Marcus Musson: Farewell 2024 – what does forestry have in store in 2025?

That said, 2025 also appears to be ready to roll with a handful of full ammo.

Those of us who had hoped for an early Christmas present in the form of stronger export prices were disappointed by slight reductions of around $2/m3 through December, giving quality prices At around $125/m3 in southern North Island ports.

There are no real surprises, however, as underlying demand remains subdued, with problems in China’s construction sector and possible Donald Trump tariffs weighing heavily on buyers’ minds.

China’s log stocks have decreased slightly and are currently at around 2.67 million m3, with an increase of around 60,000 m3/day.

Some exporters have pushed November CFR prices to US$127-128/m3 in the hope that there will be a lingering imbalance of demand and supply. However, this has been met with crossed arms and a frown from buyers who are now less interested in setting a price. .

This has led to a number of ships sailing without a letter of credit (LC), which is never a good negotiating position and is perfectly in line with Supply and Demand Economics 101.

On the positive side, foreign exchange markets have started to price in the Trump effect, with the NZ:US price firmly in the $0.58 zone and shipping rates dropping to the very low $30s. US.

These two movements have more than offset the decline in CFR – for now.

The Chinese New Year holiday begins at the end of January and we will likely see a longer break than usual from Chinese sawmills, which could cause us pricing problems in February and March.

Beijing continues to try to pull all kinds of levers to stabilize its economy, the latest being a change in its monetary policy from “prudent” to “moderately accommodative.”

This is the first reduction in 14 years and, although many would say their economy has been in a “more than moderately relaxed” mode over the past decade, it speaks to the desire to increase domestic spending in an economic context prey to deflationary pressures.

It’s also likely a recognition that exports will be weak once the US president-elect puts on his tariff clothes and starts bringing manufacturing back to the United States.

With the reduction in export revenues, Beijing only has domestic consumption to support the economy.

“Moderately accommodative” monetary policy is unlikely to do much to increase demand in the construction sector, which at this stage appears impervious to stimulus measures.

Beijing recently threw the doctor on the real estate sector and the market still remains in a very precarious position.

Goldman Sachs estimates that, without additional stimulus measures, the value of Chinese real estate could fall by another 20 to 25% before stabilizing at the end of 2025.

Some measures to stimulate the market are being implemented regionally, with Beijing and Shanghai announcing tax breaks in a bid to encourage home buying.

This situation has remained largely stable, with property values ​​seeing virtually no change.

Back home, the newly stamped consents don’t read much better.

At the end of October, permits issued were down 16% compared to the previous year and the number of new homes fell to 6.3 per 1,000 inhabitants from 7.6 during the same period.

A number of sawmills have reported that the last 12 months have been the most difficult period they have experienced, due to subdued demand and low prices.

However, better times are expected, with a reduction in interest rates and a fall in inflation leading to an increase in activity.

There is general consensus that a reasonable number of issued permits have been shelved pending lower interest rates and lower construction costs.

We could see a rapid resumption of activity if these thresholds are reached.

The big carbon news is that the government is confirming its election promise to limit farm-to-forest conversions by introducing an ETS registration cap of 15,000ha for exotic forests on GUC 6 land and only allowing up to ‘to 25% of GUC lands 1 to 6. be registered in the ETS.

No matter how you look at it, this will make our ability to meet our national carbon sequestration goals incredibly difficult, if not impossible.

The general opinion is that it is a blunt instrument with very little detail as to how it will be implemented.

While Federated Farmers and Beef and Lamb will salute each other, many farmers will likely realize that this legislation has effectively erased hundreds of millions, if not billions, of New Zealand’s agricultural value.

A question to think about if you’re struggling with estate planning and are looking to monetize your farming investment – ​​which is now worth less than it was a few weeks ago.

Next year will be interesting because there isn’t much different on the Chinese horizon compared to this year, but let’s worry about that in January.

So, let’s raise a glass to 2025 and say goodbye the same way we do to drinking Uncle Dave after Christmas dinner.

I wish you all a Merry Christmas, I hope you stock up on eggnog and that Santa gives you something more than stockings.