INSIDE // 3 Forest Roads Before Supreme Court // 4 P&P Going Strong // 5 Home Building Improves // 7 Pellet Exports Soar

By Marshall Thomas,president of F&W Forestry Services, Inc.

Winter 2013 // NO. 115

Housing Numbers That Should Excite Sawtimber Growers

for more information visit www.fwforestry.com

Forestry ReportA PublIcATION OF F&W FORESTRy SERvIcES, INc. // AlbANy, GEORGIA

FiFty years and growing

It’s been six years since I felt optimistic when sitting down to write my timber market commentary for the newsletter. And until I reviewed some of the year-end statistics, this time was no different.

The key indicators prompting some enthusiasm this time are the November and December housing start numbers of 851,000 and 954,000 on an annualized basis. The December number is up 32 percent from 720,000 in January 2012, and a whopping 77 percent up from the 539,000 starts posted in December 2010. Those are the kind of numbers that should get a tree grower excited.

It’s not unreasonable to believe that we are at least at the bottom of the latest down cycle and things are about to get better for sawtimber growers. While sawtimber prices haven’t improved much yet, our managers are reporting more interest by buyers in sawtimber-size trees. Demand has to come first, before price, so that is good news.

On the small tree side, pellet mills keep opening as the European market just keeps growing (see page 6). And someone has actually made oil from trees on an operational basis (see page 7). The increased demand from new small wood users added to the strong pulp and paper industry can’t help but further strengthen pulpwood prices, which are already on the rise.

The only negative I see is continued drought conditions in much of the Southeast. El Nino is still playing hide and seek with us—last summer, the National Weather Service said we had a 50-50 chance of an El Nino winter—but now they say the chances for that have declined (see page 2).

Timber prices across F&W’s operating regions showed some increases in the fourth quarter of 2012, but markets on the whole were little improved year-to-year from 2011.

Pine pulpwood continued to be the strongest performer among timber product classes, reflecting sustained strength in the pulp and paper industry (see page 4). Indeed, two F&W regions reported double digit increases in pulpwood prices in 2012 compared with the prior year, with West Gulf prices up 20 percent and the Southeast up 14 percent.

Large pine sawtimber, the tree product laggard, showed some improvement in the final quarter of 2012, but only one of F&W’s five service regions—the Mid-Atlantic—reported a 3 percent year-to-year improvement in this timber class for all of 2012. However, some F&W mangers reported stepped up buying of large sawtimber in the fourth quarter in anticipation of traditional seasonable wet winter weather.

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SOUTHEAST LAFAyETTE, AL $8–14 $13–18 $23–30 $4–9 $20–33 GAINESvILLE, FL $12–21 $16–22 $25–32 $6–9 $13–25 Marianna, Fl $10–15 $18–25 $21–25 $4–6 $15–25 ALbANy, GA $9–12 $14–16 $24–28 $4–6 $18–22 Macon, Ga $8–11 $14–16 $23–28 $4–6 $17–22 statesboro, Ga $12–20 $16–21 $24–33 $8–13 $22–38 GreenWooD, sc $6–10 $12–18 $25–30 $6–8 $25–30

CENTRAL REGION

chillicothe, oh $5–6 na na $2–3 $27–43 clinton, tn $3–7 na $5–12 $3–5 $18–35 paris, tn $6–10 $8–13 na $6–7 $22–44

WEST GULF

Dequeen, ar $6–10 $10–13 $18–25 $7–11 $15–25 el DoraDo, ar $6–12 $11–13 $19–34 $4–11 $26–46 corinth, Ms $5–12 $13–15 $17–23 $5–8 $32–38 jackson, Ms $5–10 $12–17 $18–32 $6–12 $17–32 HuNTSvILLE, Tx $9–10 $12–15 $24–26 $8–9 $28–34

MID-ATLANTIC

charlottesville, va** $10–14 $12–18 $15–28 $3–5 $10–28

NORTHEAST

Glens Falls, nY*** $3–4 $6–13 $17–32 $9–11 $37–105 herkiMer, nY*** $2–2 $5–10 $10–30 $2–6 $55–140

2012 FOuRTH QuARTER PINE & HARDWOOD STumPAGE PRIcE RANGE*

*�All�Prices� in� tons,�based�on�sales�handled�by�F&W�offices.� If�no�sales�occurred,�prior�quarter’s�sales�and�other�data�are�used�to�compile�price�range.�Price�ranges�are�due�to�different�locations,�timber� quality,� logging� conditions,� type� of� harvest,� and� local� market� conditions.� To� convert� $/ton�to�$/cord�multiply�$/ton�price�by�2.7.�The�actual�range�for�our�sales,�depending�on�region,�is�from�2.6�to�2.8.�**Virginia�Pine�Sawtimber�is�$90-100�MBF�(I).�(S)�=�Scribner,�(I)�=�International,�(D)�=�Doyle.� ***�Northeast�Pine�Pulpwood�prices�also�include�Hemlock�and�Spruce.�

Drought and abnormally dry weather conditions across the southern pine belt from virginia to east Texas have increased over the second half of 2012 as hoped for relief from a return of El Nino-induced wet weather has failed to materialize.

At mid-year, the Nation Weather Service put odds on an El Nino development at 50-50. but by November, the Service said “the

atmosphere and ocean continue to indicate borderline ENSO-neutral/weak El Nino conditions….Therefore, the previous El Nino Watch has been discontinued as the chance of El Nino has decreased.”

As with most weather forecasts, there is a caveat. The Weather Service said the development of El Nino, or even its dry weather counter part La Nina, “cannot be ruled out during the next few months.”

Foreign investors piled into u.S. forestlands at a likely record pace in 2010, extending their ownership interest to 13,534,336 acres concentrated largely in the southern pine belt, the pacific northwest, and the state of Maine.

Foreign ownership interest in the nation’s woodlands increased by 638,938 acres—or 5 percent—in the10-month March-December period of 2010, bringing the total to almost equal the record 13,558,648 set in 2007. That was the year that international paper co. spun off its huge timberland holdings, bringing a flood of buyers and investors.

The new foreign forestland holdings were announced by the u.S. Department of Agriculture for the March-December period of 2010. These statistics will be compiled on a calendar year basis going forward, the agency said. uSDA is required by law to monitor foreign ownership of the nation’s agricultural land, farms and pastures as well as forested land.

uSDA offered no likely rationale for the spurt in foreign investment in u.S forestland. but the financial turmoil and uncertainty in Europe is likely to be at least a contributing factor to the burst in foreign ownership.

PINE PULPWOOD AvERAGE SOuTHEAST / central reGion / WEST GuLF / MiD atlantic

PINE SMALL SAWTIMBER AvERAGE SOuTHEAST / central reGion / WEST GuLF / MiD atlantic

Where’s El Nino?

Foreign Investment In u.S. Forestland Jumps

TImbER STumPAGE PRIcES AcROSS F&W’S SERvIcE REGION

Forestry ReportPublication subscription rate: $60/year. For further information on material in this report or to discuss your forestry needs, contact the nearest F&W office or the albany headquarters at:

PO box 3610, Albany, GA 31706-3610(229) 883-0505 / fax (229) 883-0515www.fwforestry.com

Marshall thomas, presidenteley Frazer, chairmanrob routhier, executive vice president

REGIONAl OFFIcES

Hamilton, AL LaFayette, AL DeQueen, AR brock May Dennis lebleu jim reese (205) 952-9369 t.r. clark (870) 584-3016 (334) 864-9542

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Albany, GA Statesboro, GA Corinth, MS burke Walters Wade McDonald robert ekes chad hancock (912) 489-1655 (662) 286-9544(229) 883-0505

Jackson, MS Glens Falls, NY Herkimer, NY keith Ward Wayne tripp Wayne tripp (601) 991-2121 (518) 480-3456 (315) 868-6503

Chillicothe, OH Greenwood, SC Clinton, TN peter Gayer lewis levy rick sluss (740) 779-3917 (229) 343-8034 (865) 457-5166

Paris, TN Huntsville, TX Charlottesville, VAtom cunningham ken addy Glen Worrell(731) 642-3888 (936) 435-9223 (434) 296-1464

AFFIlIATED cOmPANIES

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INvENTORy & mAPPING GROuPJeff Jordan / Albany, GA / (229) 883-0505 x136

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the F&W Forestry report is produced by: bates Associates / PO box 191386Atlanta, GA 31119-1386 / (770) 451-0370bbates@batesassociates.net

©2013 F&W Forestry services, inc. reproduction in whole or in part by electronic or mechanical means, without authorization from F&W Forestry Services, Inc., is prohibited.

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2 // f&w forestry services, inc. Providing management, consulting, and real estate services to landowners since 1962 • Winter 2013

PINE LARGE SAWTIMBER AvERAGE SOuTHEAST / central reGion / WEST GuLF / MiD atlantic

SOUTHEAST HARDWOOD PRICES harDWooD pulpWooD / harDWooD saWtiMber

for more information and data, visit www.fwforestry.com

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Notes to designer:• You will need to manually draw connector lines because many of the data �elds are blank.• If you change any of the data, the ellipses will revert to squares. To change them back to ellipses, select your white arrow, option-click one of the squares, option-click again, and again until all squares are selected. Then go to E�ect > Convert to shape > Ellipses. Select absolute @ 0.05” • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

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Notes to designer:• You will need to manually draw connector lines because many of the data �elds are blank.• If you change any of the data, the ellipses will revert to squares. To change them back to ellipses, select your white arrow, option-click one of the squares, option-click again, and again until all squares are selected. Then go to E�ect > Convert to shape > Ellipses. Select absolute @ 0.05” • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

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Supreme court Hears Arguments On Forest Roads;Timing Of New EPA Rules upsets chief Justice

The u.S. Environmental Protection agency’s issuance of a final clarification rule on forest roads—while favorable to landowners—has thrown the case pending before the u.s. supreme court also dealing with the roads issue into confusion reaching to the chief justice himself.

On the Friday before a scheduled supreme court hearing on Monday, Dec. 3, epa announced finalization of the revised rule holding that storm water discharges from logging roads are not associated with industrial activity and therefore do not require permits under the clean Water act. the ninth u.s. circuit court of Appeals had ruled to the contrary in a case arising in Oregon and is now before the supreme court.

at the Dec. 3 supreme court hearing on an appeal of the Oregon ruling, chief justice john a. roberts chastised government lawyers for failing to advise the Justices of the EPA rules action, which had been initiated by the agency last May following the ninth circuit court ruling.

“There were 875 pages on the merits briefing in this case, and if we knew the final rule was imminent, we could have rescheduled the case for April or something along those lines,” a New York Times article reported the chief justice as stating from the bench.

There were other back-and-forth discussions of a similar nature between the chief justice and lawyers on both sides of the issue, according to the Times and other publications. Those are not the kind of conversations lawyers in the court’s chambers to argue great legal questions are likely to enjoy.

How the EPA action in issuing the final forest roads rule changes ahead of oral arguments before the high court—and the chief justice’s obvious annoyance—will play out remains to be seen. before the December oral arguments, it had been expected the supreme court would issue a final decision in the coming winter or early spring on the Oregon case.

Since much of the hour’s time allowed for consideration of the appeal from the appellate court’s ruling in the Oregon case was devoted to the epa’s final rule issuance and its ramifications, not a great deal of time was spent on arguments over the legal issues at stake.

A number of next-step options are open to the supreme court as the case now stands, including:

• It could rule in favor of the forest advocates and overturn the decision of the ninth circuit.

• It could declare the case moot, as the government lawyers

recommend, which would essentially affirm the epa final rule as the governable outcome.

• It could send the case back to the ninth circuit court of appeals with guidance for a new judgment.

• It could uphold the original decision of the ninth circuit that could have huge problems for forestland owners across the nation.

There is an option outside the federal court system to the threat of forest road permits: remedial legislation by congress.

“If there were ever a time for congress to step in and resolve this issue once and for all, it is now,” said Dave Tenny, president of the National Alliance of Forest Owners (NAFO), a Washington-based national lobbying group that plays a leading role in the road permit fight as well as other forestry issues.

“Legislation this year clearly establishing that forest roads are not point sources would preserve EPA’s 35-year interpretation of the clean Water act, stop the senseless litigation, and enable EPA, states and forest owners and managers nationwide to return to building on the water quality successes they have achieved together over the past three decades,” Tenny said.

Winter 2013 • www.fwforestry.com // 3

The paper industry, a mainstay market for tree growers during the nation’s prolonged economic slump, is on course to racking up another strong year in 2012 and appears positioned for a possible repeat in 2013.

A F&W survey of third and fourth quarter financial reports by seven u.s. and one canadian publicly-owned paper companies showed sales of a wide variety of pulpwood-based products remained strong during 2012 but with a few signs of slowing toward year’s end.

The mood, as expressed by company ceos in their reports to shareholders and to the financial community, was generally upbeat with a little more caution than in recent years because of economic unease in the u.S. and also notably in europe and china. the u.s. and canada are big exporters of pulp and paper products.

The industry’s continued strength in 2012 was reflected in monthly reports on u.S. manufacturing activity by the highly regarded institute of supply Management. The paper industry ranked in the overall growth category in all but two months through December 2012, continuing a pattern going back to September 2011.

Memphis-based international paper company, the world’s largest producer of paper and paper products and often considered a bell weather for the industry, reported sales of $7 billion in the third quarter of 2012. This was up from $6.6 billion in the same quarter of 2011 but slightly below this year’s second quarter sales.

“The company generated excellent cash flow in the third quarter despite the backdrop of slow global growth,” John Faraci, IP chairman and ceo, reported in his company’s third quarter report. “Looking ahead to next year, many of our strategic projects will be ramping up around the globe.”

Indeed, the ramp up has already begun. ip’s third quarter financial report noted that its new fluff pulp mill at Franklin, va., the first new paper mill in the u.S. in a quarter century, had “earned” $12 million in the third period—its first full quarter of operation.

Another paper and forest products giant—Washington state-based Weyerhaeuser company—reported improved financial results overall

in the third quarter, based in part on the recovering housing market. However, Weyerhaeuser’s cellulose fiber sales for the period were flat with the previous quarter and not predicted to increase in the final quarter of 2012.

A much more upbeat report came from packaging corporation of America, the nation’s fourth largest producer of containerboard and corrugated packaging products. The company reported record sales of $723 million in the year’s third quarter, 8 percent over the same period in 2011.

“We had a very strong quarter in all aspects of our operations,” reported ceo Mark W. kowlzan. “our mills ran extremely well setting an all-time production record, and both our containerboard and corrugated products remained strong.”

richmond, va.-based MeadWestvaco reported sales of $1.4 billion in the third quarter, essentially the same as the prior year period. the financial report predicted that its fourth quarter earnings would be “well above the modest profit the company generated in the year-ago quarter on a continuing operations basis.” but MeadWestvaco had a word

of caution about overhanging challenges beyond its control.

“The company is continuing to navigate well through the uneven demand environment, and is prepared to respond to negative near-term impacts to demand that could arise from the outcomes of the u.S. elections, the so-called ‘fiscal cliff’ event, as well as from global macroeconomic challenges,” MeadWestvaco said.

rayonier co., based in jacksonville with forest operations in the Southeast and Northwest and pulp mills in Florida and Georgia, said it is positioned for another strong year in 2013.

“In forest resources, we will continue to capitalize on local market opportunities in the Southeast,” said Paul G. boyton, chairman, president, and ceo. “in performance fibers, we anticipate another record year driven by strong cellulose specialties markets and we remain on track to complete our cellulose specialties expansion project by mid-2013.”

Domtar corporation, based in Montreal with mills in both the u.s. and canada, was less upbeat than most of its u.S.-based counterparts.

“The third quarter was marked by weak paper demand and by cyclically low pulp prices,” reported John Williams, Domtar’s president and ceo. “nevertheless, shipments for our pulp were sequentially higher, our paper pricing remained firm, and paper inventories decreased by 10 percent.”

Paper Industry, mainstay market For Timber Producers, Remained Strong In 2012; Will 2013 be An Encore?

THE PAPER INDuSTRy RANkED IN THE OvERAll GROWTH cATEGORy IN All buT TWO mONTHS THROuGH DEcEmbER 2012, cONTINuING A PATTERN GOING bAck TO SEPTEmbER 2011.

4 // f&w forestry services, inc. Providing management, consulting, and real estate services to landowners since 1962 • Winter 2013

After a six-year slump, the u.S. housing industry appears to be on a sustained road to at least a modest recovery that hopefully will bring stronger demand and improved prices for large pine sawtimber, the most valuable product for many tree growers.

Two of the most closely watched indicators of the housing industry from the construction perspective are new housing starts and building permits for future dwellings. both of these indicators have moved up at an accelerating pace during the second half of 2012, with both reaching annualized monthly rates surpassing 900,000 units in December.

This could bring good news for timber growers, who have watched sawtimber prices collapse by 40 to 45 percent since new home construction tanked beginning in about 2006. but they could also use some help from the weather as drought conditions continue to linger in parts of the Southeast and West Gulf areas of the southern pine belt.mIllION HOuSING STARTS AHEAD?

If the u.S. economy isn’t thrown into another tailspin by the actions—or non-action—of our political and government leaders in Washington over the “fiscal cliff” or other potential disasters, the rising housing indicators could return to million new-start territory by spring or early summer, the traditional high season for home buying and selling.

The last time that housing starts and permits were over the million annualized mark was June of 2008.

New housing starts probably will need to climb well above the million mark to restore the housing industry to solid footing and bring sawtimber demand and prices back to something approaching 2006 levels. That’s probably somewhere in the 1.25 to 1.5 million housing-start range.

buIlDERS REPORT RISING DEmAND

According to the National Association of Home builders, confidence in the housing recovery is growing among the folks closest to the action: home builders themselves.

“builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” says nahb chairman barry rutenberg, a home builder in Gainesville, Fla. “In view of tightening supply and other improving conditions, many

potential buyers who are on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.”

This view was echoed by heads of several large home building companies with operations across the u.s. in their latest financial and operations reports to their shareholders.

Typical was the report of Stuart Miller, chairman and president of lennar corp., a big multi-state home builder based in Miami, who told shareholders: “The housing market has stabilized and recovery is well underway.”

“Low mortgage rates, affordable home prices, increased buyer confidence and extremely favorable rent-to-own comparison are driving growth in each of our markets,” Miller said. “additionally, reduced foreclosures and declining distressed home inventory are further contributing to the improvement in

the housing market.”Along with the brighter news

on new housing, there was a cautionary note from Federal reserve chairman ben bernanke. In a mid-November speech he acknowledged the improvement in housing but indicated the Fed’s easy money policies are still needed. “The housing sector is far from being out of the woods,” he cautioned.

but timber growers should draw encouragement from the improving appearance of the “woods.” A look back at the past six years shows why.

7-yEAR PRIcE DROP

In 2005, the year before recession and before the housing market began to tank, pine sawtimber prices across the southern pine belt served by F&W Forestry Services averaged $43.20 per ton based on sales data and local market information. beginning in 2006, pine sawtimber prices began a sharp, continuing decline that brought the regional average down to $24.99 per ton for 2012. That’s a decline of 42 percent over seven years.

Interestingly, during this same time frame and same southern pine region, prices for pine pulpwood have actually increased, from $7.17 per ton annual average in 2005 to $10.01 per ton in 2012. Obviously, and as reported elsewhere in this publication, the pulp and paper industry not only has weathered the recession and painfully slow recovery, but actually has expanded. (See opposite page.)

New Home construction Showing Strong Recovery;Will Higher Sawtimber Prices For Growers Follow?

yEARSSOuTHERN PINE SAWTImbER PRIcES DROP42% 7

OvER lAST

Winter 2013 • www.fwforestry.com // 5

Due to the rapid growth of wood pellet production in the southern pine region, the u.S. has now replaced canada as the world’s largest supplier of this fuel source to Europe as an environmental-friendly alternative to coal for the generation of electric power.

The North American Wood Fiber Review, which tracks global timber and wood market developments, reported that an “explosive” surge in exports by u.S. producers in recent months has put this country ahead of canada as the world’s largest exporter of pellets made from compressed wood. The wood species of choice in the u.S. South is pine.

Europe has become a big-time market for pellets as a replacement for coal under the European union’s moves to reduce carbon emissions by electricity generating plants.

“Pellet exports from the two primary pellet-producing regions on the North American continent, the u.S. South and british columbia, have continued to grow, reaching a new record high

of 760,000 tons in 2Q/12,” according to data from the pellet industry and customs statistics compiled by the Fiber Review, a newsletter published by Wood resources international llc based in Seattle.

total canadian exports to europe rose 14 percent in the second quarter of 2012 above prior quarter, according to the Fiber Review, with reports of british columbia mills running at full capacity. It said pellet exports from the u.S. South rose 13 percent in the second quarter, with some “temporary slowdowns” at two large producers in Florida and Georgia due to fires at a u.s. port and at a pellet consumer in the united kingdom.

With plans recently announced for three new pellet plants in Georgia and six facilities currently under construction across the Southern region from virginia to Texas, the Wood Fiber Review said “it is possible an additional 4.2 million tons of wood pellets will be crossing to Europe in 2015.”

“This can be compared to an estimated 1.5 million tons likely to be exported from this region in 2012,” the publication noted. “Exports from both eastern and Western canada are also on schedule to grow, though not at the explosive rate being witnessed in the u.S. South.”

Separately, Drax biomass International announced in December that it plans to construct wood pellet manufacturing plants in Louisiana and Mississippi and a pellet storage and loading facility at the Port of Greater baton rouge.

The new pellet mills will be located at Gloster, in Southwest Mississippi, and at Morehouse parish, in Northeast Louisiana. The company said it plans to begin construction on the new mills during the first part of 2013 and has targeted 2014 to start full operations. The mills will have a combined capacity to produce 900,000 metric tons of wood pellets annually.

Drax biomass is a subsidiary of Drax Group plc, a major electricity generator in the united kingdom.

u.S. South Overtakes canada As largest Supplier Of low-carbon Pellets To Fuel European Power Plants

A new biomass power plant on the site of an existing recycling paper mill near Dublin, Ga., that will use more than a million tons of trees and wood residues annually has been announced by Georgia Gov. Nathan Deal.

Announcement of the $95 million project comes hard on the heels of two new pellet plants for the same general area of southern Georgia, also recently announced by Deal. The power plant will be built and operated by Green Power Solutions (GPS).

Deal’s announcement said the GPS power plant, which has already been approved by the Georgia Public Service commission, will be the largest renewable energy facility in Georgia.

GPS will construct a new wood yard on the paper mill site expected to utilize more than one million tons of round wood, bark, and other woody biomass annually from a large area of central and southern Georgia, a major forested region of the state.

“Georgia is increasingly becoming a go-to location for bio-based energy ventures, so we are encouraged by Green Power Solutions’ decision to choose Dublin and laurens county for this innovative renewal energy plant,” Deal said.

The proposed power plant also will be located on the site of the existing paper mill, which was recently acquired by SP Fiber Technologies,

llc. Deal’s announcement said the new power plant will provide steam required by the mill’s operation and also generate 56 megawatts of electricity that will be sold on the grid to Georgia power co.

Deal said the new power facility is the result of 18 months collaboration between beasley Forestry Products llc, a large hardwood lumber and other wood products producer based in hazlehurst, Ga., and land care services llc of Dublin.

construction of the power plant is scheduled to begin in May 2013 with power generation slated to start in 2015.

Woody biomass Power Plant Announced For Southern Georgia

6 // f&w forestry services, inc. Providing management, consulting, and real estate services to landowners since 1962 • Winter 2013

West coast log Exports To china Rebound; Rise In u.S. Home building Hikes lumber Demand

u.s. log exports to china, after falling sharply in the first half of 2012, rebounded robustly in the third quarter, leading at least one expert to predict that increased shipments to the Asian giant will be around for a while.

although the chinese shipments are from the u.S. Northwest as well as canada’s west coast, these large exports are likely to impact overall domestic demand and prices for lumber just as new home construction in this country is gaining traction across the country. (See page 5.)

u.s. log exports to china increased some nine percent in the third quarter, totaling 412 million board feet, according to a report by the northwest research station of the u.S. Forest Service based in Portland. Third quarter lumber exports to china declined eight percent from a considerably smaller base.

“sixty-two percent of West coast log exports went to china during the third quarter,” xiaoping Zhou, a research economist at the Portland station, said in a Forest Service news release. “china increased

its importation of West coast logs to over 257 million board feet, an increase of 30 percent from the second quarter of this year.”

According to Zhou, although china’s economy has slowed during the last few quarters, “the country will retain its dominant position in the West coast log export market for the next few quarters—or, even, the next few years.”

The decline in softwood lumber exports to china is a result of increased lumber exports from british columbia, according to Zhou. in 2011, china increased its softwood lumber imports from british columbia by 62 percent over the previous year.

The rebound in u.S. log exports to china comes as new home construction and increased demand for lumber is gaining momentum in this country.

“The improved housing market has been good news for many sawmills in North America,” reports the Wood Resource Quarterly, a publication of Wood resources international llc based in Seattle. “Lumber production has been higher throughout the

continent, with an increase of 7.3 percent in August year-over-year in the u.s., and 6.3 percent in canada over the same period.”

The publication said increased lumber demand has pushed prices substantially upward this fall, with southern pine lumber up 48 percent and western hemlock up 32 percent year-over-year. It attributed these price data to Random Lengths, which reports on the North American lumber, OSb, and plywood industries.

but Wood Resources Quarterly also noted that higher lumber prices and demand have had little impact on log prices thus far in the housing recovery. It said pine sawtimber prices in the South “have been practically unchanged for almost two years, and sawlog prices in the u.S. northwest have been surprisingly flat for more than a year.”

“However, in early November, there was increased upward pressure on sawlogs prices in the West from chinese log buyers that were more active in the market than earlier in the year,” according to Wood Resource Quarterly.

kior inc. says it has begun commercial-scale production of “high quality” oil converted from southern pine biomass at its initial facility at columbus, Miss.

In a somewhat low-key statement in a report to shareholders, kior president and ceo Fred cannon said “we have commenced operations at the columbus facility and have produced high quality oil that is in line with specifications for upgrading into cellulose gasoline and diesel.”

“More importantly, we believe the high quality of the oil from the

columbus facility validates kior’s proprietary biomass fluid catalytic cracking…technology at commercial scale,” he said.

“The facility’s performance to date not only meets our expectations based on our experience at our pilot and demonstration scale facilities, but also gives me confidence that we remain on track to upgrade our oil in order to ship america’s first truly sustainable cellulosic gasoline and diesel for American vehicles,” cannon added

in a conference call with financial

analysts, cannon was quoted by Bloomberg News as saying kior’s top priority is ensuring that operations at the columbus facility go smoothly.

“As far as the yields, we’re not focused on those right now,” he said. “Our focus right now is to get the plant up and stable.”

kior states on its web site that it plans to build a second Mississippi plant at Natchez with three times the capacity following the launch of the columbus facility.

kiOR Says First mississippi biomass Oil Plantup And Running; larger version Slated For Natchez

Winter 2013 • www.fwforestry.com // 7

100

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650

Notes to designer:• Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

2007 2008 2009 2010 2011 2012 Q4

RESIDENTIAL CONSTRUCTION LUMBER PRICES

650

540

430

320

210

100

30-Year FixeD rateSource: Freddie Mac

southern pine–s/MbFSource: Random Lengths Southern Pine Composite Index

us Dollar value aGainst 26 Major traDinG partnersSource: Federal Reserve

275

493

350

251 240

TIMBER MARKET INDICATORS

238

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Notes to designer:• If you change any of the data, the ellipses will revert to squares. To change them back to ellipses, select your white arrow, option-click one of the squares, option-click again, and again until all squares are selected. Then go to Effect > Convert to shape > Ellipses. Select absolute @ 0.05” • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

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Notes to designer:• If you change any of the data, the ellipses will revert to squares. To change them back to ellipses, select your white arrow, option-click one of the squares, option-click again, and again until all squares are selected. Then go to Effect > Convert to shape > Ellipses. Select absolute @ 0.05” • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

HOUSING PERMITS

2007 2008 2009 2010 2011 2012 Q4

1.8

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0.4

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in Millions oF units (annualiZeD) throuGh DeceMber Source: US Department of Commerce

in Millions oF units (annualiZeD) throuGh DeceMberSource: US Department of Commerce

HOUSING STARTS

.780

1.398 1.355

.905 .906

.572 .554.605 .611 .587 .609

2007 2008 2009 2010 2011 2012 Q4

200

250

300

350

400

Notes to designer:• Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

2006 2007 2008 2009 2010 2012

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282 284261

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Notes to designer:• This is a column graph with a manual area �ll. The area fill is on a separate layer. • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

MORTGAGE RATES

2007 2008 2009 2010 2011 2012

7

6

5

4

3

6.34%6.03%

5.04%

4.69%

Q1 Q2 Q3 Q4

90

100

110

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130

Notes to designer:• This is a column graph with a manual area �ll. The area fill is on a separate layer. • Only the graph area of this Illustrator �le will show in the InDesign frame. You will need to manually place the legend and x/y axises in InDesign. This is because working with Illustrator graph axises can get tricky if you have to change the data frequently and the Illustrator legends take up too much real estate.

US DOLLAR

130

120

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100

90

104100

106

97 99 99

2007 2008 2009 2010 2011 2012 Q1 Q2 Q3 Q4

in Millions oF units (annualiZeD) throuGh DeceMberSource: US Department of Commerce

102

.813

4.45%3.92%

280

321

3.80%101

3.50%3.36%

101

310

294

241

339

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