Stars align for NZ forestry companies
Stars align for NZ forestry companies
New Zealand forest growers, long overshadowed by booming returns from the dairy industry, look set to cash in on record prices for logs as they prepare to harvest trees planted in a flurry of activity two decades ago.
Forestry plantation activity in New Zealand jumped between 1992 and 1998, as a surge in Asian log prices lured investment syndicates to the sector. Radiata pine, which makes up about 90 percent of the nation’s plantations, are typically felled between 26 and 32 years, meaning the “wall of wood” will start being harvested from about 2018, according to government figures.
Rising prices for forestry products, the nation’s third-largest commodity export, have been overshadowed in the past year by a rapid rise in the fortune of dairy products, with overseas sales of milk powder, butter and cheese worth more than three times as much as sales of logs and wood. Still, forestry has been the quiet achiever, with the ASB New Zealand forestry index and the forestry sub-group of the ANZ Commodity Price Index touching record highs in January.