ITTO is Back!

In January 2012, the International Tropical Timber Organization (ITTO) discontinued their biweekly market report because they lost their budget. This was disappointing for us because we used it to track market prices for some of the tropical woods we grow in our projects, and distribute key findings to our shareholders.

But, after a year of going without, we’re happy to see the ITTO biweekly market report is being published again. The report does an excellent job of reporting on country-specific tropical timber news and publishing prices for different species and products in different markets. We encourage you to check it out.

ITTO reports China’s timber demand increasing

The ITTO’s bi-weekly market update newsletter contained an interesting lead story on surging demand from China. From 2001 to 2010, log imports doubled from 17 million cubic meters (m3) to 35.4 million m3.

 ... With the international supply of commodity wood products falling and with rising domestic demand analysts expect to see a strong upward pressure on timber prices in the domestic market.

Interestingly, the article predicts that by 2015 the deficit of timber will be 180 million m3 - an increase of 550% increase over the amount imported in 2010. Meanwhile, log imports from Russia increased 12% by volume and 40% by value just in the first half of the year.

The report did not cite its source of information, but even after discounting the projected deficit by 50%, the growth in future demand and prices could be significant.

That’s positive news for the value of the timber being produced on Planting Empowerment’s plantations.

FSC certification and pricing update

A cocobolo tree in our Friends and Family plantation demonstrating strong growthThe ITTO's most recent timber report included an anecdote about a Peruvian logging concessionaire receiving FSC certification for its operations in Madre de Dios. They noted the large enterprise could barely afford the certification and annual verification process, and is seeing no prospect of better pricing because of the FSC certification. This makes sense considering that India and China are major purchasers and are not as demanding regarding timber certifications. It appears that producers with more direct sales channels into the US and/or Europe are in a better position to capture the higher pricing that FSC certification provides.

While we manage our investor-owned plantations to exceed FSC certification standards we have yet to actually certify those plantations due to the high cost and the current small scale of our operations. Once timber production from our plantations begins, we will analyze the market conditions when production comes on line to see whether the price premium validates the cost of certification. 

The ITTO also reports that timber demand and prices are holding steady across the globe. Pricing for plantation teak (Panamanian included) arriving into the Indian market held steady after a recent bump. Flooring originating from China is now being hit by anti-dumping levies by the US, so that will potentially depress demand slightly. However, a long term study of timber needs in Australia was pointing to the lack of local supply and the need to increase imports in the future.