(Bloomberg) -- Lumber prices have soared to records. Demand for wood is skyrocketing. The shares of wood suppliers are surging.
And yet, trees themselves are dirt cheap in places like Louisiana, where timber supplies are plentiful.
The so-called stumpage fee, or what lumber companies pay to land owners for trees, for Louisiana pine sawtimber on March 31 was $22.75 per short ton, according to the latest data from price provider TimberMart-South. That’s the lowest since 2011.
An abundance of harvest-ready trees has kept stumpage fees extremely low across the U.S. South, home to half of the country’s production. Meanwhile, lumber futures are up 85% in 2021 because of soaring demand. Sawmills profit from the premium lumber commands over the stumpage fee -- think of it like the lumber crack spread.
Those margins are exploding. The spread between futures and stumpage for Louisiana pine, for example, has more than doubled just this year, topping $1,100 per 1,000 board feet.
In Alabama, the stumpage fees are slightly higher than Louisiana at $23.34 per short ton. But they’ve barely budged since 2016 and are half the price fetched in 2005.
In the futures market, lumber touched a record $1,326.70 per 1,000 board feet on Monday.
That sent the spread between futures and the Louisiana stumpage fee higher than $1,144 per 1,000 board feet on Monday, based on a calculation that assumes 8 short tons of logs per 1,000 board feet.
...
More:
https://finance.yahoo.com/news/lumbe...100000412.html
Connect With Us