01Factors Affecting Timber Prices
While prices in the state or region reflect the typical rate, local market conditions are more important and prevail. For instance, if your timber grows near several mills, it might command a higher price than if it was located far away from mills.
The value of a timber depends on the species, size, and qualities of the trees growing.
The value of timber relies, in large part, on how much timber is sold in a single sale and what kind of harvesting is done. Very often, the larger the sale, the higher the price per unit of wood. It can cost more per unit of wood to cut only a few, select trees rather than all of them.
The price a buyer pays for your timber also depends on the growing conditions which affect the cost to remove them and bring them to a mill. Variables include the distance from the stand to the nearest road, slope and soil wetness.
02Investigating Rough Lumber Prices
To research lumber prices, contact your state service forester, who most likely works with the state Department of Natural Resources, Division of Forestry or Forestry Commission. You should also visit the National Association of State Forester's website which has links to state service forestry agencies. You can also try your Forestry Extension or county Agricultural Service agent. Extension Forestry staff are usually located at your state's Land Grant university, often in the Forestry Department. You might also want to give the USDA Cooperative Extension System a try because they link to every state's free services which often includes forestry assistance from professional foresters.
Sample Calculation: Let's say you want to determine timber prices for red oak on the stump. You call other sawmills in your area and determine the average price for red oak grade lumber is $800 per thousand board feet (bf). You determine your harvesting cost to be $100 per thousand bf, trucking at $100 per thousand bf, and milling at $250 per thousand bf. You take the $800 and subtract $450 in costs, and you have $350 per thousand board feet.
03Calculating a Profit
Before you start making phone calls and offering $350 per thousand for standing red oak, don't forget to factor in a profit. Use your cost figure and add 50 percent to 70 percent. For example ($450 x 1.5 = $675 per thousand bf) or ($450 x 1.7 = $765 per thousand bf). Therefore, the price range you can pay for red oak on the stump is $35 to $125 per thousand board feet based on your cost figures.
04What Drives Calculations?
A number of factors go into calculating and determining the value of a log from the mill’s point of view. Basically, it's a matter of factoring in total revenue, variable costs, and fixed costs in order to determine net return. The Forest2Market website has sample calculations showing how the numbers break down.
In general, the following is what drives calculations:
Finished Products (Lumber): By-products, residual chips, shavings, sawdust, bark/hog fuel
Variable Costs: Log cost, log yard (inventory) cost, sawmill operating costs, labor, drying, planning, shipping, maintenance cost
Fixed Costs: General and administrative costs, log procurement (staff), sales/staff, depreciation, interest, corporate fees
The tcwoods.com website also explores calculations based on different thickness, widths, and lengths of lumber.
A Formula for Tabulating Lumber for Sawmills
Factors Affecting Pricing
According to the USDA Forest Service Southern Research Station, it's difficult to determine the value (i.e., worth) of timber because there are so many factors that influence price. Lumber calculations can be confusing, even for veteran woodworkers.
In addition to researching the suggested government and forestry agencies below, there are also two excellent timber websites (tcwoods.com and forest2market.com) that will help chart calculations.
In the meantime, here is a comprehensive overview and the key things you need to know to calculate timber prices accurately.