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North Carolina(Scrap Monster): The pine sawtimber prices decreased by 40% from 2007 to 2011, while stumpage prices decreased 41.8% and delivered prices fell by 38.8%, according to recent analysis by Forest2Market's Delivered Raw Material Price Benchmark.

The causes of the substantial drop in the larger classes of pine sawtimber prices are two fold, according to Stuber, who performed the analysis and also the Director of Operations at Forest2Market, "Market forces have placed both a floor and a ceiling on prices over the last five years. Pine pulpwood prices provided the floor and wider dimension lumber prices provided the ceiling."

As the housing and construction market declined, sawmills cut production and removed a significant supply of residual chips from the market. Pulp and paper mills were forced to increase their purchases of pine pulpwood to make up for this loss of supply. The increase in demand drove pine pulpwood delivered prices higher to an average of $29/ton by 2011, just $4/ton less than smaller sawtimber prices.

As the floor was being raised, however, the ceiling was being lowered, according to Stuber. "Let's consider mid-size dimension lumber prices. Using #2 grade, southern yellow pine as a barometer, the housing and construction market has valued 2x6 through 2x10 products less than 2x4 and 2x12 products."

Stuber continues," So as a floor is caused by pine pulpwood and as sawmills have lost profit on mid-sized lumber dimensions," says Stuber, "the natural reaction of the pine sawtimber price curve has been to hold steady at smaller log sizes while declining at a much faster rate for mid-sized and larger logs. Only if pine pulpwood prices drop significantly or value is created for wider lumber dimensions will we expect a change in the slope of the curve for 2012