Sources: ABS, AIP, Margules Groome
Margules Groome’s Australian Softwood Residual Log Price Index measures domestic softwood plantation residual log prices (excluding exports). The index is a measure of the residual log value to the forest owner once harvest and haulage costs are subtracted from mill door log prices. It is a measure of the forest owners log margins, or the spread between log prices and logistics (delivery) costs. It should be noted that there is no time lag between the indices as shown.
The latest edition of the index indicates margins have increased again in the June quarter 2023. Logistics costs have continued to come down from their December quarter 2022 high, while log prices have remained high. It is expected that log prices will start to come down from 2024 following timber prices after the latter rose ~40% during and after the COVID-19 pandemic. With logistics costs expected to increase again because of rising fuel prices caused by the deterioration in the value of the AUD, margins are more likely to fall than rise. It should be noted that while timber prices have remained steady in nominal terms, due to inflation (CPI) they have fallen in real terms by ~6% in the last 4 quarters. Real log prices have followed.
For further information and analysis contact Margules Groome.