For the quarter of April through June of this year, U.S. timberland prices were 7.2% higher than the same time period year before, and 0.2% higher than the rate of annual appreciation posted for the previous quarter of January through March according to the National Council for Real Estate Investment Fiduciaries. (NCREIF). As a result of strong demand from both China for logs and lumber and domestically for timber products, total returns from U.S. forestry land over the year was 9.9% when accounting for 2.6% income – the highest point in almost six years. This demand however has been called ‘cloudy’ and ‘patchy’ and this week Plum Creek Timber, which controls 6.7 million acres of U.S. timberland has cut its harvest volume for 2014 to the low end of 20 million – 21 million tons and has cut its estimate for U.S. housing starts for the year to 1.03 million – 1.1 million. Wood Resources International states that demand from China has slowed due to a slowdown in construction in that country, resulting in high inventories being held on vessels and in ports waiting to be unloaded and a price decline of 10% so far for the year, but also adds that these conditions are seen as a temporary set-back on a general long-term upward trend.
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