Rising international log prices as a result of increased demand from Korea and south-east Asia could mean better times for forest owners.  MAF predicts strong log prices if the Russian Federation follows through on its intention to raise export taxes on its soft wood.  In addition, the recent drop in the NZ$ to more reasonable levels must be making forest owners sleep a little more easily.

Nevertheless, the stumbling US economy and continued uncertainty over its stability after the recent subprime turmoil could mean even lower new house numbers there.  While the downturn in the US housing market has had surprisingly little impact on New Zealand’s forestry exports, one expects that forest owners may well be subject to more noticeable declines in demand from this market in the near future.  The US accounts for around 12% of all New Zealand’s forestry exports in value terms.  Hopefully any serious declines in exports to the US will be more than offset by ever-increasing demand from China and, more recently, India.

The total value of log, timber and pulp exports for the year to July 2007 was $1.8bn, up 17% over previous year’s figures.  However, this impressive result masks the contrasting results seen at a product level.

Logs have returned to strong growth, with annual exports by value up 38% on the previous year.  This was the result of a 20% rise in quantity exported and a 15% increase in price year-on-year.

Timber, which accounts for around 25% of all forestry and paper product exports, has been on a roller-coaster ride.  Export quantities have followed a general upward trend since 1997, while prices have slumped since mid-2001.  The result is that total receipts have fluctuated dependent on the extent to which rising quantities balance out falling prices.  The roller-coaster has crested and is on the way down once again, with total annual value up 2.2% on the July 2006 year (to $636m) compared with the February 2007 year.  While quantities are off the high recorded in the December 2006 year, they are up 1.7% on the July 2006 year.

The fall in pulp quantities exported seems to have bottomed out, with 685,000 tonnes for the July 2007 year.  This figure was down 7.5% on the year before.  However, prices are up 24% on the previous year, with the result that exports by value have increased 14% over the previous year.