Timber prices are rising as a result of the devastation caused by Hurricane Sandy, which could mean growing returns for those with investments in timberland, according to reports by Forestry Research Associates (FRA).
The Chicago Mercantile Exchange was up yesterday by the maximum daily rate of $10 for 1,000 board feet. The rise is the result of the demand for timber for use in the rebuilding of thousands of homes, which were damaged by the hurricane throughout the Eastern US. Daryl Swetlishoff, form Raymond James Ltd, told Canada’s Globe and Mail Newspaper, “Lumber prices are atypically high for this point in the year, and bucking a seasonal trend already.
“For the near term, even if the hurricane is partially a psychological impact on lumber, prices are going to be buoyant, he added.
Several large forestry firms in Canada are now preparing to up their production in order to meet the new demand for lumber. The US might also import timber from elsewhere, such as Latin America, according to FRA’s analysis partner Peter Collins. Mr Collins explained: “The impact of Sandy was obviously devastating for many people living on the East Coast and the demand for timber to quickly rebuild their homes will be huge.”
Investing in sustainable timber, through plantation projects like those run by Greenwood Management and other similar firms in Brazil, can be a lucrative option at the moment. “Several analysts are predicting a boom in timber prices as demand continues to creep up,” added Mr Collins.
Mr Swetlishoff added, “A shock like this could keep prices higher and for longer in a season when it is typically weak. We’re tempering our view by saying that prices were already a bit elevated.”
Prices are high due to strong demand from emerging economies like China and India, which are importing huge amounts of timber for house building and infrastructure development.
Forestry Research Associates
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