Log markets steady
Winter weather came early this season and mountain snowpack is above average. This may slow log flow; however, mill inventories are generally strong. The Weyerhaeuser union workers strike ended in October and tightened markets in Washington and Oregon. The Oregon Board of Forestry approved more than 100 changes to the Forest Practices Act, impacting timber harvest activities on more than 10 million acres of private and non-federal forests in the state, removing approximately 270 million board feet of volume.
Trucking and rail capacity remain tight
Spare trucking and rail capacity remain tight, but conditions appear to be improving as consumers demand fewer goods (see Crop Inputs Snapshot for more insight). Mills continue to face challenges in procuring transportation to retailers and are selecting rail whenever possible; however, conditions are showing improvements.
High-cost lumber mills curtail operations
The cost to produce lumber has risen since 2019. With current prices significantly down from March 2022 highs (see Pricing section below), mills located within high-cost wood baskets have fallen below break-even levels, particularly in British Colombia, and several have decided to curtail operations. There have been a handful of curtailment announcements in other North American operating regions as well. These trends will reduce lumber supply and help to set a floor for prices.
Residential improvements to support lumber demand
Rising interest rates and challenging economic conditions are affecting home affordability and consequently, single family home construction is falling. Conversely, lumber sales out of big box retailers have been strong. Residential improvements are the largest demand driver and may help offset falling demand from home construction if economic challenges persist.