By Ram Dahal, DNR Forest Economist
Timber prices are the dollar values paid to a landowner for the right to harvest by loggers or timber buyers. Timber pricing is important as it not only defines the value of the timberland but also as a driving factor for timberland investments. Therefore, an understanding of how timber prices are set is foundational for both buyers and sellers of stumpage.
In principle, the price offered for timber depends on the interaction between the supply and demand components of a market. In the context of a timber sale, demand refers to a logger or timber buyer’s desire to purchase timber and willingness to pay for it. In most circumstances, wood-consuming mills are the primary drivers of timber demand. On the other hand, supply refers to the total amount of a timber that is available to the marketplace. Forestland owners are the primary drivers of timber supply. Continue reading “Timber Prices: Supply and Demand”