New Zealand Log Prices - November 2010

Supply and demand in China, New Zealand’s major export log market, appears to be reaching a balance. As such, in-market prices for New Zealand logs in China and Korea have slowed from the rapid rises witnessed through September and October. In-Market prices for a KS log have stepped over US$140/JASm3 and a KI log is currently priced around US$135/JASm3 reports Agrfax.

Strong demand for logs is continuing in India, however this market struggles to attract volume due to the higher shipping rates eroding returns in New Zealand currency. The remaining markets of Korea and Japan have also experienced strong in-market price rises. This is due partly to competition for supply with China, but also from the dramatic lift in value of the New Zealand dollar over the past 4-6 weeks.

Chinese demand for logs from New Zealand continues to be strong and very real. Tight domestic supplies are driving up local prices and forcing processors to look beyond the border for supply. The latest five-year program for China’s Economic and Social Development has stressed that accelerating urbanisation is an important mission over the coming years. Data from the State Council Development Research Centre (SDRC) indicates that China’s urbanisation rate has hit 46% and is expected to reach 63.6% by 2030. The SDRC adds that urban migrant’s demand for housing is likely to become the largest driving force for China’s economic growth during this time, and such growth would boost domestic demand in China by US$4.5 trillion.

The Combined Agrifax Log Price Index, which measures returns from the whole forest, has jumped up by NZ$3/T this month. It is now at NZ$87/T and back at levels last seen in June 2010. A slight reduction in pricing for pruned logs has offset gains made in the unpruned segment of the index. Rising export log prices have led the gains made in the unpruned segment of the index.

For more detailed reports contact AgriFax at: www.nzxagri.com/agrifax