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Two Trees Forestry
167 Main St.
P.O. Box 356
Winthrop, ME 04364
V: (207) 377-7196
F: (207) 377-7198 harold@twotreesforestry.com

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Monday, May 15 2017

Spring 2017: tight quotas, winter thaws, firewood sales down

Selling low-grade wood persists as Maine’s major market quandary. Last May, UPM’s Madison Paper closed, and in January, Verso Paper shut down one of its three paper machines in Jay, decreasing demand for raw fiber in total by roughly 1,000,000 tons per year, with pulpwood prices also falling. As a result, the remaining Jay, Rumford, and Skowhegan mills are holding loggers to tight monthly delivery quotas, in order to control wood procurement. Though we continue to move both softwood and hardwood into those mills, selling such wood has become more complicated. Complicated too, was this winter’s weather with two significant thaws in January and February. A cold March helped salvage the rather dismal winter, though winter harvests were down significantly as a result. Sawlog markets provided the best news, though by winter’s end those markets appeared to be nearing temporary saturation. We look to the summer with uncertainty, though we remain busy as landowners continue seeking to harvest timber.

In addition to the pulp demand declines, 2016 saw the loss of pulp market price premiums for popple and spruce/fir groundwood. Popple groundwood – a pulp formed by mechanically grinding pulp chips to separate cellulose fibers – is derived from rot-free aspen with a minimum top diameter of 5”. Today, that same popple is generally grouped with other hardwoods and sells without a premium. More surprising was the price premium lost from spruce/fir, the historic foundation of pulp and paper making in Maine. Madison Paper was our last major spruce-fir buyer; the remaining local mills mostly process hardwoods now. Previously spruce/fir stumpage significantly outperformed hemlock and pine, though today such woods sell as softwood pulpwood for the same as pine and hemlock. Such structural changes to the market are unlikely to reverse soon.

While new markets for low-grade wood have cropped up over the years as wood pellet plants, the continued low cost of fuel oil appears to be damping those initiatives. Similarly after a surprisingly long run at above average price and demand levels, commercial and residential firewood needs has fallen off. Wood sold as firewood tends to be at higher rates than hardwood pulp, so the reduced sale has lowered landowners’ income from hardwood, as well.

So how/can we adapt to these conditions? Despite the concern with markets a complementary concern is for Maine’s skilled and honest loggers who do such valuable work. While we foresters may decide which trees to cut, it is ultimately the hard-working loggers who remove the poor ones without damaging the potentially more valuable ones. And so if we are to retain such excellent contractors, wood needs to be cut. If they can’t stay busy they may not be available when next we need them. Not surprisingly these same folks, squeezed by pulp quotas, have been merchandizing their wood more aggressively. Where before, when encountering a questionable log section, some simply bucked it into the pulp pile, today they are diligently pushing the log specification dimensions, and sending more wood to the sawmills. A nearly absurd example occurred this winter in Sidney where a logger sold 70% of relatively average hemlock as sawtimber.

Looking forward, with a resource as vast as the Maine woods, it seems inevitable that new players will fill any opening created by a smaller pulp and paper industry. Products, such as cross-laminated timbers (CLT) and glulams, can utilize small diameter sawtimber to create columns and beams, rivaling the strength of steel, are being tested and certified to existing lumber standards. Researchers at UMaine’s Wood Composites Lab, as well as some of Maine’s pulpmills, continue researching and developing alternative wood uses, including some for textiles, insulation, and biofuels. A potential winner are the nanofibers within cellulose, a further refinement of the pulping process, which extracts fibers as strong as steel but five times lighter, useful for any number of applications. Thus as we step toward an uncertain summer, we hear thoughts of useful markets to come.