Log price outlook provides valuable industry insight

AR16 - logs lpo

IO1: Commercial forestry and ecosystem services

Some information is better shared, and Scion’s log price opinion outlook has provided a means for competing log marketing companies to share their market insight with total anonymity.

The web-based survey has been developed by the Value Chain Optimisation Team as a means of providing a speculative log price outlook based on informed opinions. This is a unique initiative in the New Zealand forestry industry that asks log traders and others within the industry to consider what is likely to happen to log prices over the coming months, and to vote confidentially online.

The surveys have been running for 18 months, and the information is adding to the wealth of data the team is gathering about performance, markets, networks and concerns from industry stakeholders.

“While the drive is towards increasing domestic processing, log exports form a substantial component of the forestry industry,” says Science Leader Dr Carel Bezuidenhout. “The survey has attracted a regular client base of about 50 participants from 30-40 companies worldwide. This group represents about 60 per cent of all the logs leaving the country. Participants offer a confidential and informed opinion on how they see the market performing over the following three months.

“Once the inputs are collated, the result is made available only to those who participated in the survey.”

Although the survey is informal, the log price opinion outlook is proving useful for participants for company reporting and budget projections. The survey also gives Carel and the team the opportunity to be in regular contact with key forestry industry players.

“A considerable amount of value chain research involves understanding the people who make the decisions along the supply chain, from growers, to traders and manufacturers. This work is allowing us to forge valuable relationships with forestry stakeholders.”

The research is also helping the team build a solid understanding of the log supply chain. As well as seeking participants’ opinions about log prices, Carel is able to source valuable business intelligence, such as identifying the main industry drivers, key export markets, the size of the domestic market in comparison to the international market, and where value may be lost.

“A supply chain is about making money by producing, moving and marketing products,” says Carel. “A value chain is more about alignments where companies with similar business models can synergise and innovate to create unique long-term win-win opportunities”.

Investment: Scion Core