WoodWeek – 17 November 2021

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Greetings from your WoodWeek news team. The party is well and truly over for now for our log export volumes. The added uncertainty inflicted by a ruthless Delta strain of the Covid19 virus makes it worse, but let’s look back briefly before we get too down in the mouth. If the last 5 years of continued growth in log export and forestry revenue led you to buy into the “This time it’s different” school of thought, you have now had a sharp reminder that the over-riding cliché, “What goes up must come down …” is the sage business advice to follow in the future. Getting your timing right is the key of course.

Cliches and life lessons aside, we could all do well to recall that in mid-2016, the MPI 'Situation and Outlook for the Primary Industries' (SOPI) quarterly update (see page 7 of SOPI June 2016) was forecasting export revenue to grow to NZ$6.3 billion by mid-2020. What actually happened was stunning growth in both volumes and prices resulting in achieving NZ$6.9 billion in export forest product sales by mid-2019 (see page 4 of SOPI June 2021). Then along came Covid in 2020 sending a warning shot across our collective bows, before an iceberg called Evergrande pummelled our log export flotilla in the past month.

Moving to more encouraging news, construction of both residential homes using framing and commercial buildings growing demand using more wood is a positive factor as local CLT production comes online. So local demand for logs could offset a small but not insignificant part of the pain of log exports being in a temporary halt.

One of our largest forest companies, Hancock Forest Management NZ is changing its name to Manulife Investment Management Forest Management Ltd NZ (MFM NZ), or Manulife.

Stepping slightly aside, this year (well, okay, next year now) we celebrate the 10th anniversary of one of our strongest conference series. Celebrating 10 years as New Zealand’s most popular agritech event, MobileTECH Ag, has been rebranded to DigitalAg. The 2022 event will be taking place in Rotorua in March 2022.

“We are excited about the name change, as digital agriculture is a better fit for the future of the event and where technology is evolving,” said Innovatek’s programme manager, Ken Wilson.

“When we started the programme a decade ago, mobile technologies like ‘smartphones’, tablets, GIS and drones were gaining momentum with early adopters within the sector. Fast-forward to 2021, all phones are ‘smart’. No longer is mobile tech a leading feature for innovation. It’s now just a given.”

While there are still issues around rural connectivity and farmer adoption, the focus on technology is clearly around digital platforms. The ability to make practical decisions from real-time data is what is driving productivity for the agricultural and horticultural industries.

And finally today, we finish with the compelling story of a man who has adapted COP26 principles to help make a positive change in his personal life ... strategically, of course.

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PF Olsen Log Export Market Update

Market Summary (28 October) - CFR sale prices for logs in China are reasonable but extremely high shipping costs continue to adversely affect the NZ AWG prices - The October AWG prices for export logs dropped an average of $1.10 per JASm3 in the main North Island ports. The domestic prices for structural logs dropped by $5 per tonne in many regions. The PF Olsen Log Price Index dropped $1 in October to $119. The index is currently $4 below the two-year average, $5 below the three year-average and $6 below the five-year average.

China - The CFR price for A-grade logs in China has remained variable but the top end is still 182 USD per JASm3 for October. There is pressure on this pricing for November shipments. Southern yellow pine (SYP) has dropped to 140 USD per JAS for 20cm SED logs. After the Chinese holiday week at the start of October, the daily port off-take has increased by 10k per day to 75-80k.

Softwood inventory levels have dropped slightly over the last two weeks to 4.8m m3. Congestion in China is still an issue (currently 155 handysize and 696 vessels in total anchored outside Chinese ports) and not forecasted to improve in Quarter 4. This congestion may ease in Quarter 1 as Chinese demand for commodities slows down.

Log supply from New Zealand is estimated to be 15-20% down in November as forest owners reduce harvest levels. This may mean there will be a shortage of log supply when Chinese demand does increase. Spruce supply from Europe will not increase much as containers are scarce. The domestic price for spruce sawn timber has fallen by approximately one third in the last two months.

The Caixin China General Manufacturing PMI rose to 50 in September up from 49.2. The level of new orders rose for the first time in three months and sentiment strengthened to its highest point since June. Countering this positive outlook, new construction starts in September fell 13.54% from a year earlier. This was the sixth straight monthly decline which is the longest negative run since 2015.

Demand for logs has been more uncertain due to credit issues in the property development sector and power shortages.

China is in a state of “Structural Reset”. The government has been concerned about the growing gap between the wealthy and the poor in China as this leads to social unrest. Therefore, they are undertaking wealth redistribution strategies (tax the wealthy etc). They are also trying to improve the income and lifestyle of the middle class. The central government wants to reduce property prices while for local authorities the main issue is how to continue making money from this development.

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Log exports bolster port results

Napier Port credits log exports for improved results - Napier Port’s revenue for the year to 30 September 2021 rose 9% to a record $109.5 million from $100.4 million in the same period a year ago, driven by increases in bulk cargo volumes and record log exports in particular.

Napier Port, which is a key gateway for central and lower North Island freight, achieved the record despite the challenges from global container shipping disruptions and the absence of cruise ship visits to the region.

Bulk cargo revenue rose 32.7% to $41.5 million from $31.3 million principally due to higher log volumes, which increased 27.6% to a record 3.02 million tonnes. Average revenue per tonne improved due to tariff increases, one off cost recoveries, and an improved cargo mix.

Container services revenue increased by 4.8% to $65.3 million from $62.3 million, thanks to a 2.9% increase in container volumes to 276k TEU[2] and improved average revenue per TEU.

Napier Port’s result from operating activities rose 6.4% to $43.8 million from $41.2 million, with the unwinding of the protective cost saving measures introduced at the start of the pandemic in 2020 and ongoing investment in capability to drive growth, together with costs associated with increased activity, partially offsetting the impact of revenue growth.

Napier Port also invested to improve services to customers including work to deploy an on-port log debarker, which will allow the company to cease on-port log fumigation.

Outlook - In the annual report Chair Alasdair MacLeod said: “Our base-case volume forecast for log exports in FY2022 is in-line with FY2021. We have been a beneficiary of buoyant log export markets for the past year, but we are not complacent about thepotential for a cooling in these favourable conditions to impact volumes through Napier Port."

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Name change: Hancock is now Manulife

Hancock Forest Management NZ Limited is changing its name – Hancock Forest Management NZ is changing its name to Manulife Investment Management Forest Management Ltd NZ (MFM NZ), or Manulife. The change represents a visual transition to align with our parent company Manulife Investment Management (MFM).

There are no changes to how the business will operate in New Zealand. Our wider business strategy and investment decision-making processes will remain the same. The change also has no impact on jobs within the company, and staff have been notified of this change.

Managing Director Australasian Timberland Operations, Robert Green, says the rebranding signals an ongoing commitment to our future in New Zealand: “It is an important moment for us. We're confident that clients will benefit from the strength and resources of Manulife Investment Management while continuing to tap into our deep, strategic timber and agriculture expertise.”

The change has been taking place behind the scenes for 24- to 36- months, with consideration to how this could be rolled out across the global business. By aligning our capabilities, MFM NZ offers a strength few organisations can match, providing the company with a base to keep building upon moving forward.

The global business is headed by Christoph Schumacher, who recently joined Manulife Investment Management as Global Head of Real Assets, Private Markets. The role unites the firm’s real asset capabilities across real estate, infrastructure, timberland, and agriculture, all of which have been key drivers of diversification, offering sustainable and nature-based solutions and have a long history of helping to generate differentiated returns for our clients.

In New Zealand, Robert Green will remain in his role as Managing Director Australasian Timberland Operations, in addition to General Manager Kerry Ellem and our existing team.

“We're excited about the future with Manulife – and we're confident our staff and various other stakeholders are too.”

Source: Manulife


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Changing landscape of forestry fumigation

(Opinion) While the journey has been long and somewhat tortuous, an advocate for alternative fumigation of New Zealand’s export logs has welcomed a reassessed “road map” on the future use of methyl bromide. The Decision-Making Committee of the Environmental Protection Authority recently announced what it calls a “comprehensive suite” of new rules for the toxic and ozone-depleting substance.

Kade McConville, group director of Melbourne-based Draslovka Services Group, says the outcomes of the EPA reassessment “are now based on science over grandfather rights, and have categorically changed the landscape of fumigation in New Zealand.”

Draslovka is seeking to have ethanedinitrile, a “non-ozone-depleter” developed by the company in the Czech Republic, registered with the EPA in New Zealand.

Kade says he sees the EPA reassessment of methyl bromide as “justice for the environment and the communities which this substance has affected for decades.”

Dr Chris Hill, general manager of the EPA’s Hazardous Substances Group, says the decision sets a roadmap to full recapture of methyl bromide.

“It provides a clear and structured pathway for industry to reduce the amount of methyl bromide emitted,” says Dr Hill.

Ship-hold fumigation will be banned from January 1, 2023. He says ”stepped increases” will apply to the recapture of methyl bromide from containers and covered log stacks, starting from January 1, 2022.

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Image: Kade McConville

Source: Sunlive



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SnapSTAT - Baltic Shipping Index easing a welcome sign





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New report on benefits of weed control chemicals

NZIER Report: Glyphosate’s Economic And Environmental Benefits – Food and pasture growers as well as the forestry industry rely on glyphosate to prevent deep-rooted weeds from taking over their crops and decimating productivity, according to a report by the NZIER on the benefits of glyphosate to New Zealand.

The world's most widely-used weed management tool has extensive economic and environmental benefits. It enables farmers and growers to deliver food and fibre efficiently, cost-effectively, and to a higher quality - allowing access to safe and affordable food.

The report estimates that herbicides are worth up to $8.6 billion to NZ agriculture, with an average impact on output of up to 20%.

Glyphosate is a broad-spectrum herbicide that can eliminate nearly all weeds, which many other herbicides cannot. Without it, producers would face substantial weed pressure - as weeds compete with crops for light, water and nutrients. An even greater pressure exists with climate change and the need for farming practices to become more sustainable.

The NZIER Report to Agcarm can be found Here>>





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Tigercat Releases E-SERIES 822

Tigercat releases 822E series feller bunchers and harvesters with the latest features and upgrades - The 822E is the most compact track feller buncher and harvester platform in the Tigercat track carrier line-up. The powerful machine is versatile for challenging thinning and final felling applications. Strong lift capacity, tight-tuck ER boom geometry, and compact tail-swing make the 822E the perfect choice for selective felling where minimal site impact is important.

A redesigned engine enclosure provides improved roof access for clearing debris. A boom slider also reduces debris build-up in hard-to-reach areas. The clamshell style enclosure and drop-down side platform allow easy access to all sides of the engine, valves and daily service points.

The updated E-series cab includes a new parallel action air ride seat with integrated heating and cooling. The reclining seat is fully adjustable with seat angle and seat extension adjustment. The wider seat cushion and lumbar support provide operator comfort all day long.

Read the full news release here


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US launches forest investor club at COP26

At COP26 during the World Leaders Summit’s Forest Day session, the United States launched the Forest Investor Club. ~ This network of leading public and private financial institutions and other investors aims to unlock and scale up investments that support sustainable, climate-aligned outcomes in the land sector.

These financial institutions and Network Partners are committed to increasing the scale and geographic scope of investment in restoration, conservation, sustainable agriculture and forestry, and green infrastructure.

The Forest Investor Club will accelerate the pace, increase the scale, and expand the scope of forest and nature investment by identifying and facilitating access to a pipeline of investments in forests and nature, collaborating under complementary partnerships to unlock investment opportunities, and working to develop solutions to investment barriers and bottlenecks.

The Founding Members of the Forest Investor Club include Apple, BTG Pactual Timberland Investment Group, Conservation International, Convergence Finance, the U.S. International Development Finance Corporation, FinnFund, Goldman Sachs, Hancock Natural Resource Group, Lombard Odier, Mirova, Norfund, NewForests, Pollination, SAIL Ventures, The Nature Conservancy, and U.S. Agency for International Development (USAID).

Meanwhile, the United States, the European Union, and partners formally launched the Global Methane Pledge, an initiative to reduce global methane emissions to keep the goal of limiting warming to 1.5 degrees Celsius within reach.

A total of over 100 countries including Nepal representing 70% of the global economy and nearly half of anthropogenic methane emissions have now signed onto the pledge. The countries who have joined the Pledge represent all regions of the world and include representatives from developed and developing nations.

The strong global support for the Pledge illustrates growing momentum to swiftly reduce methane emissions—widely regarded as the single most effective strategy to reduce global warming.

Countries joining the Global Methane Pledge commit to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030 and moving towards using best available inventory methodologies to quantify methane emissions, with a particular focus on high emission sources.

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Image: The Costa Rican rainforest, one of the richest areas of biodiversity in the world.Fabio Fistarol
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New look for major NZ Agritech Event

Celebrating 10 years as New Zealand’s most popular agritech event, MobileTECH Ag, has been rebranded to DigitalAg - The 2022 event will be taking place in Rotorua in March 2022.

“We are excited about the name change, as digital agriculture is a better fit for the future of the event and where technology is evolving,” said Innovatek’s programme manager, Ken Wilson.

“When we started the programme a decade ago, mobile technologies like ‘smartphones’, tablets, GIS and drones were gaining momentum with early adopters within the sector. Fast-forward to 2021, all phones are ‘smart’. No longer is mobile tech a leading feature for innovation. It’s now just a given.”

While there are still issues around rural connectivity and farmer adoption, the focus on technology is clearly around digital platforms. The ability to make practical decisions from real-time data is what is driving productivity for the agricultural and horticultural industries.

Continued advances in AI, machine learning, data-capture and big data are enabling new innovations to be developed and adopted every year. Machine vision, where video cameras give computer’s the ability to see, is being used to identify weeds, pick fruit, drive robotic vehicles and monitor individual animals. Systems analysing satellite and aerial images can detect soil deficiencies, weather predictions and carbon mapping. We also have wearable sensors that are tracking animal health, optimising equipment productivity and improving farm safety.

Whether the data comes from video, imagery, sensors, or a combination of each, it is the algorithms within AI and machine learning that are driving better fact-based decisions.

“DigitalAg 2022 will showcase new agritech developments and provide a platform for the sector to come together, discuss the issues and encourage collaboration,” said Mr Wilson.

“We have worked closely with the agritech industry to create an innovative two-day programme and are excited to meet up next year.”

Details on the DigitalAg 2022 programme are now available. The event runs on 30-31 March 2022 in Rotorua, New Zealand. Further details can be found on the event website, www.DigitalAg.events.


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... and finally ... Australian man's pledge to honour COP26


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Man announces he will quit drinking by 2050 - A Sydney man has set an ambitious target to phase out his alcohol consumption within the next 29 years, as part of an impressive plan to improve his health.

The program will see Greg Taylor, 73, continue to drink as normal for the foreseeable future, before reducing consumption in 2049 when he turns 101. He has assured friends it will not affect his drinking plans in the short or medium term.

Taylor said it was important not to rush the switch to non-alcoholic beverages. “It’s not realistic to transition to zero alcohol overnight. This requires a steady, phased approach where nothing changes for at least two decades,” he said, adding that he may need to make additional investments in beer consumption in the short term, to make sure no night out is worse off.

Taylor will also be able to bring forward drinking credits earned from the days he hasn’t drunk over the past forty years, meaning the actual end date for consumption may actually be 2060.

To assist with the transition, Taylor has bought a second beer fridge which he describes as the ‘capture and storage’ method.

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See you again next week.
John Stulen
Editor

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