There’s a spring in the step of those involved in the forestry industry in New Zealand as prices are on the way up. Sources: Yahoo Finance, Fairfax NZ News, Stuff
Newstalk ZB business correspondent Roger Kerr said prices are up as the United States housing market starts to lift.
“If you drive around the country and take a look at New Zealand ports from Whangarei down to Bluff, there are just stacks of logs on the portside waiting to be shipped,” he said.
The higher US prices means suppliers there are withdrawing from the Chinese market in order to supply wood domestically, and Roger Kerr said New Zealand is well placed to fill that gap.
“The forestry sector was the standout industry performer in the December quarter GDP growth figures that came out about 10 days ago, and production was up about nine per cent in the December quarter.”
Forestry exports are now worth NZ$3 billion a year, the third-strongest export industry after dairy and meat.
Latest gross domestic product figures are at the highest level since Statistics New Zealand’s series began in 1987.
In the next few years, New Zealand forests are predicted to increase log production by 5 million cubic metres, on top of the 26 million cubic metres of logs already produced a year.
Masterton-based Forest Enterprises manages 73 forests in the North Island, including 9615 hectares in 40 forests throughout Wairarapa.
Managing director Steve Wilton said although it had been a positive quarter, the cyclical nature of log prices meant there was still uncertainty.
“Whether what we are experiencing now represents a sort of paradigm shift upwards in the cycle from what’s been at times quite a depressingly lower base, I don’t know.
“We’d like to think it would continue. However, our hopes and wishes in the past have often been dashed.”
According to Agrifax, New Zealand prices for A-grade logs were up by about 1% from February to March, for a weighted average price of $101 a tonne.
Wilton said the forecasted production volumes were “huge” relative to what New Zealand had done in the past.
“The volume, from New Zealand’s perspective, increase is high, but from an international log market perspective, is still only a drop in the bucket.
“Our challenge is to cope with that volume, finding a home for that volume at the best price.”
The monetary value of New Zealand’s exports of logs, lumber and other wood products was $847 million in the December 2012 quarter.
