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Company Keeping Pace with the Economic Turnaround

Company's and contractor's log trucks show the bigger logs that are being produced on the Sierran lands

 

Company's and contractor's log trucks show the bigger logs that are being produced on the Sierran lands

Company’s and contractor’s log trucks show the bigger logs that are being produced on the Sierran lands

January 2014, Ryan McKillop, Inventory Forester –

There are finally signs of an economic turnaround, and the Company has been working on several projects that will guide our operations over the next few years.

These include projects in the western Sierra low country, high country, our east-side Sierran lands, and into the French Creek area.

These projects along with the various others will ensure that we will keep our business on track for the next five years or so.  Given what we’ve been through during the recession, the fact that we’ve weathered what seems like the worst of it, it now seems like the Company is in a pretty good position for success moving forward.

Of course, this all hinges on the continued improvement of our economy, as well as other hard-hit economies like China, who import our wood products.  Seems like, at least for the near future, that we will be able to continue exporting a portion of our logs, and that factor alone helps domestic pricing.

Additionally, housing starts are projected to reach over 1 million units for the first time in 7 years, and the Fed has promised to keep long-term rates associated with new mortgages as low as possible.

Though long-term rates have come up recently, they are still well below the historical average, and new origination loans are expected to take a majority share of the mortgage finance market for the first time since 2006.

It looks like a slow, but steady climb for housing starts, all we need now as the big driver, it seems, is some significant job creation to occur.

The Graph shows a clear North American lumber price increase in Douglas-fir and pine since the bottom in 2009.  While there is still much room to get back to 2004-2005 lumber prices above $500/mbf, we’re headed in the right direction.  Hopefully log prices will follow suit.

While Soper is known for producing a quality big log, the fact is that every year we seem to be getting less and less of a premium for that kind of quality.

While it’s more efficient to get those bigger logs to the mills, they do take much longer to grow than what is the optimal rotation age of 70-80 years.  Our first plantations are now 57 years old and quickly becoming good-sized logs.

Three-log load on the way to the mill

Three-log load on the way to the mill

Plantation thinning and smaller size log production is something that has to happen to keep our growth rates maximized and the stands healthy.

Our foresters have been patiently waiting for these acres to finally start coming online, which they are, even though it means less efficiency and thus more cost.

As it stands now, 22% of our Sierran ownership is considered to be in managed plantation of various ages.  Over the last couple of years we have been including more and more commercial thinning in our harvest plans, and this trend upwards will continue.  In response, our mechanical operations will play a larger and larger role in yearly production.

Click images to enlarge

 

 

 

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