What’s Up With Cedar Prices?

Spring 2017

In case you haven’t heard, cedar logs and poles are commanding astronomical prices at mills in the Inland Empire. What is causing this phenomenal run-up? And how long will it last? Neither question comes with easy answers. When asked for his opinion, one forester with four decades of cedar experience responded, “I don’t know, so I’ll look forward to reading your newsletter to find out.”

We interviewed several long-time cedar purchasers with area mills who offered their veteran opinions regarding these questions. They all pointed out that, unlike Douglas-fir or lodgepole pine, western redcedar grows in a relatively small range in the moist forests of the Pacific Northwest, thus limiting the supply of cedar available commercially. And while most forest product values plummeted following the Great Recession of 2008 because of a slowdown in the housing market, the demand for cedar increased because do-it-yourselfers discovered that value could be added to a home with cedar upgrades (fences, decking, etc.). Consequently, the recovering economy has fueled a sky-rocketing demand for cedar.

Also, as a specialty species, grown only in the Pacific Northwest, cedar brings a higher profit margin than basic commodity lumber products which must compete with similar boards of species produced in other regions of the country or world. With this higher profit margin in mind, more mills are anxious to purchase your cedar sawlogs or poles to ensure they have an adequate inventory of raw material to produce coveted cedar products. This creates an increasing demand which drives up prices.

Basic supply and demand economics seems to answer the question of, “what is causing cedar’s high log value.” A finite supply of cedar that currently enjoys a strong demand. Consequently, the price goes up. The answer to the second question – How long will it last? – doesn’t come as easily.

The relative abundance of cedar during this period of high demand partly results from past silvicultural practices on industrial and family forest lands. A few of our local timber companies practiced a form of uneven-aged management by “selectively” harvesting their timber stands during the latter part of the last century. One company in particular did not want the public to confuse its ownership with adjoining Forest Service clearcuts, so they tended to leave the shade tolerant species such as cedar, grand fir and hemlock. At the same time, family forest owners often looked upon their forests as a savings account, only making withdrawals when needed for a new roof for the barn, medical expenses, college tuition, or a new pick-up. They sometimes instructed the logger to, “Take anything but the cedar.” These prescriptions retained the cedar.

Trevor Favaro, Alta Forest Products log buyer, walks through his log yard and explains these past management philosophies in his “theory of the butt log.” The growth pattern on any tree is clearly visible on the butt cut of a log. Foresters often think of cedar as a slow growing species as evidenced by very closely-spaced growth rings. But cedar can produce remarkable diameter growth under the right circumstances. Trevor pointed out the number of butt logs in the log decks that display growth “releases” resulting from one or more timber harvests where cedar was retained in the stand for future growth.

For now at least, our stands contain cedar that is available for harvest. In some cases, the value of cedar justifies the cost of logging marginally valued other species and encourages sanitation cutting to remove poor quality and low-valued trees. But, how long will the current supply and demand last?

Consumer tastes change over time. As the value of cedar climbs, will the consumer find a substitute wood or non-wood product? Likely so, as we see that already happening. Consider the amount of vinyl fencing that replaces wood products.

Also, cedar will likely become a lesser component in our stands as short rotations of even-aged management becomes more prevalent on industrial forest lands. While we plant very little cedar, Mother Nature will usually see that it naturally reforests suitable sites. But will forest owners and managers want to wait the long amount of time required for cedar to reach a commercial size class? Likely not.

There is no definitive answer to how long this cedar “bubble” will last. But, if you have merchantable cedar on your property, and a financial return ranks high on your list of objectives, now might be a good time to visit with your consulting forester regarding a timber sale.

(Acknowledgement is given to the following foresters who contributed to this article: Doug Bradetich – Idaho Forest Group, Trevor Favaro – Alta Forest Products, , Skyler Johnson – Columbia Cedar, Inc. and Fred Omodt – McFarland Cascade)

Bill Love, CF