New Zealand export log prices rise in January

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New Zealand export log prices rose to a nine-month high in January as falling Chinese inventories stoked demand in the nation's largest market. Local returns were bolstered by a decline in the kiwi dollar and lower shipping costs – reports New Zealand’s website WoodWeek.

According to AgriHQ's monthly survey of exporters, forest owners and saw- millers, the average wharf gate price for New Zealand A-grade logs rose to $103/tonne, from $101/tonne in Decembe. The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, promoted in rank to an eight-month high of 95.39 from 94 in December.

According to WoodWeek, New Zealand log returns are benefiting from a decline in shipping costs, as the price of oil has more than halved from its peak in June last year, and as the New Zealand dollar's drop to a three-year low makes the nation's exports more competitive. Chinese log inventories are estimated to have dropped down below 3 million m3, close to their normal range of between 2-2.5 million m3, even though last year they increased due to a weak housing market.  

"Inventories have come right down to near normal levels, which has been helped by a relatively mild winter in China so far, meaning more building can take place," shared AgriHQ forestry analyst Ivan Luketina. "However, with the Chinese New Year approaching there is potential for inventories to rise again, which would likely mean more price decreases."

Luketina said Chinese buyers were "well aware" of the lower shipping prices and declining kiwi dollar and were seeking to have the savings passed on to them. "Pruned domestic logs have increased slightly in price and there is good demand for finished products in the US, helped by the declining New Zealand dollar. Still, tight supply in the North Island is keeping log prices elevated", Luketina continued.

WoodWeek reminds that wood is New Zealand's third-largest commodity export.

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