A myriad of pandemic-related impacts caused lumber prices to skyrocket over the last year, providing an anticipated boost for Washington state timber coffers.
The projections are laid out in a recent Washington state Department of Natural Resources (DNR) quarterly revenue forecast report. It shows that the pandemic has had a significant impact on Washington state timber.
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About 70% of revenue generated by timber sales from forests on DNR land is held in trust, and used to help fund services and junior tax districts in timber counties, like Lewis or Mason. This includes money for public safety, schools and infrastructure needs.
“[We’re] very reliant on timber sales, not only Lewis County, but all the timber counties,” said Lewis County Commissioner Gary Stamper.
Early in the pandemic, the DNR expected it to drive down housing prices and new construction, bringing the demand for lumber along with it. But outbreaks and restrictions slowed production at mills, increased the number of workers who were furloughed and laid off, and even closed some mills.
At the same time, the report states low interest rates actually increased demand for home construction and remodeling. Washington state has been in the midst of a housing rush, as throngs of employees who could now work from home sought larger accommodations.
The report states:
“The result was a sharp drop in supply while strong demand remained, making lumber prices rocket up and pushing up log prices. These high prices have continued as wood manufacturers haven’t been able to expand output to completely meet demand due to supply chain and labor supply difficulties.”
To put this in perspective, 1,000 feet of lumber (mbf) went for $478 in March 2020. While prices fluctuated during that year, dropping off in November, by April 2021, the cost of lumber was $1,203/mbf —nearly double the highest prices of any point between 2000 and mid-2020.
The price of logs which DNR sells also increased, peaking at $718/mbf in April 2021, which was high, but still less than prices seen in early 2018. Prices are expected to remain higher than normal through 2022, the report states.
Because of this, DNR is projecting an extra $4 million in revenue for the 2021-23 biennium, bringing the total to $364 million. For fiscal year 2021, the revenue had decreased slightly from $100,000 to $165 million.
While timber is still a source of revenue for trust counties, it brings in far less money than it used to. Between 1995 and 2018, timber revenue decreased by 45% to $123.6 million.
Timber prices will likely continue to fluctuate in the near future. The report notes that Russia is planning on banning timber exports beginning in 2022. It’s unclear what impacts this could have on DNR timber, since logs from state-managed lands aren’t allowed to be exported. But considering Russia supplies 12% of timber globally, the ban is likely to push up the price of logs, at least in the short term.
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