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An interview with Tom Brickman
owner, South40 Partners

Question: You say timber prices are up. But don’t a lot of people say timber prices are down?

Brickman: Well, prices are down for some kinds of timber. But in the last month or two we’ve seen huge price increases for other kinds of timber.

Question: What are you seeing that leads you to believe this?

Brickman: We market timber for our clients year-in and year-out. So, we’re constantly in touch with the timber markets. For the past year we’ve encouraged our clients to delay selling if possible because prices were low. But, by late September we knew prices for some kinds of timber were starting to creep up. So, in December we put two tracts of timber on the market. When we opened the bids, the sales brought 50% to 100% more than our appraisals! We were surprised by the strength of the market.

Question: So, you would advise anyone with timber that now is a good time to sell?

Brickman: No, we would not give that advice. And the reason is that it depends on what kind of timber the landowner has to sell.

Question: What do you mean by ‘kind’ of timber?

Brickman: In general there are four ‘kinds’ of trees in the woods: A – pine pulpwood used for making paper; B – hardwood pulpwood used for making paper; C – pine sawtimber used for making lumber; and D – hardwood sawtimber used for making lumber. The price for pulpwood trees, especially hardwood, is up 300% to 400% in the last 2 months.

Question: So, on a particular tract of land, a landowner can sell one ‘kind’ of trees but not the
other?

Brickman: Usually not, though there are exceptions. Typically the four types of trees occur in a mix of ‘natural’ (meaning unplanted) timber that grew back after the last harvest. But, for the first 25 years or so, the trees are predominantly pulpwood. By selling a tract of timber that is predominantly pulpwood now, you capture these high prices. The four types usually can’t be sold separately until they are much older.

Question: What about planted pine stands?

Brickman: Well, this is an exception. If the trees are at least 14 years of age and have never been thinned, it’s a great time for a first-thin. However, if the trees have been thinned, even if the remaining trees are still pulpwood sized, then a landowner will make more money in the long run by growing them to sawtimber size and waiting for better prices.

Question: So you’re saying pine sawtimber prices are low?

Brickman: That’s right. The price today is about 60% of what it brought 2 years ago due to a 70% drop in housing construction. So, we still encourage our clients to avoid selling timber if pine sawtimber makes up the majority of the total value of all trees on the property (or if it’s a thinned plantation). As for hardwood, high grade sawtimber prices are still OK, like they have been for several years.

Question: So, you believe pine sawtimber prices will rise in the future?

Brickman: Yes, we do, though we hear lots of discussion on this. For example, a just-thinned pine plantation has 20 years of growth left, and 80% of the trees there today will grow to sawtimber. It’s hard for me to think that in 20 years we won’t see housing demand return, and it’s hard to imagine something cheaper than a pine board to build them with. Keep in mind that over the last 20 years pine sawtimber prices have averaged 400% to 800% higher than pine pulpwood.

Question: What is causing the high pulpwood prices today?

Brickman: It’s mostly weather related supply issues. The large amount of rain we’ve had this year makes it difficult to harvest many tracts of timber. So pulp mills are short of supply. Hardwood, especially when it grows on dry ground that can be logged now, is bringing big premiums. Also, landowners should realize that these high pulpwood prices are probably a short-term situation and that prices will probably go back down once things dry up in a few months. It’s important to act quickly to take advantage of these prices.

Question: It all sounds complicated. Boil it down for us – who should sell timber today?

Brickman: It’s pretty simple. Any landowner with natural timber at least 18 to 20 years of age that isn’t growing in a bottom and where pine sawtimber is a minority of the total value; or, a landowner with planted pines at least 14 years of age that have never been thinned. In these two cases, now is a very good time to sell. But we’re also recommending that planted pines not be clear-cut just because pine pulpwood prices are up and pine sawtimber prices are down. My Dad would call that “eating the milk-cow”. We’ve worked in these markets for 35 years and have seen lots of ups and downs. We believe pine sawtimber prices will return.

Question: But, not every situation falls neatly into these two categories. What can a landowner do to be sure they make a good decision?

Brickman: That’s right – there are exceptions. For example, some ‘natural’ stands should be thinned. And factors other than current prices should also be considered before making a decision to sell (especially the goals of land ownership). It’s always a good idea to chat with a consulting forester (one who doesn’t buy timber too) before making a decision. Sometimes just talking to someone with experience will give you a perspective you might not have considered. The Association of Consulting Foresters is a good place to start (www.acf-foresters.org).

Contact South40 Partners at 205-936-2160 for a copy of “7 Tips For Selling Timber” or for a free consult on your particular situation.