Key Findings Although timber production in the South more than doubled from the 1960s to the late 1990s, output levels have declined over the last 10 years, signaling structural changes in timber markets. For softwood products, production declines are most clearly related to demand issues. Demand for softwood solid wood products is strongly linked to housing markets, and a sharp decline in construction beginning in 2007 reduced timber demand, a short run adjustment. Demand for pulpwood in paper manufacturing has declined as the production capacity has dropped in the South, a long run adjustment. As demand declined, investments in softwood production continued to expand, leading to supply growth for all softwoods, but especially for softwood pulpwood. The net result was a substantial reduction in softwood pulpwood prices. In contrast to softwood products, hardwood pulpwood output declined and its price increased in the 2000s, indicating a contraction of supply, especially in the Coastal Plain where paper production is concentrated. Several forecasts of timber markets show expanding supplies of softwood timber, especially softwood pulpwood, as new plantations mature and additional plantations accumulate across the South. Across all forecasts, softwood pulpwood supply expands through the next 40 years, while softwood sawtimber supply grows over the next decade and then stabilizes. Forecasts of hardwood supplies indicate a gradual contraction as urbanization shrinks inventories. If timber product demand returns to and stays at the 2006 levels, total timber production is forecasted to expand by about 25 percent over the next 50 years, with little impact on the price of softwood sawtimber and hardwood pulpwood. Softwood pulpwood prices would decline by about 50 percent. If demand growth returns to 1980s and 1990s levels, total timber production could expand by about 40 percent over the next 50 years, with the greatest gains in softwood pulpwood output. Softwood pulpwood prices stabilize at 2006 levels while softwood sawtimber and hardwood pulpwood prices would increase at an average annual rate of slightly less than 1 percent. Growth in demand, coupled with gains in the productivity of planted pine forests, would likely expand total timber production by about 70 percent, with the production of softwood pulpwood more than tripling. The price of softwood sawtimber would stabilize, the price of softwood pulpwood would fall at less than 1 percent per year, and the price of hardwood pulpwood would increase by less than 1 percent per year. Forecasts indicate that the South s timber supply could expand if moderate rates of future forest investments are added to investments in forests made over the past 20 years. Forecasts for 2055 show that annual production of softwood pulpwood could increase beyond 2006 levels by an additional 2.4 billion to 3.7 billion cubic feet (36.6 million to 57.9 million green tons) without substantial price effects. Timber production has the potential to expand substantially in the South, but future markets are likely to be limited by demand levels. Bioenergy is a potential but highly uncertain source of demand. Recovery of housing-related demand for wood products remains a key uncertainty in the short run. Without an expansion in timber demand, private forest owners would be expected to eventually experience a strong shift away from forest management as investment returns diminish to the point where continued investments cannot be justified.
Wear, David N.
Paper (invited, offered, keynote)
In: Wear, David N.; Greis, John G., eds. 2013. The Southern Forest Futures Project: technical report. Gen. Tech. Rep. SRS-GTR-178. Asheville, NC: USDA-Forest Service, Southern Research Station. 183-212.
Wear, David N.; Prestemon, Jeffrey; Huggett, Robert; Carter, Douglas 2013. Markets. In: Wear, David N.; Greis, John G., eds. 2013. The Southern Forest Futures Project: technical report. Gen. Tech. Rep. SRS-GTR-178. Asheville, NC: USDA-Forest Service, Southern Research Station. 183-212.