Historically, there is a strong positive correlation between global oil price growth and U.S. diesel
price growth. If oil prices remain elevated from sustained global conflict this year, we may also see higher US diesel prices and higher costs for timber harvesting + wood trucking/transportation.
From Zachary Lowry at The Timberland Investor: "The forest industry's exposure to this conflict runs almost entirely through one product: diesel fuel. ... When diesel prices move, harvesting costs move with them..."
thetimberlandinvestor.com/how-the-iran...
An updated table without the product labels cut off...
Headline PPI up 2.9% Y/Y. Largest wood product price increase since last year was for hardwood lumber (+5.2% Y/Y). Largest pulp product price increases were for converted/sanitary papers (+3.1%) and paperboard (+3.0%). Notable declines continued for wood pulp and hardboard/particleboard/fiberboard.
Biomass magazine reports on data from the USDA FAS: US wood pellet exports totaled 10.09 million metric tons in 2025, up 1% from 2024.
biomassmagazine.com/articles/usd...
From Paul Jannke (FEA): imported lumber & plywood are already subject to Sec. 232 measures, so the new tariffs applied under Sec. 122 do not apply. However, other wood products (OSB, eng. lumber, mass timber) are NOT subject to Section 232 measures, so are exposed to the new Sec. 122 duties.
Over 300,000 acres burning in Oklahoma this week, mostly in the western panhandle region. Red flag warnings issued across the state. Some smaller fires are currently burning in the more heavily forested eastern region of the state as well.
www.oklahoman.com/story/weathe...
While starts were comparatively flat, annual building permits issued (-4.2%), average units under construction (-13.1%), and total housing completions (-7.9%) were all down in 2025.
Latest New Residential Construction report: total housing starts in 2025 were estimated to be 1.359 mil. units, down just 0.6% from 2024. In 2025, 69% of these starts were single-family units, which is down from 74% in 2024.
The $WOOD ETF is up 14.3% YTD. Likely factors contributing to a higher valuation are the completion of the RYN/PCH merger, a Stora Enso spinoff of its Swedish forest assets, and earnings beats by WFG & UPM-Kymmene. SPF spot prices (+9%) and futures prices have also recovered over the last 2 months.
From the NAHB: "84% of home builders said that elevated mortgage rates was the most significant challenge builders faced in 2025, and 65% anticipate interest rates will remain a problem in 2026."
www.nahb.org/blog/2026/02...
January 2026 employment in the Mining/Logging sector was estimated to be 603 thous. workers, down 3.1% from a year ago. Avg. monthly employment in these sectors during 2025 was down 2.7% from 2024 and down 7.7% from its average over the prior 10 years (2015-2024).
From economist Devon Dartnell-current challenges depressing US timber markets: weak lumber prices + sluggish housing sector + high interest rates, declining domestic pulp demand & increased foreign production capacity, weak demand for residual chips from pulp manufacturers, higher forest mgmt costs.
From the NAHB: "the 10yr Treasury rate at the beginning of 2026 was at 4.1%. The rate has now increased to 4.3%. This unfortunately means the beneficial impact of the $200 bil. of additional acquisition of Fannie Mae and Freddie Mac MBS...has been partially offset by international concerns."
Retail sales of building materials and garden equipment expanded rapidly during the pandemic by 13.1% in 2020 and 14.3% in 2021 (reaching a peak of $508.4 bil. in 2022). Annual sales have remained elevated totaling $488.5 bil. in 2024. Thru Nov. it was on pace to decline 0.9% in 2025 to $484.0 bil.
Preliminary data from the December PPI report shows that softwood lumber prices were down 8.2% Y/Y while hardwood lumber prices were up 6.1%. Large Y/Y declines were observed for some paper/board products, including wood pulp and hardboard/particleboard/fiberboard. Timber/chip prices were flat Y/Y.
From Dr. Brent Sohngen: "Active Forests." A recent publication reports that "...since the turn of the century in the conterminous U.S., anthropogenic factors have contributed 55% of all carbon gain in forests while non-anthropogenic factors have provided the rest."
u.osu.edu/forest/2026/...
Southern* US Atlantic coast states.
Across the US Atlantic coast states, softwood timber utilization from 2020-2024 declined by 2.0%/yr. while hardwood timber utilization declined by 3.5%/yr. Much of the overall decline was driven by a 234 MMCF decrease in softwood pulpwood use. Softwood timber was ~84% of total utilization.
The CRFB estimates $2.2 trillion in lost revenue through FY2035 if the supreme court rules recent tariffs to be illegal. Markets seem to be expecting this outcome. www.crfb.org/blogs/replac...
Given recent trends in federal outlays, tax cuts, and a potential ruling that recent tariffs are illegal, 10yr yields seem likely to remain above 4% this year.
Mortgage rates still expected to remain above 6% this year, with the 30yr mortgage - 10yr yield spread remaining close to 2 perc. points. The legality of last year's tariffs will probably indicate the direction of the deficit and yields.
Mortgage rates followed the decline in 10yr yields over the last year, falling from 7% in mid-Jan 2025 to 6.1% this year. Strong economic growth was likely driving this trend, pulling down the deficit as a % of GDP. Tariff revenues stabilized deficit expansion, even as federal outlays grew in 2025.
The latest USFS data shows that annual softwood timber utilization by sawmills and veneer production facilities in NC declined 7% in 2024, while hardwood utilization by such mills expanded by 6%. Timber utilization by pulp, composite, and bioenergy facilities expanded by about 9% for all species.
The plywood price changes by species from Nov. 2024 to Nov. 2025 were consistent with the trend in lumber. Softwood plywood prices fell 5% Y/Y while hardwood plywood prices grew 6% Y/Y.
Latest PPI report showed a decline of nearly 7% in softwood lumber prices from Nov. 2024 to Nov. 2025. This is consistent with the year's housing trends and weak demand. Hardwood lumber prices grew 6% in the opposite direction on tight inventories while plywood prices were flat Y/Y.
