森林投資：シクリカルな課題を良好なファンダメンタルズが乗り越えていく

メアリー・エレン・アロノー
ディレクター、森林経済担当

デビッド・フォーティン
シニア・ディレクター、経済リサーチ
森林農地部門

【日本語抄訳】

・インフレ上昇を背景に中央銀行が金融の引き締めを進める中で、米国の住宅市場を取り巻く消費者心理が後退しつつあります。これを受け、今年の後半から来年にかけ、木材消費の伸びは緩やかになるリスクが高まっています。製材など最終財の価格の調整を受け、製材所や在庫の状況から地域差はあるものの、堅調であった丸太価格の伸びも鈍化する見込みです。

・また、森林セクターは、燃料、輸送、肥料といった投入コストの上昇、物流の混乱による木材価格の変動といった課題もあり、2022年後半から23年前半にかけては収益が圧迫される恐れがあります。

・今後12-18ヶ月間といった期間では、森林投資の環境は不安定になるかもしれません。しかし、短期的なシクリカル要因は、人口動態に起因する堅調な住宅需要、グリーン製品や再生可能エネルギーへの嗜好の高まり、世界の脱炭素化を促す自然由来の気候ソリューションとしての森林の貢献といった、森林の価値を支えるファンダメンタルズに対する長期的に前向きな見通しを変えるものではありません。また、長期的には木材の需要が堅調で底堅いという認識も強まっているため、森林投資に対する需要は今後も継続する見通しです。

【英語原文】

Timberland investment fundamentals outweigh the cyclical challenges

While investors may face volatility over the coming months, current risks don’t alter our long-term positive outlook on the fundamentals supporting timberland values, including strong, demographically driven housing demand, an increasing preference for green products and renewable energy, and timberlands’ contribution as a natural climate solution to facilitate global decarbonization.

As parts of the global economy emerged from the worst of the COVID-19 pandemic, pent-up consumer demand strained global supply chains. Russia’s invasion of Ukraine further exacerbated widespread imbalances between demand and supply. These dynamics drove inflation to multidecade highs.

Rising price inflation has occurred across regions and has been more persistent and elevated than anticipated at the beginning of 2022. Central banks around the world have responded to surging prices and wages with an abrupt monetary tightening cycle. By midyear 2022, rising U.S. interest rates had placed upward pressure on required rates of return for risky investments, taken the U.S. housing market off the boil, depressed consumer sentiment, and strengthened the U.S. dollar. Central banks around the world are embarking on the exceptionally challenging task of trying to temper historically high inflation without tipping their economies into a tailspin, as the shift to more restrictive monetary policy has raised the near-term risk of a global recession considerably.

This year the timberland sector has grappled with input costs that have spiraled higher—including energy, transportation, and fertilizer. Supply-side disruptions and logistical challenges have also resulted in elevated volatility in forest product prices. The combination of volatile prices, rapidly rising input costs, and slowing demand has the potential to restrain operating income through the second half of 2022 and into 2023. Although timberland capital investments may experience a drop in cash returns in the coming year due to softer market conditions, timberland values will be supported by strong investor interest for lower risk profile assets compared with many non-land financial assets. Investor recognition of timberland’s robust and durable underlying demand fundamentals should continue to draw investors into timberland and may help moderate any near-term performance headwinds.

In the second quarter of 2022, U.S. housing starts were still reflecting the strong underlying demand for shelter, with April 2022 housing starts hitting 1.81 million units (seasonally adjusted at an annual rate). But by June, U.S. housing starts had fallen to 1.56 million units, a decrease of 14%.¹ Rising interest rates aimed at curbing inflationary pressures are constraining demand growth and clouding the near-term outlook for housing. In our view, the risk of a moderation in timber consumption growth later this year and into the next one is increasing.

Rising input prices and supply chain disruptions are top of mind for timberland operators. Logging and hauling costs haven’t escaped the widespread inflationary pressures and have moved higher, an unfamiliar environment for timberland operators after years of these costs remaining relatively low and stable. The increasingly tight competition for labor has led to base wage rate increases to retain and recruit more dedicated labor. Meanwhile, road building and road maintenance costs are up, a direct result of increased diesel fuel costs. Timber plantation establishment costs—seedling costs and reforestation costs—are also on the rise after U.S. logging rates had already risen by more than 3% in 2021 over rates in 2020.²

“Rising input prices and supply chain disruptions are top of mind for timberland operators.”

The labor force in the forestry logging sector has been shrinking for years as the workforce ages and higher paying, less risky employment alternatives compete for younger workers. Still, the new July jobs numbers reflect an increase of nearly 1 million more jobs since February 2020 in goods-producing sectors—including manufacturing, construction, mining, and logging—which may be the result of rising wage rates.³ Despite higher employment in logging, pandemic-related logistical disruptions continue to cause bottlenecks, which can create additional challenges in meeting timberland harvest plans and, by extension, the timing of cash flows. Increasing hire rates to secure dedicated loggers and haulers has become more commonplace, an additional cost that seems likely to last, in our view.

Through July 2022, log prices in most regions of the United States remained strong. Log prices in the U.S. Pacific Northwest reached $943 per thousand board feet ($/mbf) in July, 6% above the price at the end of 2021. Log prices have in general outperformed operational budgets so far this year and are above the last peak in U.S. Pacific Northwest log prices in 2018. In the Pacific Northwest, timberland properties that have access to port facilities have been able to take advantage of increased export demand for high-quality logs in Japan, even with the strong U.S. dollar. Japan has been reaching out to fill the gap in supply resulting from its imposition of sanctions on log imports from Russia resulting from the Russia-Ukraine conflict.

Still, the downward correction in lumber prices to levels more aligned with historical averages suggest log prices will need to realign with the lumber and wood panel markets. Regional differences in supply/demand dynamics—influenced by local timber inventory and installed capacity of converting facilities—will be key to the magnitude and timing of log price adjustments in the coming months.

Why the long-term outlook for timberland investment remains so bright

Although timberland investors may face bumpy performance over the next 12 to 18 months, this short-term cyclicality doesn’t change the long-term positive fundamentals of timberland investing: strong housing demographics, an increased consumer desire for green products and renewable energy, and accelerating decarbonization efforts. Strong U.S. residential construction is projected to extend through the remainder of the 2020s.⁴ We expect innovative wood-based construction systems and advances in U.S. building codes will continue to expand and open new tiers of demand—with multistory residential and nonresidential buildings using wood-based building systems becoming a larger proportion of total timber demand.  Paper packaging is also expected to continue to benefit from public concern over environmental impacts of plastic waste. Timberland’s contributions as a natural climate solution—through carbon capture and storage in forests, wood products, and soils—are expected to play an increasing role in market dynamics over the decade to come. Patient, forward-thinking investors are taking note. 

1 U.S. Census Bureau, July 2022. 2 Forisk, Q3 2022. 3 U.S. Bureau of Labor Statistics, as of July 14, 2022. 4 Forest Economic Advisors, May 27, 2022, and Fastmarkets RISI, June 7, 2022.