Timberland Investment World Summit in New York.
Focusing in particular on the American timber markets and timberland prices, Credit Suisse believes log prices have bottomed in 2009 and they should improve in 2010-2011. Credit Suisse go on to forecast a healthy outlook for forestry investment with further strengthening of timber prices 2013 to 2018.
The managing director at Credit Suisse, Chip Dillion, has made forecasts which are based on an emerging market for wood-based biofuels, and the demographic push of baby boomers buying second homes and retirement places. He believes that the overall U.S. and global economic situation will improve over the next five to eight years, which would be consistent with recent historical cycles. Dillon, however, sugestes the years after 2020 for timberland returns as “more challenging” than the next decade. As ever, timberland investments for individual investors are not short term investments, most direct forestry investments are viewd on a 5-7 year time horizon
Forestry funds, the larger institutional investors are attracted by the steady returns that forestry investments offer when compared to the volatility the stock market offers. Although some traditional timber markets may decline, new markets for wood products and new types of trees may more than make up for the slack. Trees with very short rotation cycles are plantation-grown in the tropics today, and genetic engineers are working on cold-hardy trees. A eucalyptus that could be grown in the South America on a seven or eight-year rotation would change a lot of forecasts about energy prices and the future of timberland values in that region. The conclusions of the summit were that timberland is attractively priced now, because prices have been discounted due to lower stumpage and log prices.
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