User 398038

How Weyerhaeuser's Results Reflect on Timber REITs

Where user 356199 writes "How can a storm during the very last month of the year cause an increase in harvests during 2007? It takes months to figure out how to salvage the fall down. That theory doesn't hold water. ...allow me to try to explain.
Think of a storm as an "involuntary harvest." If this "storm" is a hurricane (and I know that much of Weyerhauser's property is in Alabama which is certainly exposed to storm's along the Northern gulf coast) then you can be looking at a LOT of timber being "involuntarily harvested."
Where you are under the impression that "it takes months to figure out how to salvage the fall down", this is not actually true at all.
Once the timber is down, there is a very limited amount of time to "harvest" it - that is - to actually SELL it for any purpose whatsoever. Trees that have been "involuntarily harvested" in storms will, more often than not, have to be sold for pulp at best ...though they might have been cut and sold for use as poles or sawlogs otherwise.
The volume of timber left on the ground after a storm which must be salvaged - or lost - immediately also creates a huge supply that quickly runs into a bottle neck of demand. Far more of this damaged timber is available for sale than there is a need for - IF there is any real demand whatsoever.
Storms are great for the mills. The damage done to stands of timber drives the price of timber down at the very same time that damage done to homes and other buildings drives the demand for lumber up. This means that mills can buy low and sell high at the same time.
I hope that resolves your confusion.