Oregon State University Researchers Discover New Way to Predict Future Log Prices

Oregon State University researchers say they have discovered a new way to predict the future price of logs using readily available information. Jeff Reimer, a professor of applied economics at Oregon State said, “Log prices are really variable. That makes this a difficult business, whether you are a land manager, mill owner, timberland investor or, as we are seeing now, a home builder.” The health of the timber industry can be measured in various ways, including harvest levels, employment in timber harvesting and at mills, and lumber demand. Yet the prices of cut and delivered logs may be the most direct way to monitor the condition of timber markets, Reimer said. Reimer’s study was recently published in the Journal of Forest Policy and Economics and focused on Douglas fir, the most commercially important timber species in the Pacific Northwest, Reimer found that simply knowing the number of housing permits issued in a month can explain about 46.8% of the variation in log prices over time. Adding additional information — including the monthly inventory of homes, mortgage rates, the exchange rate with Canada (also a big timber supplier) and the Case-Shiller home price index — explains about three-fourths (74.3%) of the price variation.