Timberland in the US accelerated its price growth, despite
some lumber market concerns centred on China and the domestic market, which
prompted one of the top forestry groups to warn on profits.
US timberland prices were 7.2% higher in the April-to-June
quarter than a year before, nudging 0.2 points higher than the rate of annual
appreciation recorded for the January-to-March period, the National Council for
Real Estate Investment Fiduciaries (Ncreif) said.
Factoring in income of 2.6%, the total return from forestry
land over the year was 9.9%, the highest figure in nearly six years, although
still behind the 17.2% achieved from farmland.
The performance "reflects a combination of strong export
demand from China for logs and lumber and a healthy domestic demand in the US
for timber products", said Mary Ellen Aronow, chair of the Ncreif timberland
However, Ms Aronow, a senior forest economist at Hancock Timber
Resource Group, acknowledged some challenges to these factors, saying noting "some
hurdles still facing the recovering US housing market, and a cloudy outlook for
Earlier this week, Plum Creek Timber, which controls 6.7m
acres of US forestry, cut its forecast for full-year earnings to $1.05-1.25 a
share, from $1.30-1.50 a share, citing a market recovery in 2014 which "has been more muted than we and
other industry participants initially expected".
The group said it was cutting its harvest volumes this year
to the "low end" of a range of 20m-21m tonnes to push more lumber into "future
periods when we expect prices to be better".
Citing patchy domestic demand, the group, whose shares fell
6.3% at one point on Tuesday, cut to 1.03m, from 1.1m, its estimate for US
housing starts this year.
Wood Resources International reported earlier this month that
US lumber markets began falling in the spring, with "lumber prices falling over
10% so far this year", with "weaker log export markets in Asia" a big factor.
"Demand for wood in China has declined somewhat because of a
slowing in the construction sector, which has increase log inventories in the
ports and on vessels waiting to unload logs," Hakan Ekstrom, principal of Wood
Resources International, told Agrimoney.com.
However, he added: "I see this as a temporary blip on the
long-term upward trend in demand for wood raw-material - logs, lumber and wood