January 2021 Outlook

Happy New Year

                                                                                                                            January 2021 Outlook

Happy New Year! 2020 is finally over as is most of our political uncertainty. For better or worse the Democrats now control both the legislative and executive branches of the federal government. Fasten your seatbelts.

Currently timber stumpage prices have remained steady since the post pandemic panic subsided and most of Alabama opened back up to some level of business activity. Hardwood saw logs remain the bell cow leading the market with prices just south of all time highs. Hardwood tie logs are back to pre-COVID-19 price levels. And a decent market for hardwood pulpwood has returned.

On the pine side, pine saw logs and pine chip and saw prices have ricked up, while pine pulpwood price pulpwood prices remain at their same low level. Low interest rates have spurred housing levels not seen since 2007. In November housing starts spiked to seasonally adjusted annual rate of over 1.5 million. This is excellent news for lumber and panel producers. And last month Jasper Lumber announced a partnership with Tolko to spend $45 million expanding their mill and almost tripling output. These factors have already had a positive impact in pine prices.

We have not yet seen much of a seasonal bump in any pricing. But winter has not quite reared its wet ugly head yet. When it does, we expect hardwood products to increase the most and the soonest, particularly hardwood pulpwood.

As we move forward into 2021, we’ll closely watching a couple macro indicators. First is the Federal Reserve. If they continue to hold interest rates down housing starts will remain strong. If the “moderate” Democrats have over pull we expect a huge spending increase, called a stimulus rightly or wrongly, with some pork thrown in to satisfy the far left. There will also be a lot of socialist rhetoric but not much of a legislative move that way. In other words, we don’t believe we will see a tax increase in 2021. Even the Chuck Schumer's of the world know that would be an economy killer. If they don’t increase taxes, they will start increasing regulations however. This will slow the recovery but not stop it. As the threat from COVID-19 decreases because of the vaccine and rational decisions they will have less of an opportunity to artificially control us with lockdowns. That will also help the recovery.

In short 2021 should be better that 2020. A bad dream is better than a nightmare. We might even get a semi normal college football season.