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Timber Talk 12/23/13

Posted By John Dorka, Monday, December 30, 2013

Timber Theft and Trespass Legislative Proposal Provided to OFA
This past week, OFA received a copy of a "new” version of a legislative proposal to address timber theft and trespass. Rep. Ross McGregor (R-Springfield) sent the copy to OFA and asked us to participate in an "interested parties” meeting on January 7. We are planning to discuss the proposal at the annual meeting in March, pending legislative action on the proposal. OFA has a Timber Trespass Working Group that has met periodically over the last several years since legislative discussions started on the issue. If any OFA member is interested in being part of the working group, please call me or send an email. This legislation has the potential to significantly impact timber harvest operations for both the industry and the landowner and is one that bears watching closely. I will share information with the membership as it develops.

ODA Adds Butler County to Thousand Cankers Disease Quarantine
The Ohio Department of Agriculture (ODA) announced last week that it is quarantining Butler County, Ohio with prohibiting the movement of regulated walnut products from the County. Regulated walnut products include green lumber, logs, stumps, roots, branches, mulch, wood chips, and any species of firewood. ODA had earlier quarantined portions of Butler County but expanded it to include the entire county. You can read here the news release ODA. Thousand Cankers Disease of Walnut and the latest on other Ohio invasive species will be discussed at the OFA Annual Meeting on March 6, 2014.

US DOT Webinar on Truck Size and Weight Study
Within the last two year, Congress commissioned the US Department of Transportation to study and review all research and information available the impact of changing/raising the Gross Vehicle Weight (GVW) on commercial trucks on the US highways and interstates. Last week, DOT held a webinar to seek input from stakeholders on the status of the review so far. OFA sent a note to the membership notifying them of the webinar in case anyone was interested in listening or weighing in. The session was very technical and lasted nearly 4 hours. It was clear from the nearly 300 participants on-line and the questions and comments provided that there is a clear division between those in favor of raising the GVW and those opposed. For anyone who is interested in becoming more familiar with the issue, you can read comments provided by the Coalition for Transportation Productivity (of which OFA is a member) to DOT on the study and issues important to the CTP.

Notes from The Hardwood Leader
The following are notes gleaned from the January, 2014 issue of The Hardwood Leader, a hardwood
market forecasting newsletter. Forecasts are those provided by staff from Hardwood Publishing, which produces the newsletter:

  • The Leader expects 2013 rising hardwood prices not to continue through 2014, and supply is not likely to rise enough to balance demand;
  • Rising prices for stump to mill products will not include commensurate rises in manufactured products, where prices will remain flat. Product margins will tighten, and the Leader expects that some domestic plants could be shuttered unless there is significant relief in raw material cost;
  • In 2014 housing growth is expected to be slower than 2013 growth, with growth depending in large part to what the Fed does with quantitative easing. Foreign markets will provide most of the new lumber demand;
  • Rising Red oak, White oak, and Hard maple prices may cause end users to begin substituting for lower priced materials such as Yellow birch, Ash, Soft maple, and even Cherry;
  • Sawmill and concentration yard margins will tighten next year as log prices rise faster than green lumber and these in turn faster than kiln dried lumber. The Leader thinks production may decline in some areas as some species simply won’t be profitable to saw;
  • Exports will drive Ash demand in early 2014, and will gain momentum as a substitute for oak, especially in Asia;
  • The Leader sees Cherry demand remaining relatively weak, and will not return to higher levels until custom cabinet sales get stronger, exports increase to more markets, and there is more furniture demand;
  • Red oak price increases will slow due to the Chinese New Year slowdown but not stop as demand will remain ahead of supply. Moulding and stair manufacturing demand for Red oak will move up and lagging production will keep prices moving up;
  • Poplar has had strong domestic sales and record-setting exports and is expected to continue into the new year.
  • White oak exports August-October were the highest since May 2011, with China shipments highest in more than a year; White Oak exports will be limited more by supply than demand in the near-term. Demand will remain strong from residential flooring plants;
  • In the Appalachian region, the Leader expects prices for most species to climb over the next two months. Domestic yards and manufacturers will continue buying at high levels to stay ahead of the Chinese return later in January.
  • Hardwood lumber exports totaled 142 MMBF in October, breaking the one-month record of 129 MMBF set in May. This was 25% higher than October 2012. Walnut hit all-time high exports and Ash and Red oak one-month exports were the highest in a quarter century. The Leader expect U.S. hardwood lumber exports to surpass 1.44 BBF in 2013 and will likely surpass 1.55 BBF in 2014;
  • October hardwood exports to Mexico have increased for five months and have been the highest since May 2006. Although Mexican exports are expected to slow over the next several months they will quickly rebound;
  • October hardwood lumber exports to China were the highest one-month export to any country ever recorded;
  • "Core inflation” (excluding food and energy) rose 1.7% from October 2012 to October 1013;
  • U.S. residential furniture factory shipments were $1.96 billion in Sept. 2013, up 6% from the same time last year. In a monthly survey of manufacturers, 80% reported increased sales for the year, the best since before the Great Recession;
  • Single family building permits declined in September to their lowest level since February, 2013;
  • Pending home sales continued a 5-month decline into October; seasonally adjusted existing home sales experienced the most significant one-month decline since Fec. 2011;
  • Meanwhile, the median sales price of existing home sales hit a 5-year high in June but declined in September and October;
  • Seasonally adjusted job growth was 200,000 or more in 3 of the last 4 months with actual job growth at 2,365,000 jobs. However, 3 out of 4 of those jobs were in the government;
  • Unadjusted employment in durable wood products manufacturing declined in November but was 3.4% above November 2012.

Governor Kasich Willing to Delay Green Energy Requirements
After remaining out of any discussion on revision to Ohio’s green energy law, last week Governor Kasich indicated that he would be willing to delay implementation of the green energy requirements in Ohio’s energy law. The governor indicates that he has concerns about how the requirements can affect manufacturers’ cost and hurt employment in the long run. He indicated he is not against green energy requirements or doing away with them , but he is willing to delay them, especially if doing so helps people to retain jobs. The debate on the law revision has each side claiming that electricity costs will increase, depending on whether you support or oppose green energy requirements. Debate on the issue will pick up again after the holidays.

Ohio Energy Report
The U.S. Energy Information Administration released a report highlighting state profiles of energy production and consumption. The Ohio profile contained some interesting information about the state’s energy usage:

  • Ohio is one of the 10 largest consumers of natural gas and pays the 8th highest average residential prices for natural gas, at $21.78 per thousand cubic feet of gas;
  • Ohio is the 11th largest producer of electricity but the state’s average electric rates are the nation’s 21st highest at 12.21 cents per kilowatt-hour;
  • Ohio is among the top 10 states in total energy consumption;
  • Ohio has modest natural gas and crude oil production and reserves but the Utica shale formation could add considerably to the base of reserves;
  • Ohio has the second-highest crude oil refining capacity in the Upper Midwest after Illinois with a per day production capacity of 530,000 barrels.
  • Ohio is the 10th largest coal-producing state, but used twice the amount that is produced, with electric plans consuming 90% of the total.

OFA Annual Meeting, March 5-6, 2014, Columbus Sheraton Hotel on Capital Square

Frankincense and Myrrh – Ever Wonder What These Are?
If many of you are like me, I am familiar with the names of the gifts the Magi presented to the infant Jesus after his birth – gold, frankincense, and myrrh. Certainly we all know what gold is but the other two are less familiar. I frankly never looked into what the other two gifts really are. If you don’t know, you may be surprised as I was to learn that Frankincense and Myrrh are wood products! That’s right. Both are resins produced by stripping bark from the trees that produce them and then letting the sap run and harden on the trunk, producing the familiar resin. This information was provided by Dr. Charles Ray, Associate Professor, Wood and Forest Science, Penn State University. You can read more about it on Dr. Ray’s blog.

Merry Christmas and Happy New Year!
I hope all had a very Merry Christmas and a chance to enjoy a brief moment with family and friends as we prepare and look forward to a New Year with the hope of abundant blessings for all.

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