This report is limited to the main trends in supply and demand in Europe and North America. The period covered is extended as far as possible into the fourth quarter of 1950.
The softwood lumber supply and demand situation during the first half of 1950 was characterized by a high level of consumption. In many circles in Europe and North America it was thought that there would be a break in the predominantly seller's market during late summer or early fall, primarily as a result of seasonal factors. This development was delayed, however, by the outbreak of the Korean crisis, with the necessity for speeding up stockpiling purchases, and the implementation of European rearmament programs. Not until October was there a setback in certain lumber prices in North America, indicating that the pressing need for some grades of ´ lumber, which prevailed earlier in the year, had disappeared. On the other hand, no such sudden change in the European situation could be noted. ´
In Europe, softwood lumber consumption´ rose steadily during the first three quarters of the year in most of the Western European countries. In the United Kingdom and the Federal Republic of Germany, however, consumption is still far below prewar.
In the United States and Canada, the firm demand for softwood lumber during the first nine months of the year made it possible to maintain a stable or strengthening trend in prices. This situation was bolstered by a freight-ear shortage on the west coast of the United States during late summer and early fall. Thus when more ears became available at the beginning of the fourth quarter, some softening on the lumber market followed. Curtailment of housing credits and restrictions on some types of construction in the United States, resulting from the Korean crisis, began to affect the demand for lumber toward the end of the year.
As for international trade in softwood lumber, the trends described in our previous survey (UNASYLVA, Vol. IV, No. 3) were maintained for most of the period under review. Exports from Canada were mainly destined to the United States, and overseas shipments from these two countries remained relatively small. The European: softwood lumber export trade, on the other hand, was expanding on all markets of importance other than France and the United Kingdom. Exports from seven of the main exporting countries* reached 841,0000 standards during the first half of 1950, as compared with 616,000 standards a year earlier. The British Timber Control, from the opening of the shipping season, resisted purchasing at prices demanded by Swedish exporters. As the season progressed, Swedish availabilities for the United Kingdom declined. In the long run, the United Kingdom's policy of waiting could not be maintained and, as the seriously depleted stocks of the country had to be built up later in the year, large contracts were placed in Canada at prices higher than the United Kingdom had originally intended to pay.
*Austria, Finland, France, western zones of Germany, Norway, Sweden, and Yugoslavia.
The European import requirements have so far not been met by any marked increase in supplies from the U.S.S.R. While it is likely - barring changes in the political situation - that exports of softwood lumber from the U.S.S.R. to Europe may be maintained at present levels or even increased during the next years, the U.S.S.R. will also import some lumber. The new Finno-Soviet trade agreement provides for certain exports of Finnish timber to the U.S.S.R. during a five-year period.
A somewhat confusing price situation prevailed at the beginning of the fourth quarter of 1950. In some European exporting countries the trend toward rising prices was very strong. In Sweden, in the October 1950 auctions organized by the state forest administration board, the prices for standing timber showed an average increase of 63 percent over 1949 prices. Although the major part of this rise was in pulpwood ´ prices, the prices for sawlogs had also increased considerably. No certain indications were available at the time of writing as to the opening prices for 1951. The general European supply situation suggests a strengthening of prices for 1951. As, however, the dollar shortage has been partially alleviated, especially in the United Kingdom, it is likely that purchases from Canada and the United States could be increased to some extent, provided additional supplies are available from these sources. The weakening trend in Canadian lumber prices may therefore affect export prices for northern European lumber during 1951, yet the basic price for Swedish 7" redwood battens, which averaged about £50 net f.o.b. per standard in 1950, is expected to rise to at least £60 net f.o.b. in 1951.
During its session in October 1950, the Timber Committee of the Economic Commission for Europe concluded that 1950 export supplies of sawn softwood from European sources, including the U.S.S.R., would run somewhere between 2,144,000 and 2,377,000 standards. Assuming that at least 285,000 standards would be shipped to Europe from the Western Hemisphere, i.e., Canada, the United States of America, and Brazil, the committee expected European import requirements for 1950 to be more or less completely met.
According to the Timber Committee, 1951 export supplies of softwood lumber from European sources, including the U.S.S.R., could be estimated at between 2,000,000 and 2,375,000 standards. The improved currency situation would possibly allow an increase in imports from the Western Hemisphere, tentatively estimated at 475,000 to 500,000 standards for 1951. Since European import requirements may exceed 3,300,000 standards, a gap of more than 400,000 to well over 800,000 standards could develop in the European supply/demand picture.
In certain European importing circles the prospects are viewed with a seriousness which has resulted in suggestions for the allocation of European timber trade. However, there are indications that additional quantities of North American lumber will be available and purchased by European importers before the United States defense program gets into high gear. By mid-November it was reported that the United Kingdom Timber Control had made contracts for well over 400,000 standards of Pacific Coast timber for shipment before the end of June 1951, and that the shipment of about 850,000 standards from North America to the United Kingdom could be foreseen during the next twelve months. This would mean that in 1951 the United Kingdom alone would import from North America roughly three times as much softwood lumber as all Europe was expected to import from the Western Hemisphere during 1950.
In Canada the tentative "plan" for the construction of 606,000 dwelling units during the first postwar decade is considered as being less than a maximum program. It is therefore expected that the demand for housing will be strong for some years, provided that the national income remains at a high level and the government continues to encourage house building as a deliberate policy. According to Canadian estimates, a 50,000 unit per year building program would require some 363,000 standards of lumber, a 60,000 unit program about 436,000 standards, a 70,000 unit program 505,000 standards, and an 80,000 unit program 581,000 standards. These figures plus estimates for commercial and public construction indicate that the potential domestic demand for lumber will remain strong, barring unfavorable economic or political changes.
In the United States, demand for and production of softwood lumber for housing will depend to a great extent on the effects of the new mortgage curbs on construction activity. The present yearly level of some 1.4 million housing starts will no doubt be heavily curtailed but predictions for 1951 vary from a pessimistic forecast of 600,000 or 700,000 to some 800,000 or 900,000 new housing starts.
The effects of diminishing construction activity on the consumption of softwood lumber in the United States are expected to be counterbalanced by increased requirements for repair and modernization of homes, stores, farm buildings, and other structures, for defense purposes, and for packaging.
Europe
Consumption
In most European countries the first half of 1950 was characterized by a relatively high level of industrial production and, particularly in many Western European countries, by greater building activity. There was, in general, an increased need for timber. As the prospects for building and industrial activity were considered favorable, purchases of lumber from Northern European sources were started by the importers, with the exception of the United Kingdom, very early in the season. Even with rising prices, the demand for lumber remained firm, and markets showed some weakness only in France and Switzerland.
In Austria, building activity was affected by financial difficulties toward the middle of 1950. Consumption of softwood lumber for the first six months, however, was somewhat greater than during the corresponding period of 1949.
In the three northern exporting countries economic activity was, on the whole, comparatively brisk. In Finland both industrial production and construction activity increased during the first half of 1950, but were accompanied by inflationary symptoms. In Sweden industrial production was also high, and the construction of dwellings showed a rising tendency toward the end of the period. The same seemed to be true for Norway, which continued to be a net timber-importing country. There, however, the most urgent building needs appeared to be filled. The indications were that domestic consumption of softwood lumber in these three countries was relatively stable and tending to increase somewhat.
The situation in the United Kingdom was unlike that in other importing countries. In spite of large requirements, consumption declined during the second quarter of the year to a monthly average of less than 75,000 standards of imported sawn softwood and some 7,000 standards of home-grown softwood. Even these low levels put a heavy drain on stocks. The shortage of selected lengths and dimensions was, at times, very acute, resulting in temporary and local curtailments of construction activity, but, on the whole, the building activity of the country increased somewhat as compared with the first half year of 1949.
In the Netherlands there was a marked strengthening in demand for and consumption of softwood lumber during the-first six months of 1950. This was caused by the rise in industrial production and by increased building activity. Taking into account a decline in average consumption of timber per dwelling unit in the Netherlands from some 21 m³ to roughly 14 m³ in the postwar period, it is estimated that the total timber consumption by the building trade during the first half of 1950 was almost equal to that of 1937.
In France and Belgium industrial production declined somewhat during the first half of 1950. The demand for lumber in France was not particularly active, in spite of some expansion of building operations. In Belgium, however, the growing need for softwood lumber was reflected in the country's increased imports.
In Italy intensified building operations led to strengthened demand for timber. In other fields, too, the consumption of softwood lumber was increased.
In Switzerland, also, the consumption of softwood lumber for construction purposes seemed to have increased, while the demand for second- and third-class boxboards and for inferior quality sawnwood was slackening.
The industrial production index in Western Germany showed an increase of about 12 percent from December 1949 to June 1950. The housing shortage is estimated at between 4 million and 5 million dwelling units, about half of which are required to replace buildings destroyed during the war, and the remainder for housing of postwar refugees. A total of 2,500 million marks was scheduled to be used for the, government-sponsored housing program.
It was expected that 330,000 new dwelling units would be completed during 1950. Although no data on lumber consumption were available, it was believed that the consumption level in 1950 would be considerably higher than in 1949. The demand for softwood lumber was reflected by increased imports.
Production
For the first half of 1950 output of sawn softwood in Europe was estimated at about 3,954,000 standards, as compared with 3,884,000 standards during the corresponding period in 1949.
The increase in the production of softwood lumber was particularly large in France. The salvaging of timber damaged by earlier forest fires brought the output of sawn softwood in this country during the first six months of 1950 to 40 percent above the 1949 level. In Austria, the production of sawn softwood rose about 19 percent as compared with the corresponding period of 1949. Output of all sawn timber in Finland was almost 11 percent higher than a year before, and reports from Sweden also indicate a considerable increase. There were no marked changes in the output of sawn softwood in Norway, and production declined slightly in Yugoslavia and Switzerland. Output in the western zones of Germany dropped from 857,000 standards in 1949 to 793,000 standards in 1950, or over 7 percent.
Exports
Export trade on the softwood lumber market was very active from the beginning of the year. The position of the European exporting countries was favored not only by the early opening of the export markets with soaring prices and by the persistence of the seller's market but also by the effects of the Korean crisis, as well as by the absence of effective competition from non-European sources.
Although the most important lumber-buyer the United Kingdom, remained comparatively reluctant to make early purchases from the northern exporters at the relatively high prices prevailing at the beginning of the shipping season, Finnish sales had reached around 500,000 standards and Swedish sales some 425,000 standards by the end of the first quarter. The new seller's market had, by the end of the first half year, absorbed from 75 to 90 percent of the quantities available for export from the northern countries.
By the end of the first half of 1950, only about 100,000 standards of Finnish and less than 50,000 standards (a large portion being goods ordered in 1949) of Swedish sawn softwoods had been sold to the United Kingdom. The most active single buyer of Finnish and Swedish lumber during this period was the Netherlands, but increased quantities were also shipped to Denmark, Western Germany, and Belgium, as well as to the Union of South Africa and Australia. Sweden's lumber exports to Australia, which rose from 2,000 standards a year prewar to 25,000 standards in 1949, were believed likely to reach 50,000 standards in 1950. Finnish exporters were regaining markets in South America and in the Levant.
In July and August 1950 Finland's lumber export trade policy was revised. Licenses were no longer issued for shipments of lumber to Denmark and the Netherlands, since the contingencies reserved for sales of Finnish lumber to those two countries had been exceeded. A little later, it was announced that permits for new sales of lumber would be given only for shipments to the United Kingdom. This measure was motivated by Finland's great need for sterling. Under a new agreement Finnish exporters pledged to sell to the United Kingdom during 1950, at increased prices, 150,000 standards instead of the 107,000 standards remaining against the agreement made at the beginning of the year. It was estimated that some 60,000 standards would be delivered during 1950, leaving a balance of 90,000 standards for shipment at first open water in 1951. Total sales of Finnish lumber to the United Kingdom in 1950 were thus increased to 267,000 standards. Later, as a result of serious strikes in Finland, the quantity to be shipped during the 1950 season was reduced by 40,000 standards.
By the end of the first half year of 1950, exports of softwood lumber from Finland to the U.S.S.R. had slightly exceeded 8,000 standards, only about one-fourth of the 1949 quantity. In June 1950, however, a five-year trade agreement was concluded between the two countries, providing, inter alia, for an additional export of 10,000 standards to the U.S.S.R. during 1950 and of 60,000 standards annually during the four remaining years. An equivalent of a further 55,000 standards of sawn wood is represented by the wooden houses which Finland was scheduled to ship to the U.S.S.R. during 1950; in each of the following years covered by the agreement Finland's shipments of prefabricated houses to the U.S.S.R. will represent 80,000, 70,000, 70,000, 55,000, and 25,000 standards of sawn wood respectively.
By the beginning of September, Sweden was estimated to have exported about 600,000 standards, which suggested that the total exports of softwood lumber during 1950 could reach a volume of around 700,000 standards (including some 50,000 standards of boxboards), as compared with a total of 648,000 standards (including some 43,000 standards of boxboards) in 1949. Shipments of Swedish lumber to the United Kingdom, however, were not expected to exceed 50,000 standards for the entire year 1950, as compared with 233,000 standards in 1949. Toward the end of the third quarter, the sending of some sample shipments of lumber to the United States was seriously contemplated in Swedish trade circles.
As a result of the favorable market, Norway more than doubled its exports of sawn softwood during the first half of 1950. In October 1950, exports of timber from Norway were stopped for the rest of the year. Domestic needs, particularly those of the building industry, had to be met, and the 25,000 standards scheduled for export in 1950 had been sold.
Austria's lumber exports during the first eight months of 1950 were reported to have reached a level roughly equivalent to prewar levels for twelve months. This was mainly due to the demand in Italy.
France's exports of sawn softwood, exceptionally large because of the availabilities resulting from the forest fires, exceeded the abnormally small amount imported during the same period. The bulk of the French exports went to the Near East and North Africa, and to the United Kingdom.
During the early part of 1950, the U.S.S.R. did not play a very active part in the softwood lumber export trade. Shipments under the 153,000-standards agreement concluded with the United Kingdom in June and mentioned in our previous report on softwood lumber, began in August when about 30,000 standards were sent. The U.S.S.R. took up the option, provided by the contract, for an additional 45,000 standards, thus bringing its total shipments to the United Kingdom for 1950 up to almost 200,000 standards. During the first half of 1950, shipments of softwood lumber from the U.S.S.R. to Belgium were about 4,500 standards, the total quantity contracted for 1950 delivery amounting at that time to 14,000 standards.
Imports
During the first six months of 1950, imports of the greatest buyer, the United Kingdom, declined roughly 33 percent, whereas imports of most continental countries increased, as compared to 1949. The net result was an increase of about 7 percent over total European imports during the first half of 1949.
The increase in the import figure for the first six months of 1950 was entirely accounted for by imports from European sources. Imports from the dollar area did not reach 44,000 standards, a decline of more than 50 percent from the levels during the corresponding period in 1949. Later in the year, the allocation of ECA (Economic Cooperation Administration) dollars for purchases of timber was discontinued, and timber imports from the dollar area were thus made dependent upon "free" dollar availabilities.
As has been mentioned earlier, the United Kingdom reluctance to purchase on a rising market was responsible for the low level of its lumber imports during the first half of 1950. The results of this policy were manifold. By the end of June 1950, the United Kingdom's imports from Sweden were only a little more than 50,000 standards (over 54,000 standards during the first half of 1949) and those from Finland about 34,000 standards (nearly 32,000 standards in January-June 1949), while at the same time imports from Canada remained at less than 24,000 standards (almost 76,500 standards in January-June 1949); imports from the United States had dropped to the negligible level of 1,800 standards (6,000 standards a year earlier). There was an additional decline in imports from Yugoslavia, and a complete stoppage of shipments from Western Germany The increases in imports from France, Poland, and some other sources could only partially fill the gap existing between requirements and supplies. Consequently, stocks had to be drawn upon so heavily that they dropped from 415,500 standards at the turn of the year to only 170,200 standards at the end of the first half-year period.
In the meantime, a surplus was developing with the dollar countries. This situation resulted in increased purchases of Pacific Coast lumber. By mid-September, contracts placed by the British Timber Control with exporters in British Columbia, Canada, and some sellers on the United States west coast totaled around 245,000 standards for shipment up to the end of June 1951. Additional contracts for shipments from dollar sources were placed in October.
The serious criticisms arising from the import policy of the British Timber Control during the first half of 1950 contributed to the decision regarding partial removal of timber trade control. At the beginning of October, the Board of Trade announced that softwood and mining timber purchases which had been under government control since 1939, could be concluded by private trade channels with Sweden, Finland, France, Austria, and other soft-currency countries for shipments arriving on or after 1 January 1951. The Timber Control will continue to buy in hard-currency-areas and will also be responsible for importation from Eastern European countries, i.e., the U.S.S.R., Eastern Germany, Poland, Czechoslovakia, Yugoslavia, and Rumania. The new provisions did not relax existing controls over the use of softwood, but controls over home market retail prices of imported softwood will be removed as of 1 April 1951.
It was expected that the partial relaxation of the United Kingdom softwood import controls would result in greater purchases of lumber from Sweden and Finland for shipment during the early months of 1951 than was the ease a year before:
By the beginning of November 1950, it was reported that the United Kingdom Government had already purchased about 600,000 standards for 1951 shipment. At that time, contracts made by private importers for shipment after 1 January 1951, did not exceed 9,000 standards.
The Netherlands played an outstanding role among the continental European importing countries which made sizable purchases of lumber for early delivery during 1950. By the end of the first half year, its imports had reached about 146,000 standards, more than a 50 percent increase over the corresponding period in 1949. Imports from Sweden and Finland, accounting for over 47 and 26 percent of the total respectively, had considerably increased, as had shipments from Austria. On the other hand, imports from Western Germany, which totaled more than 105,000 standards, during the first six months of 1949, were now only about 10,000 standards, while imports from Poland, Czechoslovakia, Yugoslavia had declined to a smaller degree. No imports from the U.S.S.R. were reported, against nearly 19,000 standards during the first half of 1949. By the latter part of 1950, purchases contracted by importers in the Netherlands for delivery during the year totaled about 395,000 standards, which was believed to correspond more or less closely to the whole year's imports of sawn softwood (against 325,000 standards in 1949). Some 48 percent of this total was accounted for by Swedish contracts, about 34 percent by Finnish contracts, and 9 percent by Austrian contracts.
Belgium, competing with the Netherlands for favorite dimensions and early deliveries, imported during the first half of 1950 about 56,400 standards, a quantity 71 percent higher than that of the corresponding period in 1949. Imports from Sweden, which represented almost 60 percent of the total during the first half of 1949, dropped slightly and accounted for only 33 percent of the total. The proportion of Finnish lumber, on the other hand, was more than trebled and represented almost 25 percent of the total. Imports from Canada were considerably increased, but did not exceed 2,700 standards; imports from the U.S.S.R. were 4,400 standards, and those from Western Germany 2,400 standards. By the beginning of the second half of the year,- purchases from the U.S.S.R. for 1950 delivery amounted to 14,000 standards.
Denmark also increased its imports to a remarkable degree during the first half of the year - from 27,600 standards in 1949 to 58,200 standards in 1950. By early purchases, made mainly in Finland and Sweden, Denmark secured the bulk of its 1950 needs. Stocks showed a remarkable rise, and no large imports were expected during the last six months of the year.
Western Germany was a more important lumber importer during the first six months of 1950 than it had been earlier in the postwar period. While total imports of softwood lumber to Western Germany in 1949 amounted to 82,000 standards, imports during the first half of 1950 alone were almost 46,500 standards. By the end of June, imports of lumber into Western Germany from Sweden had reached 31,000 standards (less than 16,500 standards during the first half of 1949) and those from Finland almost 13,000 standards (nearly nonexistent during the first half of 1949).
Imports into Italy during the first six months of 1950 showed an increase of almost 19 percent over those for the corresponding period of 1949. The main source of supplies was Austria, which accounted for nearly 86 percent of total Italian imports of softwood lumber. With imports amounting to 92,000 standards during the first half year of 1950, against close to 78,000 standards a year earlier, the demand in Italy was well met and stocks were abundant.
Imports of softwood lumber into Ireland were also increased during the first half of 1950, and some timber-exporting countries, particularly Sweden and Norway, imported larger quantities than a year earlier. There was a marked drop, however, in imports into France. With reduced imports from Western Germany, total imports of sawn softwood into France did not reach 27,000 standards, against more than 43,000 standards a year earlier. The decline of softwood log imports, almost exclusively originating in the French Zone of Germany, was still more drastic, more than 80 percent.
Prices
During the second and third quarters of 1950, there was a general strengthening in European softwood lumber prices, although there was no uniform price level. Prices were mainly influenced by three factors: the early purchasing activity shown by importers of Swedish and Finnish lumber; the upward trend in prices prevailing in the United States and Canada for the first nine months of the year; and, after the outbreak of the Korean crisis, the need for building inventories in a number of countries and for implementing rearmament plans.
In our last softwood lumber report, it was mentioned that Swedish shippers had sold to markets outside the United Kingdom at prices corresponding to a basis of £51 or more for 7" u/s redwood battens net f.o.b. According to later reports, prices of first-class Swedish wood in the latter part of September climbed to £57 for 6" u/s redwood battens, £68 10s. for 9" u/s redwood deals, £52 and £58 respectively for fifths. The prices for u/s redwood boards at the same time were exceptionally high. Thus, a basic price of £73 was paid for 1" x 7", with an additional £7 for 1¼" x 7" or 1½" x 7" sidings. Also, prices for "utskott" were rising, and £40 to £41 were paid for this quality. Australia was reported to have paid a basic price of £55 for Swedish 7" u/s whitewood battens and £42 10s. for "utskott" sold for delivery in 1951.
The basic price for Swedish 7" u/s redwood battens in sales to the United Kingdom increased from about £13 per standard just prior to the outbreak of the second World War to £49, or slightly more, in 1950 - both net f.o.b. Converted from corresponding amounts in Swedish kronor at the exchange rate current at the respective periods, the rise can be expressed in U. S. dollars as corresponding to an increase from about $60 to about $150.
The new arrangement made between Finnish exporters and the British Timber Control in the summer of 1950, and mentioned earlier in this report, provided for some increase in prices. Net f.o.b. basic prices were fixed as follows:
|
7" u/s redwood battens | |
|
Group I |
£50 |
|
Group II |
£49 |
|
Group III |
£48 |
|
Group IV |
£47 |
|
Group V |
£46 10s. |
|
Group VI |
£46 |
|
7" u/s whitewood battens | |
|
Group I |
£47 15s |
|
Group II |
£47 |
|
Group III |
£46 5s. |
|
Group IV |
£45 10s. |
|
"utskott," 6" and upwards | |
|
Groups I-II |
£34 |
|
Groups III-IV |
£33 |
|
Groups V-VI |
£32 10s. |
|
Schaalboards |
£32 10s. |
In April 1950 the basic price agreed by Timber Control with the Finnish exporters for Group IV, 7" u/s redwood battens, was £44, £3 lower than the new price; the April price for Group V was £43 5s., and that for Group VI £42 15s. In May 1950 the Timber Control had offered £47 10s. for Group I, 7" u/s redwood battens, as compared with the new price of £50.
The contract made between the British Timber Control and the three largest exporters in British Columbia, Canada, regarding shipment of about 135,000 standards up to the end of June 1951, is reported to have provided for an increase of about 5 percent over prices paid by the United Kingdom for Canadian lumber contracted in July 1950. The new contract is thus based on an equivalent of about £57 f.o.b. Pacific ports for Douglas fir merchantable quality which is most nearly comparable to redwood fifths from the best Swedish and Finnish mills. It was estimated that, under prevailing increased freight rates, this price would correspond to something near £75 c.i.f. British port. Later, in October 1950, the Timber Control was able to make new contracts for shipments from British Columbia at considerably lower prices.
At the beginning of November 1950 an increased export charge was imposed on all sawn and planed wood to be exported from Sweden in 1951. The export charge was reported to be anywhere from 50 Swedish kronor (about £3 6s. 8d.) to approximately 65 Swedish kronor (about £4 6s. 8d.) per standard. At the time of writing, it was not yet clear to what extent the export prices for Swedish lumber would be affected by the new charge.
North America
CANADA
Consumption
In a report known as the "Curtis Report on Housing," Canada's housing needs for the first postwar decade were estimated at 606,000 dwelling units, which is considered a rather conservative figure. During the period from 1945 to the end of the first quarter of 1950 inclusive, a total of about 362,000 new dwelling units were built. The figure for 1949, 91,000 new units, was an unprecedented peak.
In spite of this development and a favorable trend in industrial activity as well, the consumption of lumber did not show any marked increases.
Production
According to estimates published by Canada's Department of Trade and Commerce, production of all lumber (excluding sawn sleepers) by all operators east of the Rockies, except those in Newfoundland, amounted to some 623,000 standards during the first half of 1950, which, compared to the corresponding figure of 690,000 standards for the first six months of 1949, would indicate a decrease of about 9.7 percent. Some 10 to 15 percent of the total is accounted for by hardwood. During the same period, production of softwood lumber and sleepers in British Columbia was estimated at about 729,000 standards as compared with 678,000 standards for the first half of 1949, an increase of 7.6 percent. Although the estimates for the eastern provinces and those for British Columbia are not entirely comparable, they suggest that no very remarkable changes in the output of softwood lumber in Canada had occurred during the first half year of 1950. In July 1950 there was a slight increase in the output of softwood lumber east of the Rockies, as compared with the preceding month, but at the same time there was a minor decrease in British Columbia.
Exports
Shipments of softwood lumber to the United States were exceptionally high during the first half of 1950, and preliminary estimates indicated an increase of approximately 130 percent. At the same time, exports to the United Kingdom represented only about one-tenth of the quantity exported to the United States, and exports to other markets were relatively small.
The larger contracts placed by the Timber Control of the United Kingdom with Canadian producers were scheduled to result in bigger export shipments later in the year and early in 1951.
Prices
Lumber prices in Canada have been affected by the firmness of the domestic market and the strong demand for lumber in the United States. It was reported that the increase in prices caused by exports from the Canadian west coast to the United States was felt as a disturbing factor in the domestic market toward the end of the summer. Buyers in eastern Canada became reluctant to buy western Canadian lumber for inventory, although there was a shortage of lumber in the east.
As of the beginning of October, the Canadian dollar was freed from its fixed rate of Can$1.10 = US$1.00 and left to find equilibrium with the United States dollar. The main effect of this measure on Canadian lumber exporters was expected to be a narrowing of the margin of "profit" which arose from soft currency devaluation in 1949. It was believed that the strengthening of the Canadian dollar might to some extent diminish the advantage of exports to the United States over domestic shipments.
United States of America
Consumption
Construction activity during the first half of 1950 remained unusually high and was estimated, in terms of new houses started, at 53 percent above the corresponding levels in 1949. Demand for lumber for all uses was exceptional throughout both the second and third quarters. Exports of softwood lumber during the first half of the year were about 5.5 percent above production, and gross stocks almost 17 percent below the figure of the previous year. But during the third quarter the situation changed; production increased more rapidly than the volume of exports and, therefore, stocks of softwood lumber were 4.1 percent higher than at the end of the previous quarter.
Consumption of softwood lumber during-the second quarter of 1950 was almost 31 percent more than in the first quarter, and total consumption for the first half year set an unprecedented record, estimated at roughly 8 million standards.
From through September 1950 construction activity and demand for lumber for building and industrial purposes continued on a high level. The defense measures called for by the outbreak of the Korean crisis resulted in increased consumption of lumber for packing and crating. Consumption of softwood lumber during the third quarter of the year reached an estimated quantity of about 4.75 million standards, thus bringing the total consumption figure for the first nine months of 1950 to roughly 12.95 million standards, as compared with 10.84 million standards a year earlier.
Controls on new construction and housing credit, issued during the third quarter of the year under the Defense Production Act, had an immediate effect on the volume of construction. There was a setback, and 6.3 percent fewer nonfarm dwelling units were started than in the previous quarter. Consumption, however, rose still higher during the third quarter, although at a much slower rate, and exceeded the previous quarter levels by 2.2 percent. It was thought that the consumption of softwood lumber during the last quarter of the year would drop by some 3.5 percent as compared with the previous quarter. Even so, consumption in 1950 would be about 14 percent higher than in 1949.
Production
Output of softwood lumber during the first quarter of 1950 lagged behind the volume for the last three months of 1949. During the second quarter of 1950, however, output reached a very high level, and the total quantity for the first half year was about 7.18 million standards, some 15 percent more than a year earlier.
Although the exceptionally high rate of production dropped slightly in July, production was on the whole relatively strong for the third quarter and rose to 4.6 percent above the second quarter record. By the beginning of the last quarter of the year, however, there were indications of a decline. It was reported that some small and marginal mills were closing because of price decreases.
Trade
Exports of all lumber declined during the first six months of 1950, owing to increased domestic demand. Exports of softwood lumber alone, totaling 84,800 standards, were almost 31 percent below the figure for the first half of 1949. Douglas fir lumber exports, representing about half of the total, had declined to approximately 50 percent of the previous year's figure.
During the third quarter of the year, exports were hampered not only by strong domestic demand and high prices, but also by increased freight rates and a continuing freight car shortage on the west coast. The total was approximately that of the previous quarter, and considerably below the exports of a year earlier.
On the other hand, imports of all lumber rose sharply during the first half of 1950. Softwood lumber imports, reaching a total volume of about 700,000 standards during this period, showed an increase of about 130 percent above the figure for the first six months of 1949. During the third quarter imports rose still further and were almost three times as large as during the corresponding period in 1949.
Prices
The Bureau of Labor statistics index for prices of composite construction lumber, converted to basis 1939 = 100, showed an all-time high of 333.7 during the second quarter of 1950. A relatively sharp increase occurred during the subsequent months, and the index rose to 371.0 in September. The index for Douglas fir lumber, for instance, rose from 384.7 in June to 415.4 in July.
The upward trend in lumber prices continued through September, but toward the beginning of October it was reported that prices for common grades of softwood lumber had begun to decline in several areas. Mill prices of Douglas fir and Western pine and hemlock, common grades used in home building, dropped $13 to $20 a standard from the record prices at mid-September. Prices of select grades of softwood lumber, however, remained firm.
Since the rise in lumber prices was brought about by a disruption of the distribution system, as well as by more normal factors, it was expected that an oversupply of lumber would develop toward the end of the year. At that time the freight car situation would be improved, and building operations would show a seasonal decline, aggravated by housing credit restrictions.
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Locust Control A report from a member of FAO's Agriculture Division indicates that in Central America locusts gather and breed in abandoned fields where the vegetation is short and scanty. To prevent locust outbreaks these areas must be put under intensive cultivation or a heavy vegetative cover should be established. When this is accomplished, it is hoped that locust parasites may be encouraged and that a better biological balance of hosts and parasites can be established. Some of the things which must be done to bring about this condition are afforestation, reforestation, prevention of overgrazing, and preservation of the existing forests. Forest fires, which are very common and rather extensive throughout Central America during the dry season, may have a direct effect on locust outbreaks as the permanent breeding grounds of locusts are always found in relatively dry hills with very scanty vegetation. This is an additional reason for doing everything possible to prevent the uncontrolled occurrence of forest fires. Whenever fires are deemed necessary, from the agronomic point of view, the burnt areas should be put under cultivation or grazing should be limited and controlled so that vegetation may be reestablished. |
