October 27, 2014

In an unusual occurrence U.S. timberland investments outperformed farmland investments in the July – September quarter as improving global economics drive up demand for wood.  U.S. timber investments had their best performance in seven years in the third quarter returning 1.47% – besting farmland investment returns for the quarter of 1.45% according to the National Council of Real Estate Investment Fiduciaries (Ncreif).  This scenario has only happened twice in the past ten years – once in the first quarter of 2007 and again in the second quarter of 2010, and in this past quarter was driven by a value appreciation of 0.74% for timberland compared to a value appreciation of 0.48% for farmland, and income returns of 0.97% for timber compared to 0.73% for farmland.  Forestry land sales indicate that prices are rising even with more sites being offered for sale as at the same time grain and oilseed prices are declining on high global supplies of corn, soybeans and wheat.  The North American timber harvest has risen for the fourth consecutive year to 510 million cubic meters in 2013 as the construction and energy sectors increase demand for wood.  This demand is supporting higher prices as global softwood trade was up 7% in the first half of 2014 and is expected to be 36% higher for the year than in 2009.

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