| Published: March 27, 2024

Ag Insights: Forest Products

by Matt Speacht, and Ron Weisenstein, on behalf of the Forest Workgroup


A Review of 2023 

As we flip the calendar into 2024, it is important to look back on 2023 and reflect on the year’s impact on the forest products industry.  


After the severe drop in hardwood lumber prices in the last half of 2022 through January 2023, markets started to stabilize. Prices for black cherry, hickory, hard maple, soft maple, yellow poplar and low-grade continued to slowly decline in 2023. Prices of white ash and red oak were generally stable throughout the year, and prices for white oak and walnut increased. Markets for railroad ties were fair and moving steadily. Blocking lumber prices dropped severely and the pole-wood markets were slow and lower priced. 


While 2023 was marked by challenges and volatility for the industry, it also saw resiliency among the producers. Forest products businesses navigated a complex landscape shaped by various factors, including reduced home building, higher interest rates compared to recent years, technological advancements, and labor shortages, among others. Despite facing these challenges, many forest products businesses demonstrated resilience and adaptability in leveraging innovative strategies to sustain operations and capital on emerging opportunities. 



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Softwood lumber prices were mostly range-bound for the majority of 2023, which is directly related to both home building — commonly referred to as housing starts — and interest rates. Housing starts in 2023 were approximately 1.4MM, which was below economists’ expectations for the year, but above 2022. Housing starts in 2024 are expected to fall around 1.5MM, while a 7% increase from 2023 Freddie Mac economists believe this figure still puts the U.S. approximately 4MM housing starts short of meeting demand.  


For timber prices and housing starts to rebound further, there likely needs to be a material decline in interest rates. The Federal Reserve is expected to make cuts to the Federal Funds Rate multiple times this year, which should bring relief to homebuyers and builders. From a labor standpoint, scarcity of manpower drove up labor costs for forestry businesses, impacting profit margins.  

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Given the weak timber markets and increased labor costs, many operations evaluated how they could reduce expenses while maintaining, or even improving, efficiency. Many businesses chose to pursue technological advancements for their operations. Innovations in forestry management software, remote sensing technologies, and precision forestry techniques allowed operations to optimize resource utilization, enhance productivity, and minimize environmental impacts. However, the adoption of these technologies varied across the industry, impacting efficiency and competitiveness among different market players. 


Overall, forest products businesses in 2023 demonstrated resilience, adaptability, and a commitment to sustainability and innovation, laying the groundwork for continued growth and success in the years ahead. 


Key Factors Influencing the Industry 

Forest Pests 

In 2023, there were 1.2 million acres of forest defoliation across Pennsylvania, mostly from spongy moth. The counties hit the hardest were in central Pennsylvania. After three years of heavy defoliation in some areas, oak mortality is increasing and will continue to increase as other stressors have an impact. A spongy moth population collapse is hoped for this year from nuclear polyhedrosis virus (NPV) which kills caterpillars over a short period of time in the heavily infested areas. Pennsylvania’s Department of Conservation and Natural Resources (DCNR) and the Pennsylvania Game Commission are expected to spray 347,000 acres for spongy moth in 2024. Control efforts are also planned for Maryland, Delaware, Virginia, and West Virginia.