WoodWeek – 14 July 2021

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Greetings from our WoodWeek and WoodWorks team. Thanks for coming to work during the school holidays!

Log export markets – What comes next? Thanks to Forest 360 we have a view of the markets from the people doing the business. To quote our first story today "It’s been a dream run over the past six months which has culminated in the highest export log prices we have seen in 30 odd years. This has been because of several factors including lack of supply into China from Australia, Europe and the Pacific Northwest. In turn its provided forest owners with stellar returns and allowed many contractors within the industry to recapitalise and improve the quality of their machinery. The increase in harvesting activity has put a strain on infrastructure and we are seeing this manifest into congestion at ports and increased turn-around times for trucks, trains and vessels. Read more in today’s issue."

Moving across to the situation for Australian log exporters, its quite a different story. Softwood log exports remain lower as prices soften - Australia’s average softwood log export price slumped to a reported AUDFob109/m3 in May 2021, down 16% on the prior month.

Meanwhile, in Wellington the work is less about real world business and revenue- earning exports; more about ‘he said. she said’. According to today’s new update from the beltway, Labour has quietly shifted the goalposts on its first campaign promise of the 2020 campaign, a policy that would make it more difficult to plant swathes of prime food-producing land in trees to harvest carbon credits.

For foresters and forest managers, coming in November we have worked with others in the industry to set up a series of pre-conference workshops the day before our ForestTECH 2021 event. This week we’ve included more details of the eagerly awaited programme for the end of year technology update which will run in Rotorua, New Zealand on 23-24 November (and live streamed to an international audience). This year it will again be covering innovations around forest resource management, remote sensing, data capture and forest inventory in addition to forest establishment, mechanised planting and automated silviculture. Further information, including the two-day and workshop programme, can be found in the story below or on the event website.

This week's SnapSTAT shows a positive forest safety trend and comes to you courtesy of our features sponsors: the great team at Chainsaw & Outdoor Power (COP) and Oregon.
Finally today - the science is in and - the way I see it, we win! A new international study in a global scientific journal has recognised plantation trees as the best source for storing carbon and providing climate change mitigation in comparison to other types of tree plantings.

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Forest 360 Log Market Commentary

(The Chronicle: Marcus Musson, Forest 360) A good analogy of the current market situation would be when you’re 9 days into a 10-day stint at a 3-star report in Fiji, you’re quietly confident that you have managed to dodge a dose of deli-belly, then your stomach begins to gurgle, and you start to sweat. You’re not sure whether you’re talking yourself into it or if you’re actually about to become well acquainted with the porcelain.

It’s been a dream run over the past six months which has culminated in the highest export log prices we have seen in 30 odd years. As commented on previously, this has been because of a number of factors, mainly a lack of supply into China from Australia, Europe and the Pacific Northwest. This has, in turn, provided forest owners with stellar returns and allowed many contractors within the industry to recapitalise and improve the quality of their machinery. The increase in harvesting activity has put a strain on infrastructure and we are seeing this manifest into congestion at ports and increased turn-around times for trucks, trains and vessels.

June has been especially problematic for port congestion. Repairs to Gisborne’s berth has resulted in load rates of less than half the usual level and, as of last week, there were around 13 vessels at anchor. The average wait time for these vessels to get to the front of the que is around 22 days at a daily cost of around $US30,000 which equates to a total demurrage cost of $US660,000!! This congestion at Gisborne is pushing volume into Napier by truck which is creating space issues there and resulting in exporters scrambling to keep the gates open. To top this off there have been a number of vessels denied entry into NZ ports due to having a dirty hull, which is basically unwanted organisms growing on the underside of the vessel. This is a result of port congestion worldwide and vessels sitting parked up at ports in tropical waters for extended periods waiting to load or unload.

NZ supply into China has been similar to previous months at around 2 million cubic metres but we are seeing some competing supply appear in the market from Uruguay and other smaller players as prices reach a point that makes it worth while them exporting to China. Total inventory is still considered low at around 4.3 million cubic metres so there’s no real panic about a supply/demand imbalance, just yet.

So why the stomach gurgling and sweating? There are a few indicators that demand is dropping as construction activity in China tapers off. Efforts by a few NZ exporters to push the CFR price above $US200/m3 were met with resistance and resulted in a decrease into the early $US190’s, still a strong number but also an indication that we may have found the ceiling. Talking to a number of exporters last week the general comment was that Chinese buyers have stopped answering calls and closed the laptops. Whether this is a genuine drop in demand or an orchestrated ploy to get the sales price down, only time will tell, but the silence is deafening.

Another slight wrinkle is that Taicang Port, the second largest log port in China, has recently started reducing the volume of logs it will receive to a level at which it will only supply the sawmills based on port company land. This is obviously a concern as reduced port space results in reduced demand as smaller sawmillers are forced to relocate to other regions to secure log supply.

As at the time of writing, most exporters are holding back on setting the July wharf gate purchase prices. The belief is that, although there should be a decrease of around $10/m3 for July, most are waiting to see who fires first and at what level. Domestic log prices are generally up across the board in response to the strong export prices and sawmillers will be welcoming some relief, if and when, export starts to button off.

So, while we’re not quite reaching for the dia-stop pills just yet, we are making sure that our plane tickets are transferrable and there’s a good stash of purex in the bathroom …


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Australia Log Exports, Prices Low

(IndustryEdge) Softwood log exports remain lower as prices soften - Australia’s average softwood log export price slumped to a reported AUDFob109/m3 in May 2021, down 16% on the prior month. Exports totalled 158,095 m3 lifting from the prior month, but still 51% lower than exports in May 2020 at the absolute height of the pandemic. The driver for the decline, of course, has been China’s decision to ban the importation of logs from Australia. The faltering prices appear to have impacted both larger (>15 cm) and smaller (<15 cm) dimension log exports.

While notable that other countries are now receiving Australia’s softwood logs, what might be the most notable feature is there are a range of countries who have been acquiring locally produced softwood logs, and as the average prices indicate, more than a few of them are paying prices equivalent to or better than those paid by Chinese customers.

Click here to see more coverage and graphs including monthly exports, by main country, can be observed below, along with the price in US dollars.(Subscribers to Wood Market Edge online can click through to access their subscription and interrogate the detailed data.)

More >>

Source: IndustryEdge



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Labour Accused of Shifting Forestry Goalposts

Labour shifts goalposts on forestry – Labour has quietly shifted the goalposts on its first campaign promise of the 2020 campaign, a policy that would make it more difficult to plant swathes of prime food-producing land in trees to harvest carbon credits.

Last July, Labour's rural communities spokesman Kieran McAnulty and Forestry spokesman Stuart Nash promised that within six months of the next Government being formed, Labour would amend National Environmental Standards for Plantation Forestry to allow councils to determine for themselves what classes of land can be used for plantation and carbon forests.

Resource consent would have been required for plantation forests to be grown on land known as "elite soils", land which has a Land Use Capability Class of 1-5. Land of a higher ranking, deemed less essential for food production, could still be used for forestry as now.

The policy responded to fears from some rural communities that the high price of carbon under the emissions trading scheme was encouraging swathes of the countryside to be planted in pine trees. As the price of carbon rose, it became more economical to convert productive farmland to pine forests.

The scale of the problem may have been overstated to begin with. The latest data shows that since 1989, 87 per cent of ETS-registered forests were planted on land use classes of 6 and above.

More>>

Source: NZ Herald
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snapSTAT feature







Source: FISC How Are We Tracking?



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Plantation Forests Store More Carbon

A new international study in a global scientific journal has recognised plantation trees as the best source for storing carbon and providing climate change mitigation in comparison to other types of tree plantings.

The peer-reviewed Nature Communications journal has published a study that plantation trees deliver almost three times more carbon abatement over 100 years than environmental plantings, Chief Executive Officer of the Australian Forest Products Association (AFPA), Ross Hampton said.

“This study confirms that trees planted for harvesting will deliver more benefits for the environment than trees planted for environmental purposes. The climate implications are significant, up to 269% more carbon is captured by plantation trees and 17% more than achieved by leaving a newly planted fast-growing conifer forest unharvested.

“There are programs in Australia that provide incentives for farmers to plant biodiversity plantings for carbon purposes but no programs that incentivise farmers to plant plantation trees. This must be rectified, the biggest asset to Australia’s storage of carbon is being left on the side lines.”

We already know that when trees are manufactured, they continue to store carbon, now we also know that as plantation trees grow, they store more carbon than any other type of planting. Plantation trees are necessary to fight climate change and move towards net-zero by 2050.

See the study here.

Source: AFPA



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Caterpillar: New Mulchers Go Big

New mulchers for big and small excavators and forest machines - The new Cat mulchers for tracked and wheeled excavators and forest machines deliver reliable operation in tough forestry applications. With their easy-to-maintain design, these mulchers incorporate several safety features to protect both workers and equipment at the jobsite. With the addition of the new Cat HM3013 and HM5515 models, Caterpillar now offers a mulcher attachment for Cat front-reach machines from 11 to 36 tons (10 to 32.7 tonnes) and long-reach front machines from 40 to 52 tons (36.3 to 47.2 tonnes).

Key components on the mulchers factor into their consistent, reliable performance. The variable torque hydraulic piston motor shifts between high speed, low torque and low speed, high torque to deliver speed when it’s needed and power when it counts. Hardened counter blades mounted inside the housing help break down the finished material, which can increase the rate of composting.

More>>

Source: Australia Heavy Quip Journal



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US Buying up our Primary Industries

ANALYSIS: United States citizens and companies are buying up New Zealand land for farming, forestry and wine-making, an RNZ analysis reveals.

Almost 180,000 hectares of farming land was purchased or leased by foreign interests between 2010 and 2021.

During the 11-year period, almost 460,000ha – a little under the size of the Auckland region – shifted out of New Zealand control through purchases, leases or rights to take forestry.

The figures come from an RNZ analysis of Overseas Investment Office (OIO) data carried out as part of the series Who's Eating New Zealand.

Selling off our primary industries
Of the foreign sales, the biggest proportion of land – 39 per cent – was purchased for forestry. Dairy operations accounted for 16 per cent and other types of farming for 22 per cent. Wine was fourth on the list at 2 per cent.

Dairying, meat production and forestry represent three of New Zealand's biggest primary industry export earners. Dairy exports earned nearly $16 billion in 2020, beef and sheep meat exports earned $7.7bn, forestry $5.9bn and wine $2bn.

Sale of land to foreign interests over the past 10 years netted about $1.4bn for dairy, $320m for other farming, $530m for forestry and $465m for wine. The value of some transactions are confidential.

Foreign interests from the United States bought the most land for forestry, dairy, farming and wine making.

New Zealand's government is keen for more foreign investment. Rules around forestry have been loosened to help reach the one-billion-trees target, but there's also a push for investment in the food and beverage sector.

More >>

Source: RNZ & Stuff


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ForestTECH 2021 programme now out

Every year one major forest technology series is run in this region. It’s designed by and for Australasian forestry resource managers, inventory foresters, researchers and tech developers. It’s the one event every year where remote sensing, GIS, mapping and forest inventory specialists, and for the first-time last year, tree crop and silvicultural managers - get-together.

It’s independent. It’s run by this region’s leading forestry technology events company, the Forest Industry Engineering Association (FIEA). Amidst the uncertainty of events in the COVID-19 environment, we’re delighted to announce that like the 2020 event, ForestTECH 2021 in November is ON.

The format for the annual technology series that’s been run in both countries since 2007 has though this year been slightly modified. The format again will enable planning with some degree of certainty for ForestTECH 2021 delegates, presenters and exhibitors.

So, what’s the format?

1. One location. Like 2020, the physical event (on-site presentations, exhibitions and workshops) will again be run in just one location this year, Rotorua, New Zealand.

2. Live links from the New Zealand event will be set up for those unable to travel into Rotorua. With the uncertainty still surrounding international travel and whether borders will be open, the live virtual linkage will ensure international delegates can still actively be involved this year. Last year, a record number of international delegates from over 20 countries were able to pick up this option. On-line questions from virtual conference delegates will be able to be made to all presenters - live.

3. Two distinct themes. This was trialled last year for the first time. Overwhelmingly the written feedback told us to keep with this same split in focus for 2021. In addition to the usual technology updates on remote sensing, new data collection technologies and forest inventory management, a second day will be focus on mechanised planting and automated silviculture. European technologies are already well advanced and are being trialled and used commercially on flatter terrain by larger forestry companies in both New Zealand and Australia.

4. Increased international involvement. In addition to New Zealand presenters, key technology presenters and forest companies from Canada, Finland, Germany, South Africa, Chile and Australia will all be presenting this year.

5. Additional half-day workshops. Three additional half-day pre-conference workshops for those delegates attending Rotorua have been set up for delegates. Details on each are contained on the website.

Note: Programme details and further information can now be found on the event website.

Photo: FCNSW



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... and finally ... back in the good ol' days

Maude and Milda were talking about their grandchildren after the holidays.

Maude said, “My daughter-in-law stopped making my grandchildren send their thank you notes. Each year I sent the grandchildren a card with a generous cheque inside. I always received a lovely thank you note. However, since my daughter-in-law stopped making the grandkids send thank you notes, I never hear from them.”

Milda said, “My daughter-in-Law never made the grandchildren send thank you notes. I, too, send them a very generous cheque. However, for the past several years, I hear from them within a week after they receive it. In fact, they each pay me a personal visit.”

“Wow,” remarked Maude. “I wish mine would do that.”
“You can, Maude, you can.”
“How?” Maude asked.
“Simple,” Milda replied.
“Do what I do: Don’t sign the cheque”



See you again next week.
John Stulen
Editor

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