Study Group: OSB Experts

GLG News^SM Analyses by this Study Group's Leading Experts(?)

NOAA has reduced hurricane forecast due to a more robust EL NIno episode

September 9, 2009

Analysis by:Brad Franchi, President,

Analysis of:NOAA cuts hurricane forecast, cites El Nino | www.reuters.com

Out of the fry pan and into the fire? NOAA reduces hurricane forecast - El Nino windshear helps keep hurricanes at bay, upper level winds associated with El Nino disrupt internal events with the hurricane NOAA significantly reduced hurricane predictions recently - as the El Nino cycle strengthens stating "El Nino is here already"

Barrons Timber Analysis article might oversimplify the situation?

August 12, 2009

Analysis by:Brad Franchi, President,

Analysis of:Timber companies vulnerable to price drop-Barron's | www.reuters.com

Barron's timber article states that US timber may be overvalued by up to 50%. Barron's points out, correctly that even last year in the midst of 30%+ declines in stock values, timberland values actually rose 7%. If we return to the basic fundamentals of timberland ownership, a point by point summary would includeUS Timberlands yields 4-8% per year in biological growth.US recreational leases for these properties have risen steadily to $15-$25 /acLumber and other products have lost value?

Review of some recent El Nino events - Consequences can linger !

July 21, 2009

Analysis by:Brad Franchi, President,

Analysis of:EL NIÑO/SOUTHERN OSCILLATION (ENSO), DIAGNOSTIC DISCUSSION | www.cpc.noaa.gov

Terms and definitions El Nino - Refers to a weather event that usually last a year or more. El Nino is driven by warm waters in the tropical pacific. Most recent El Nino's have beaten a path across the US West and dumped up to 25% or more additional rainfall across the SE USA, during the wettest time of the year. La Nina - is driven by a cool water event. Recent La Ninas have not been near as severe as the El Ninos. Generally not a concern for Forest Products

El Nino - 2009 - 2010 - promises to effect timber and paper production

July 12, 2009

Analysis by:Brad Franchi, President,

Analysis of:NOAA - National Oceanic and Atmospheric Administration - El Ni�o Arrives; Expected to Persist through Winter 2009-10 | www.noaanews.noaa.gov

NOOA is predicting El Nino conditions to effect World and US weather.  In the Southern US El Nino conditions have occurred about every 5 years.  This phenomena is caused by warming seas in Asia, which then sets up a "Freight Train" of wetter than normal conditions over the SE USA.  After a period of time, logging, especially hardwoods, can be come difficult or impossible to conduct.  In at least one recent El Nino period, several Southen pulp and sawmills have been forced to take down time, due to a lack of hardwood fiber in the local wood baskets.  Other mills have resorted to procuring higher cost chips or pulpwood, generally logged from other regions where the El Nino is not as intense. El Nino can have some positive effects, also.  The increased wind shear can help mitigate hurricane development.

Once again, the forest products industry shows a high degree of correlation

June 4, 2009

Analysis by:Brad Franchi, President,

Analysis of:Sharply declining wood costs for pulpmills worldwide in the 1Q 2009, according to Wood Resource Quarterly | www.openpr.com

Once again the forest products industry finds new ways to minimize cost. Traditionally when one end of the market experiences declining demand, another part of the industry utilizes that fiber. Times are different now, as the entire industry is experiencing poor demand. This is forcing some private landowners to not harvest timber, but retain the trees on the stump to capture the biological growth of 2 to 6% per year, as well as time.  Although demand is weak, the biomass Mills are using this decline in demand to move up from strictly low-end fuel chips, into the pulpwood markets, and take advantage of decreased paper demand. Recent predictions are for paper to start to recover in 2010. At that point there may increased competition between paper Mills and biomass Mills over both fuel wood pulpwood. Another sign of increased activity, will be the reloading of the pulpwood and saw timber markets from very low inventories. It can take a years to reload the pulpwood or saw timber markets

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