Export log prices for New Zealand decreased in March because the shipping rates on oil prices increased and the overseas market demand weakened. The average wharf-gate price for A-grade logs from New Zealand decreased to $119 a tonne from the $122 a tonne in February, according to Scoop Business.
Low oil prices have pushed shipping rates to record lows, underpinning export returns for New Zealand logs. However, oil prices edged up about $US8 a barrel in the past month, signalling shipping rates, while still low, may have reached their bottom.
As Scoop Business reported, the log inventories on Chinese ports remained at 2.9 million to 3.6 million m3, going up from 2.6 million to 2.8 million m3 in February. Compared to same period of 2015, the results were lower than the 4 million m3 from last year. Also, the kiwi dollar dropped 1% against the greenback over the month, and is down 11% over the year, making the country's exports more competitive.
"Wharf gate prices softened slightly as a result of the weaker overseas market, but both the New Zealand dollar and shipping rates continued to aid returns for exporters, keeping prices supported. Some of the bottom end has come out of shipping rates, largely due to lifting oil prices. However the mid-range for spot prices continues to be very low, and is on-par with what was seen the month prior," AgriHQ analysts Shaye Lee and Reece Brick stated, as quoted by Scoop Business.
There are reports of large quantities of wood going to China, so the market’s outcome might not be as positive in the next couple of months. Structural log price in New Zealand’s domestic market stayed at $109 a tonne, reaching the highest level since August 2014.
Nevertheless, pulp prices remained unchanged and more woodchips became available from the recently opened cubed lumber mill in the central North Island. Roundwood prices also reamined stable as the demand from the horticulture increased.