Forest Products

Forest product updates

Industry finds reasons for optimism.

Lumber prices increased slightly following the presidential election. Many expect President Trump’s pro-growth policies to support residential construction as reflected in the 7% gain of the National Association of Home Builder’s Confidence Index in November. With that said, tariffs could prove to be a headwind for construction activity as they would raise costs at a time when affordability is a challenge. Tariffs may benefit the forest products industry by supporting higher lumber and log prices. The health of the housing market, and thus the forest products industry, will depend largely on mortgage rates, which continue to follow 10-year treasury rates higher.

Anecdotal reports suggest log prices have recently ticked up, particularly for large logs in the Willamette Valley and Southwest Oregon. Demand increased following the presidential election. Input costs appear to be falling, which should take some pressure off of timberland owners; however, many have reduced harvest levels in response to low prices. If this continues through 2025, margins for harvest and haul operators may begin to compress due to decreased workload.

Timberland values remain strong despite challenging log and lumber markets, potentially due to the long-term investment time horizon and non-commercial timber factors such as conservation and carbon sequestration.

Profitability

December 11, 2024

Forest product mills: Slightly profitable - Bullish 12-month outlook
Timberlands: Slightly profitable - Bullish 12-month outlook

Many expect lower mortgage rates in 2025, which should strengthen the housing market and improve lumber demand. Potential tariffs on imported lumber would increase lumber prices.

Input costs have started to decrease and log demand / prices should increase assuming the housing market recovers in 2025.