Record price for blackwood sawlog at tender!!!

The results of the August 2015 tender at Island Specialty Timbers have just been posted.

http://www.islandspecialtytimbers.com.au

Two small blackwood logs were included amongst the 27 lots tendered.

One of the logs (Lot 23) was a plain-grain Utility Grade (NOT Cat 4) blackwood log. The description read:

A good straight log, several bumps, attractive dark stripes in growth rings at butt end. Length 2.7 metres, large end diameter 64 cm, small end diameter 50 cm, volume 0.68 cubic metres.

IST 0815 log23double

This small log sold for the incredible price of $850 per cubic metre!

This is by far the greatest price ever paid for a plain grain blackwood log.

Remember that a commercial blackwood plantation aims to grow sawlogs that are 6.0 metres in length and an average volume of 1.5 cubic metres. The above tendered log would represent the lower half of such a plantation-grown blackwood log.

In other words at this price a single plantation blackwood log could be worth $1,275!

At 300 cubic metres sawlog per hectare that equates to $250,000 per hectare at harvest for a blackwood plantation.

Remember these prices are equivalent to mill-door delivered prices, so harvesting and transport costs need to be deducted to approximate stumpage paid to the grower.

And this is only one small, low quality log sold at tender in Smithton, north west Tasmania.

The other Cat 4 blackwood log sold for $550 per cubic metre.

This is an extraordinary price for a small plain-grain blackwood sawlog and again demonstrates the commercial potential of farm-grown commercial blackwood.

Is anyone interested?

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6 responses to “Record price for blackwood sawlog at tender!!!

  1. Hi Gordon
    Prices seem high, is it reasonable to suggest that all plantation logs would bring this kind of money?

    • Hi Floyd,

      That’s the $64 question isn’t it?

      I wish I knew the answer.

      There’s so little market transparency in the forest industry. Competition, prices, supply, demand, log quality. All these issues remain pretty much hidden from the general public. No one seems to understand just how important proper market processes are for the forest industry.

      I suspect the tender prices that IST gets don’t represent the general market. The volumes are too small and the log quality is all over the show. I suspect the people buying logs from IST are the craftsmen themselves and not traders/sawmillers/exporters who would be buying volumes of plantation logs. But in the absence of anything better they are the best we have.

      The last lot of blackwood logs sold at tender by IST were some of the smallest that they trade in, and the idea of paying very high prices for such small logs makes little market sense. Confusing I know!!

      What the IST prices do tell us is that in general the market is prepared to pay very good money for quality logs.

      But I do suspect that good quality plantation blackwood sawlogs, especially a decent parcel of logs, would easily get $500 per cubic metre on the stump. Location and logging costs would need to be considered in this.

      That puts the value at well over $100,000 per hectare at harvest.

      Some people will dispute these figures but that’s my opinion such as it is.

      Do you know any farmers who might be interested?

      Cheers,

      Gordon.

  2. Hi Gordon
    If we can’t be sure of log prices based on the industry, then is it possible to work backwards. What does ordinary blackwood timber sell for per cubic meter, say for 150mm x 25mm kiln dried and dressed boards?
    Would it then be possible to get an idea of potential log values, allowing for production costs along the way?

    • Hi Floyd,

      A nice idea but….

      Most sawn blackwood timber on the market (>80% my guess) comes from the public native forests of Tasmania managed by Forestry Tasmania and delivered to the sawmillers at below cost at taxpayers expense (and this keeps going for 25 years no less!). Did anyone mention gravy train??

      So what part of the sawn timber price reflects the taxpayer subsidy and what part reflects real market demand?

      I can’t answer that question unfortunately.

      Late last year I spoke to an exporter in the north west who said he was paying farmers $500 per cubic metre on stump for good quality Cat 4 blackwood logs. Read my blog here:

      https://blackwoodgrowers.com.au/2014/11/15/blackwood-markets/

      At that time he had a pile of very fine blackwood logs in his yard.

      But he was operating word-of-mouth. There is a lot of fear and mistrust in the forest industry.

      Until the forest industry opens up and starts behaving like a business and not a political party growing blackwood will have its risks and uncertainties.

      Cheers,

      Gordon.

  3. Hi Again

    RE taxpayer subsidy, surely the price of sawn blackwood would be determined by the market itself. There are competing timbers that should give a benchmark of prices eg: black walnut selling for say $8,000 per cube might indicate blackwood is worth only $5,000. I’m sure any business would want to sell for the best price possible and that competition from other timbers sets the limits to some extent. What are NZ growers who process their timber getting per cube?

    • Hi Floyd,

      Regarding NZ prices have you seen this previous post of mine from 2 years ago?

      https://blackwoodgrowers.com.au/2013/11/29/recent-new-zealand-blackwood-articles/

      In the second article Malcolm Mackenzie quotes NZ prices (imported Tasmanian blackwood) of $NZ3000 – $NZ8000 per cubic metre. The latter for large dimension stock. He also adds the comment of adding another 30% to these prices if lengths are over 2 metres!!

      Does this mean that 2-6m lengths of large dimension clear blackwood could sell for $NZ10,000??

      I’m not really interested in doing this (market down) exercise but am happy if someone else wants to. I’d be happy to post the results here on my website. Always happy to discuss markets, costs and prices!!

      Cheers,

      Gordon

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