood stumpages prices are very transport roundwood in Arkansas did increase
similar, and have dropped substantially since by 6.8% in 2020, compared to a 1.5% average
2019 (Figures 27-29). Some of the hardwood increase in the same costs South-wide.
price fluctuations observed in the past two
years have been weather related, but the
Arkansas Pine Pulp Stumpage
$11
$10
$9
$ per short ton
$8
$7
$6
$5
$4
$3
$2
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 22. Pine pulpwood stumpage prices in south and north Arkansas regions, 2019-2020.
13Pine Pulp Stumpage
$14
$12
$ per short ton
$10
$8
$6
$4
$2
$0
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 23. Pine pulpwood stumpage prices South wide and Arkansas averages, 2019-2020.
Oak Sawtimber Stumpage
$60
$55
$ per short ton
$50
$45
$40
$35
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 24. Oak sawtimber stumpage prices South wide and Arkansas averages, 2019-2020.
14Mixed Hardwood Sawtimber Stumpage
$41
$39
$37
$ per short ton
$35
$33
$31
$29
$27
$25
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 25. Mixed hardwood sawtimber stumpage prices South wide and Arkansas averages, 2019-2020.
$14 Hardwood Pulp Stumpage
$12
$ per short ton
$10
$8
$6
$4
$2
$0
2014 2015 2016 2017 2018 2019 2020 2021
Arkansas State Wide South-wide
Figure 26. Hardwood stumpage prices South wide and Arkansas averages, 2019-2020.
15Arkansas Oak Sawtimber Stumpage
$65
$60
$55
$ per short ton
$50
$45
$40
$35
$30
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 27. Oak sawtinmber stumpage prices in south and north Arkansas regions, 2019-2020.
Arkansas Mixed Hardwood Sawtimber Stumpage
$50
$48
$46
$44
$ per short ton
$42
$40
$38
$36
$34
$32
$30
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 28.Hardwood sawtimber stumpage prices in south and north Arkansas regions, 2019-2020.
16Arkansas Hardwood Pulp Stumpage
$21
$19
$17
$ per short ton
$15
$13
$11
$9
$7
$5
Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Sep-20 Jan-21 Apr-21
South Arkansas North Arkansas
Figure 29. Hardwood pulp stumpage prices in south and north Arkansas regions, 2019-2020.
5 Outlook for 2021 and 2022 process or by natural disasters like hurricanes
and tornados. Those woody materials and
Wood pellets are source of renewable energy
biomass is a huge source for green energy
and they are produced from sawdust and
production. There is an increase awareness and
ground woody materials. There will be a
acceptance of green energy among the public.
continued increase in the wood pellet market
According to the U.S. Energy Information
and the global market size is predicted to reach
Administration in latest Short-Term Energy
US$23.604 billion in 2025. Standardized wood
Outlook on Sept. 9. The electricity generated
pellets provide a promising production
from wood biomass is 12 billion kilowatt hours
potential, which bring a big rise of trade across
(kWh) in 2020 and this number will increase to
the global. Wood pellets have numerous
14.4 billion in 2021.
applications, which could boost the worldwide
demanding. One common application of wood There will be a growth in the demanding of
pellets is being utilized as solid biofuel in engineered timber with increasing investment
automatic stoves and boilers. Industrial wood and improvement of production facilities. For
pellets could be used as a substitute for coal in example, Structurlam Mass Timber Corporation
power plant and reduce greenhouse gas announced further investments in their
emission. Implementation of the European equipment and Magnolia Arkansas Cross
Union Renewable Energy Directive is a Laminated Timber (CLT) facility will be qualified
promising indicator of global wood pellet to produce commercial building products with
market and as reported, around 6 million tons the Timber Products certification. Those
of wood pellets were traded between U.S. and investments will increase specified timber
EU member countries in 2018. demanding and bring about more job
opportunities.
Woody biomass is a potential raw material to
produce green energy in the forms of heat and Paper markets and pulpwood demand by paper
electricity. Every year, a significant volume of mills will remain relatively stable in 2021. With
wood biomass is removed throughout thinning Green Bay Packaging increasing the use of virgin
17fiber in its Morrilton mill, there will be some
increased demand on logging and trucking in
the region, but most of this increased supply is
expected to come from company-owned
woodlands. Demand for packaging and
shipping materials will reflect the recovering
economy, and an increase in use of paper in
shipping, restaurants, groceries, and health care
will keep this industry sector stable in 2021.
Regarding stumpage price, we will not see big
changes in 2021 and even 2022 considering the
strong supply of wood resources in Arkansas
and the South. Stumpage prices in Arkansas
have been fluctuated over the past five years
and experienced an overall decrease in 2020
under the impact of COVID-19. When compare
average stumpage prices between Arkansas and
the South, Arkansas oak and hardwood
stumpage prices remained higher than the
South. Meanwhile, oak and hardwood
stumpage prices in both Arkansas and the South
continued to be higher than pine stumpage
prices. Given the abundance of timber supply,
stumpage prices in 2021 and the near future
will keep flat as previous years especially for
pine pulpwood.
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