KEY POINTS:
A rise in international log prices in recent months could herald a sustained upswing in the fortunes of forest owners, says a report by the Ministry of Agriculture and Forestry.
The price rise is being fuelled by falling domestic stocks in Southeast Asia and Korea.
But the ministry says it not a fillip for all forestry sectors and the lift in global prices for raw timber, combined with the high exchange rate and a weak US timber market, has sparked closures of several timber mills.
The annual Situation and Outlook for New Zealand Agriculture and Forestry report released last week said higher prices for hardwoods had increasingly turned the attention of Korean and Japanese manufacturers to New Zealand logs, whose prices they had subsequently bid up.
Increased demand for logs from India and China was also a factor.
The ministry said a key factor in the outlook for log prices is the implementation, enforcement, and longevity of softwood taxes which the Russian Federation intends to increase to 80 per cent by 2009. The Russian Federation accounts for about 40 per cent of world softwood exports.
Overall international log prices are expected to increase gradually in the forecast period to 2011. But the report expects that faltering US and Australia housing starts, weaker gross domestic product outlooks, and the overhang of historically high household-debt levels will see a decline in sawn timber prices over that period.
Although international forestry product prices decline overall, the assumed depreciation of the New Zealand dollar against the US dollar meant export prices in New Zealand dollars were likely to rise steadily between now and 2011.
