Reframing this chart as “CPI in perspective” highlights the volatile markets U.S. natural resource producers and resource-dependent manufacturers successfully navigate while serving global demands for energy and fiber each day. The U.S. Energy Information Agency is forecasting 2023 average prices for crude oil, gasoline and natural gas well below their 2022 averages. Hardwood lumber, log and stumpage prices will face headwinds in the short-term but can enjoy spot market opportunities as our economy continues digesting its inflation-curbing monetary policy medicine.
While the U.S. red oak log:lumber export-volume ratio has generally stayed between 40-60% during the past twelve years, the cherry log:lumber export-volume ratio has trended downward significantly during the same period, suggesting cherry markets for logs and lumber operate differently than for red oak. Interestingly, the top country-destinations in 2022 for both red oak and cherry logs and lumber are identical: China, Canada and Vietnam. So, we can’t point to a 2022 country-destination difference to explain the strong twelve-year down-trend in the cherry log:lumber export-volume ratio. But, there is destination-related answer.
Readers will notice cherry lumber exports have substantially increased since 2010. Although the absolute volume of cherry lumber exports pales in comparison to that for red oak, the relative increase in cherry lumber volume exported has increased considerably over the years. That’s one factor driving the downward move in cherry export log:lumber ratio. There’s more. In 2010, the top country destinations for U.S. cherry logs and red oak logs were China, Hong Kong, Canada. And, for those two species’ lumber, the 2010 top destinations were Canada, China, Mexico and Japan. The one country buying significant volumes of both species’ logs and lumber in 2022 – which wasn’t nearly as prominent back in 2010 – is Vietnam. Their current purchases of U.S. hardwood grade lumber and logs is significant. It’s not the only driver. But, it’s an important one. Watch for U.S. hardwood grade lumber and log exports to Vietnam and Mexico to increase in coming years.
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