Timber prices fell significantly for all log category sizes in the third quarter compared with the same period last year. Medium to large sawlog prices are down by 16% over the same period in 2015, while small log prices are down by 32% according to data supplied by Coillte and UCD (Table 1).

The downward trend in medium to large logs has been consistent throughout the year, but the drop in small log sizes is surprising as prices have been strong throughout the year.

However, the prices for small logs are sourced from a small number of sales and may not reflect the true position. A number of foresters contacted maintained that small log prices have fallen by no more than 10% this year (see panel).

Wood Price Quarterly

Prices are made available for each quarter by Coillte and Wood Price Quarterly (WPQ). WPQ provides price data issued by UCD in collaboration with the Irish Timber Growers Association (ITGA) for the private sector.

The WPQ prices are for a small number of sales, while Coillte prices cover a much larger number of transactions and have greater geographical spread. However, the company’s prices apply only to medium and large logs, as it reserves small logs for its Coillte Panel Product mills.

The decline in sterling from late June has had a major impact on log prices since the value of the pound began to fall from €1.30 to €1.16 against the euro by mid-August.

Timber prices for the final quarter are unlikely to show a significant increase as sterling continued to fall up to October, although it has made modest gains in recent weeks.

However, other factors may be at play in the reduction of log prices. There is little doubt now that log supply has increased from Coillte and private forest owners, so the panic buying that occurred in the past when sawmills faced possible shortfalls no longer applies.

Coillte

Coillte’s arrangement with sawmills to provide quotas has had a positive effect on the supply-demand relationship between the company and its sawmill customers. It provides stability and a degree of certitude for both Coillte and its customers which has been lacking in the past.

This has been a welcome development which is working well, according to sawmill spokespersons and David Feeney, Coillte.

“This year, Coillte achieved the best level of sawlog sales in 10 years, nearly 25% sawlog growth year on year,” said the company’s commercial and supply chain director.

“This gives great confidence to our customers that we will deliver on our ambitious commitment in the new five-year production forecast,” he claimed.

Coillte’s output in 2016 is on target to reach 1.6m cubic metres, while it is expected to reach 1.65m in 2017.

“This has been a real team effort from harvesting, logistics and sales teams,” he said.

“Key to success was the focus on sawlog recovery and optimisation, production and the successful implementation of the new sales contract system,” he maintained.

“The new sales contract system has given the industry more certainty in their supply. It gives us confidence that our journey to being the best forestry company will be achieved and we are on our way to selling 1.8 million cubic metres of sawlog by 2020.”

While the outcome for 2017 is uncertain, the Coillte-sawmill initiative and greater efforts to increase timber mobilisation from private forests demonstrate that the forestry and forest products sector is better prepared than it has been to address currency fluctuation and post-Brexit developments.

Advice to forest owners is to thin

A number of forestry consultants contacted by the Irish Farmers Journal acknowledged that there has been a drop in log prices since last year, but maintained that prices have remained steady for most of 2016.

Managing director of Euroforest Ireland Jim Hurley said that assessing log prices by category can be misleading, as every sale contains a range of size categories and a resultant range of products.

“We carried out a first thinning recently which contained 55% pulp – for energy and board mills – 15% stakewood and 30% boxwood, mainly for pallet production,” he said.

“This would be typical of many first thinnings of Sitka spruce, Norway spruce and some larch-spruce mixtures,” he claimed. “When the value of this basket of products is calculated, the forest owner we are purchasing from is experiencing a drop in price of around 5% compared with the first quarter this year.”

It is likely that log prices will remain at current levels in the short term, but growers shouldn’t panic.

Unlike agricultural production, tree crops don’t deteriorate in value or quality if not harvested. Clearfells, in particular, can be delayed in the expectation of rising prices, but thinning should be carried out as it benefits the quality and price of the final crop.

Minister Creed opens €59m Medite SmartPly facility

Minister for Agriculture, Food and the Marine Michael Creed officially opened the €59m Coillte Panel Product Medite SmartPly manufacturing facility in Belview, Waterford Port, Co Kilkenny, last Friday.

Medite SmartPly, part of the Coillte group, manufactures and supplies innovative and sustainable wood panel products to customers throughout Europe. The upgrade of the plant was completed this year, securing it as one of the southeast region’s largest exporters.

Medite SmartPly employs more than 160 people directly at the plant, which manufactures oriented strandboard, with a further 200 jobs supported indirectly in the wider community.

The Medite SmartPly plant uses trees, harvested mainly in the southern part of the country, to manufacture innovative and sustainable wood products used in construction, flooring and furniture sectors.

Minister Creed said: “The investment in the development of this state-of-the-art facility will enhance SmartPly’s ability to manufacture innovative products to meet the ever-evolving needs of international customers, while providing a very important outlet for pulpwood from Coillte and private forests.”

Coille CEO Fergal Leamy said: “We are now positioned strongly to grow our panels business and have the platform to become the number one provider of value-added wood panels in Europe over the next five years.”