Brazil Sawlog Prices Rise in Past 12 Months, after Five Years of Decline
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In the 1Q/17, pine sawlog prices in Brazil increased in both U.S. dollars and in the Brazilian Real quarter-over-quarter. During the past 12 months, sawlog prices have gone up by 26%, according to the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. Most of the rise in prices has been the result of a stronger Real, but there have also been smaller upward price adjustments in the local currency because of higher labor and energy costs. The recent price increases follow a downward price trend that lasted for much of 2011-2015.
There are expectations that sawlog prices may continue to go up in the coming months because of improved opportunities for Brazilian exporters of lumber, plywood, and value-added products such as doors and moldings to increase shipments overseas. During the first quarter of 2017, pine lumber exports reached an all-time high and were equal to the annual export volume just five years ago. The countries that have increased imports of Brazilian lumber the most in the past year are, in descending order, the U.S., Mexico, China, and Saudi Arabia.
An analysis of long-term timber price trends, volatility, and a point-in-time assessment of current timber prices relative to historical trends was recently undertaken by the timberland investment consultancy firm ForestEdge LLC. Sixteen products were tracked, generally representing plantation roundwood products in Brazil, Chile, South Africa, and New Zealand, in addition to conifer sawlogs in Sweden and hardwood pulpwood in the U.S. South. Only pulpwood in Brazil (both pine and Eucalyptus) and conifer products in South Africa (pulpwood, small and large sawlogs) registered increasing prices during the 1995-2016 period in inflation adjusted U.S. dollars.
With respect to current delivered timber prices in local currency, it is interesting to note that with few exceptions, most timber prices in the local currencies in the 4Q/16 were not far from their trend-line values. Prices in both Brazil and Chile remained below their local currency trend lines, reflecting somewhat depressed timber markets.
