News
This page is sort of a blog that we
keep related to timberland investment news, ideas & issues.
Another good blog on these topics is
The Timberland Blog by Brian Fiacco.
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On the job front...
April 21, 2008
By Bucky Henson
Buchanan Forest Management has an opening for a "Management
Forester." This individual will be one of our point people
working with our landowner clients to understand and help us meet
their needs. See our
Employment page for more information.
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Notes on markets, etc...
April 1, 2008
By Bucky Henson
As the stock markets rally today, we are taking a look around
our area, the nation, and North America for indications of how
different people are looking at forest products and timberland
markets.
My favorite news item of the day comes from the Reuters website
and regards Plum Creek Timber (NYSE Ticker Symbol: PCL).
Click here for the story:
Plum Creek Outlook
It doesn't look to Plum Creek (or to us) that lumber prices are
likely to improve dramatically over the next few months. We
continue to see mill closures and cutbacks across the nation (Potlatch
Arkansas mill closure) as the effects of the sub-prime
mortgage mess continue to suppress U. S. housing starts. The
weak U. S. market is also affecting Canadian lumber manufacturers (Tembec
market outage) (U.
S. and Canadian lumber manufacturers suffer).
On the bright side, pulp and paper markets remain strong.
Other specialty wood products (utility poles, cross-ties) are still in
demand. Wood continues to move from the stump to the mill, at
least in our area.
Also on the bright side (depending on how you look at it) is the
fact that Plum Creek expects land sales to pick up in the latter half
of 2008 (see the article noted above). With interest rates at
relatively low levels and with what seems to be a feeling that 2009
could see better prices for wood products, maybe that expectation will
be realized. We'll see.
Fire Suppression and Prescribed Burning
We encourage you to read Brian Fiacco's blog entry on fire
suppression and other fire-related issues on his Timberland Blog (see
link at the top of the page). This is a relevant topic for all
timberland owners. Funding for fire suppression is important -
as are issues involving legal liability for one of forestry's best
tools: Prescribed Burning.
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Pine Pulpwood prices in Buchanan's
operating area on the rise
January 10, 2008
By Bucky Henson
In what is probably a somewhat short-lived movement, pulpwood
prices in Central and South Alabama have risen significantly over the
last couple of weeks. Low inventories, Christmas holidays, and a
bit more rain than we've had over the last two years have paper mills
rightly concerned about their winter inventories.
Higher prices generally result in greater supply, so this
increase will probably last only so long. However, as we've been
telling you on this blog, the overall usage of pulpwood fiber -
particularly pine pulpwood fiber - is increasing in our area.
International Paper's return to the use of pine fiber at it's
Cantonment (Pensacola), Florida mill and the new high-capacity OSB
plant that Louisiana Pacific has built at Thomasville, Alabama will
continue to exert upward pressure on the price of pine pulpwood across
our region. In addition to those plants, there also are the
wood-pellet plants that we've discussed going in across the South -
also using pine pulpwood fiber.
We believe (anecdotally) that many landowners in our area have
been holding back on their initial pine plantation thinnings waiting
for a big price increase on pine pulpwood. If the timing is
right, a landowner can catch a good price for his/her pulpwood during
a time when ground conditions are good for thinning. (However, we
should beware of thinning our pine plantations during really wet
weather just because a good price is available. In many soils,
extreme moisture will soften the ground such that logging equipment
can damage the root systems of the trees that are left after the
thinning).
Anyway, pine pulpwood price fluctuation is difficult to predict,
but we should see it in our area - at least for a while.
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Why are paper companies selling their
land?
September 28, 2007
By Bucky Henson
On August 9, I told you that we would offer a discussion of why
paper companies have been selling their timberlands and whether or not
it was because they believe that timberland is not a good investment.
As we hinted, that is not the reason.
I recently read a really good article that explains why these
companies have decided to divest their timberlands. It was
written by Mike Clutter (who was recently named dean of the David
B. Warnell School of Forestry and Natural Resources at the University
of Georgia located in Athens, Georgia), Tony Cascio and David Newman.
I've received permission to offer it here in an Adobe .PDF format:
Click here to download the .PDF document.
Please let us know if you have any thoughts about this
discussion.
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Another Southeastern U. S. wood
pellet plant to open soon
September 27, 2007
By Bucky Henson
We received an email from a friend today about another wood
pellet plant that is set to open in Southeast Georgia by the end of
the year. Appling County Pellets, LLC, a division of Fram
Renewable Fuels, LLC, will be producing commercial wood pellets at a
plant located near Baxley, Georgia to
ship to Europe through ports in Savannah and Brunswick, Georgia.
For more information about Fram, click here:
www.framfuels.com.
We don't have estimated volumes of wood use, yet. But,
we'll update this page when we get them.
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Temple-Inland will sell 1.6 million
acres of timberland in a deal with The Campbell Group
August 9, 2007
By Bucky Henson
In the last of the "big" paper company land sales anticipated
by the industry over the last few years, Austin, Texas - based
Temple-Inland, Inc. (NYSE: TIN) announced that the company
will sell some 1.6 million acres of timberland to investors represented by the Campbell Group - a timberland investment
management company based in Portland, Oregon. The purchase
price is reported to be $2.38 billion. The sale is part of an
overall reorganization of Temple-Inland.
Temple-Inland is primarily a packaging and forest products
company. Earlier this year, Carl Icahn, the noted
investor-activist (sometimes referred to as a corporate raider)
bought an almost 7% share of the company. The decision to make
the land sale and the accompanying restructuring of the company is
said to have been at least strongly influenced by Icahn.
Keep an eye here on our news page for a discussion of why
paper companies are selling land and whether or not the sales
suggest that these companies believe that timberland is not a good
investment. Hint: That is not why they are selling
timberland.
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MeadWestvaco agrees to sell 228,000
acres of timberlands located in the Southeast U. S.
August 8, 2007
By Bucky Henson
Paper & wood products manufacturer MeadWestvaco Corporation
(NYSE: MWV) announced this week that the company will sell
approximately 228,000 acres of timberlands that it owns and its
long-term timber contracts (or leases) on another 95,000 acres or so
to Wells Timberland REIT, based in Norcross, Georgia, for $400
million.
The timberlands are located primarily in Southwest Georgia and
Southeast Alabama. Like the recent International Paper sale of
timberlands, the deal includes a fiber-supply agreement whereby
MeadWestvaco will purchase wood from about 300,000 acres (virtually
all of the acres involved in the deal) that are within trucking
range of its Mahrt, Alabama paperboard mill.
The land is said to now be stocked with about 13.5 million tons
(and growing) of merchantable timber - mostly southern yellow pine
sawtimber and pulpwood.
Wells Timberland REIT is a new, public, non-traded timberland
fund (the first of its kind) created by Wells Real Estate Funds, a
national real estate investment company based in Norcross, near Atlanta. The
MeadWestvaco purchase will be the first for the newly created
timberland fund. The fund will seek to return value to its
investors by selling timber and land-use rights (hunting/recreation
leases, etc.). We do not know what mineral rights may or may not
be included in the transaction.
This transaction is the next-to-last "big" paper
company land sale that has been anticipated over the last year or so. The
last "big" sale that has been expected is the sale of Temple-Inland's timberland
holdings. We'll have an article on that deal soon.
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Funding approved by U. S. Senate for
dredging of the Alabama-Coosa River System
May 31, 2007
By Buchanan Staff
The following are excerpts from a press release from U. S.
Senator Richard Shelby (R-AL)...
May 24, 2007
U. S. Senator Richard Shelby (R-AL), a member of the Senate
Appropriations Committee, today announced Senate approval of funding
for Alabama included in the fiscal year 2007 (FY07) Emergency
Supplemental Appropriations bill. This legislation will now go to the
President for his signature.
“As we continue our military operations abroad, it is my goal to work
in every possible way to make sure that General Petraeus and our
troops have my full support, both morally and materially, to carry out
their mission,” said Shelby. “This legislation reinforces the U.S.
Senate’s commitment to warfighters in harm’s way and I was proud to
vote in favor of it.”
Among
other details of the bill mentioned in the release:
Alabama-Coosa River System Dredging Project
- $3 million
The Alabama-Coosa river system was seriously damaged when Hurricane
Dennis wreaked havoc on the Gulf Coast. The state of the river system
has significantly strained existing industry that relies on the river.
As an example, the silting and shoaling as a result of Dennis is
increasing the transportation costs of a single industry on the river
by $100,000 each month. The Army Corps of Engineers will use this
funding to begin dredging the system to alleviate the problems that
have plagued barge traffic over the past several years.
“The Alabama-Coosa River runs through an economically depressed area
of the state in serious need of industry and good paying jobs,” said
Shelby. “If the Alabama-Coosa can achieve full operational status,
jobs and industry will follow. We must not forget the damage these
counties have endured. The dredging will ensure that this vital
waterway is restored to the people of Alabama.”
This
is great news for Alabama - in particular for the Selma, Alabama wood
pellet manufacturer that we mentioned earlier. The dredging will
allow Dixie Pellet, LLC to ship its product to markets in the EU.
This is also good news for timberland owners in our area, as it helps
establish another market and greater utilization of the wood that we
grow.
As the press release notes, dredging
of the river system will help the State of Alabama as a whole by
allowing industries of all sorts to ship products to customers and
from suppliers in a cost-effective manner.
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Drought conditions continue across
the deep south
May 14, 2007
By Buchanan Staff
Across Mississippi, Alabama and Georgia, we are continuing to
experience severe drought conditions. There were a few
thunderstorms that popped up over the weekend, but we are still in
need of rain. As is usually the case during droughts, trees and
wood markets are feeling negative effects.
Although we have yet to see severe outbreaks of
Southern Pine Beetle (SPB)
infestations across our operating region, we have seen a number of
problem areas that we believe are either caused by or taken advantage
of by the
Ips Engraver Beetle. We believe
that the severe drought conditions over the last year or two have
weakened many trees and left them subject to attack by parasites such
as the Ips Beetle.
Do we know whether or not Ips Beetles kill each tree? No.
Some trees simply expire due to the drought, and some may be weakened
or killed by some other parasite or disease.
Control of Ips infestations can be difficult. Whereas, in
our area, SPB tend to infest all of the trees in a "patch" of maybe 10
to 100 trees or more, the Ips Beetle tends to infest and kill "a tree
or two here and a tree or two there."
In the case of a SPB infestation, we usually cut all of the
trees in the infested patch and then cut a buffer of green trees
around the patch (not unlike excising cancerous tissue).
In the case of an Ips infestation, we generally don't wish to
cut the "apparently" healthy green trees, because we're waiting for
the best market conditions and optimal tree size for the harvest of
those trees. So, we have to watch and wait. It's always a
judgment call, but sometimes, the damage from the Ips and/or the
drought is severe enough that a salvage harvest is necessary.
Unfortunately, drought conditions usually coincide with
less-than-optimal market conditions. In the South (unlike some
regions) the best, easiest time to harvest timber is during dry times.
Whether harvesting timber on a hillside or in a swamp bottom, the
drier, the better for a logging crew. Therefore, delivered wood
supply is at a peak during these dry times. Mills across the
south will often have more wood available to them than they need.
As a result, the mills do not have to pay as much for that wood as
they do when they "need" it.
Fortunately, wood is moving in our area at present. The
prices may not be the best ever, but they are not the worst ever,
either.
So, we watch, wait, and - when necessary - act.
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Southern Hardwood Forest Research
Group Seminar
April 25, 2007
By Buchanan Staff
Last week, Buchanan hosted some 80 individuals from across the
south on Buchanan's King Place (located in King's Bend on the Alabama
River near Selma). The group toured a number of ongoing hardwood
regeneration study areas as well as enjoying lunch and fellowship
time.
If you would like more information on the Southern Hardwood
Forest Research Group, please contact us at
info@buchananforest.com, or
just give us a call.
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Buchanan Forest Management to host
hardwood research group in April 2007
March 14, 2007
By Bucky Henson, Buchanan Forest Management
On April 19, 2007, Buchanan Forest Management will host a
day-long seminar on Southern hardwood regeneration and management by
the Southern Hardwood Forest Research Group. We plan to tour
several tracts in Dallas County, Alabama (where our home office is
located) where we have ongoing hardwood regeneration projects.
The Southern Hardwood Forest Research Group is a gathering of
scientists, registered foresters and interested individuals who meet
regularly to discuss topics and issues related to Southern hardwood
forests.
Hosting this seminar and similar functions is part of
Buchanan's continuing involvement in forest research with a
particular interest in Southern hardwood research.
If you have an interest in attending the seminar or have
questions, please contact us. The seminar will start in Selma
around 9:00 AM and conclude around 3:00 PM. Lunch will be
served in the woods.
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New wood-based manufacturing in the
Southeast U. S. coming online in late 2007 and early 2008
March 13, 2007
By Buchanan Forest Management Staff
A number of significant developments affecting Southeastern U.
S. timber markets are slated to take place in the latter part of '07
and '08. Thanks to the investment of literally hundreds of
millions of dollars in new facilities and equipment, several new
and/or improved wood-based manufacturing sites will begin or restart
production during that timeframe. This is a recap of the ones
that we know at least something about. If you know of others,
please, PLEASE let us know.
Louisiana Pacific OSB Mill -
Thomasville, Alabama
Picture courtesy of Louisiana Pacific's website.
Announced in late 2004, Louisiana Pacific's new $120
Million-plus OSB (oriented strand board) plant is expected to begin
production in late 2007 or early 2008. The plant is expected
to use primarily Southern yellow pine "pulpwood" (wood that is
either too small or too rough for sawing for lumber or peeling for
veneer and which has traditionally been used for paper production).
We hear that the plant will consume as much as a million to a
million and a half tons of roundwood per year. The term
"roundwood" refers to tree stems or parts thereof that have been
harvested, placed on a log trailer and hauled to a mill to be run
through a chipper, sawmill or veneer plant.
We're guessing that most of the wood for this mill will come
from West Central and Southwest Alabama and from East Central and
Southeast Mississippi, but it should be expected that this new
consumption will affect wood markets across the region.
More information on this mill can be found at:
LP Thomasville.
Wood Pellet Plants - Dallas County,
Alabama and Jackson County, Florida
Two other facilities guaranteed to impact regional wood
markets are planned wood pellet plants in Alabama and Florida.
An emerging market for Southeast timberland owners is coming
from the European Union. In a nutshell, regulations in the EU
require electricity producers to use renewable resources as a share
of their raw materials. As a result, these producers are
purchasing wood pellets to supplement coal and other materials in
their facilities. The U. S., with its bounty of wood, is
providing a lot of that supplemental material. Run an internet
search on "EU wood pellets and energy," and you'll get all sorts of
information about this growing market.
New Gas Concepts, Inc. is building a $100 Million-plus
facility, Dixie Pellets, LLC, in Dallas County, Alabama just outside
Selma. The plant is scheduled to begin shipping product in late
2007 or 2008. According to New Gas Concepts' website, this
project:
"...involves the construction and operation of the world’s largest
wood pellet production plant in Selma, Alabama. The pellets will be
barged down the Alabama River to the Port of Mobile, and exported to
European Union electrical utilities as feedstock for power generation.
Because Dixie Pellets will utilize renewable wood sources,
gasification technology, and will minimize the carbon emissions in
transportation, its pellets qualify as a “green” energy source in the EU. Favorable incentives for green power sources make the pellets
valuable to buyers in the EU."
We think that this facility will consume roundwood at a rate of,
maybe, a half of a million tons or more per year; although, we
understand that a lot of the wood for this plant will come in the form
of dust and shavings from other wood products facilities such as
sawmills and veneer plants. We'll know more as the plant's
opening draws near.
New Gas Concepts' website can be reached here:
New Gas Concepts.
On a 225-acres site near Cottondale, in Jackson County, Florida
(in the Panhandle), a new wood pellet plant is being constructed by
the JCE Group of companies. JCE Group, headquartered in
Gothenburg, Sweden, has operations worldwide in diverse industries
such as oil & gas, forestry, real estate, construction, distribution
and IT/telecom.
This plant will also provide wood pellets for EU electricity
producers. JCE is making a $100 million investment in a new
subsidiary, Green Circle Bioenergy, Inc. in Florida to produce the
pellets. We've read that the plant may use between 300,000 and
500,000 tons of wood or more per year - a lot of which will be
roundwood, we can guess.
More information about the Cottondale plant can be found on the
JCE Group website at:
JCE/Green Circle.
International Paper - Cantonment, Florida
Paper Mill
Maybe the biggest news at this point has to do with IP's
existing mill near Pensacola. This mill was converted several
years ago to a "white" paper mill using eucalyptus chips from South
America. In 2006, IP decided to convert the mill back to a
"brown" paper mill producing linerboard. As a result, the mill
will be using Southern yellow pine almost exclusively as early as late
2007.
We guess that this will increase their pine pulpwood consumption
to as much as 1.2 to 1.5 million tons per year, maybe more.
Anyway, it's going to use a lot of wood.
So, in all, we're looking at additional consumption of mostly
pine pulpwood on the order of some 3 to 4 million tons annually across
a big part of our region (Northwest Florida, Alabama, and
Mississippi). That is, of course, assuming that current
production levels are maintained at the other existing facilities
(paper mills, etc.). This should be good news for timberland
owners in our area.
Buchanan
Forest Management
1064 Valley Creek Church Road
P. O. Box 990
Selma, Alabama 36702-0990
Phone: 334-872-0491
Fax: 334-875-9436
Email:
info@buchananforest.com
Buchanan Forest Management P. O. Box 990 Selma, Alabama 36702-0990 Phone
(334) 872-0491/ Fax (334) 875-9436 
