DNR Log and Lumber Price Outlook

DNR composite log prices
Figure 1: DNR composite log prices table from the DNR Quarterly Economic and Revenue Forecast, June 2017.

Log Prices

From the June 2017 DNR Economic and Revenue Forecast: Figure 1 presents prices for Douglas fir, hemlock, and DNR’s composite log. The latter is calculated from prices for logs delivered to regional mills, weighted by the average geographic location, species, and grade composition of timber typically sold by DNR. In other words, it is the price a mill would pay for delivery of the typical log harvested from DNR-managed lands. Readily visible on the graph is the decline in the premium for Douglas fir—due in large part to Chinese demand fortifying hemlock prices. Also readily visible is the drop in prices from late 2014 to early 2016. The price of a ‘typical’ DNR log moved up sharply from a two-year plateau in 2013 to $591/mbf (thousand board feet) in 2014. However, prices declined through 2015 to average $521/mbf. The decline in log price is primarily due to the slowdown in demand from China and ample regional supply of both logs and lumber.

Log prices in 2016 increased to average $536/mbf, they’ve averaged $578 in the first five months of 2017, and we expect them to stay strong throughout the rest of the year.

Lumber Prices

After peaking at $373/mbf in 2014, West Coast lumber prices fell to $311/mbf for 2015. They recovered slightly in 2016, averaging $327/mbf, mostly due to higher first quarter housing starts than in 2015. The increase in starts spiked lumber demand, catching lumber dealers off-guard, and pushed prices up from the end of the first quarter. Prices retreated toward the end of the year but did not fall to earlier lows. Lumber prices have averaged $378/mbf through May.

About this Forecast

The Washington State Department of Natural Resources (DNR) publishes Economic and Revenue Forecasts quarterly to project revenues from Washington state lands it manages. These revenues are distributed to management funds and beneficiary accounts as directed by statute. DNR Forecasts provide information used in the Washington Economic and Revenue Forecast issued by the Washington State Economic and Revenue Forecast Council.