Abstract:The South-Central United States, which includes the states of Louisiana, Mississippi, Texas, and Arkansas, represents an important segment of the softwood sawtimber market. By using the Seemingly Unrelated Regression (SUR) method to account for the linkage among the four contiguous timber markets, this study examines the dynamics of softwood sawtimber stumpage markets within the region. Based on quarterly data from 1981 to 2014, the findings reveal that both pulpwood and chip-and-saw (CNS) prices have a positive influence on the Texas and Arkansas sawtimber markets. Moreover, Granger-causality tests suggest that unidirectional causality runs from pulpwood and CNS markets to the respective sawtimber market. Compared to the pre-financial crisis period, sawtimber prices in these four states are 9%-17% lower in the recent years.

Softwood chip-n-saw (CNS) is a relatively new stumpage product in the sawtimber-and pulpwood-dominated stumpage markets in the U.S. South. Based on a quarterly data series from 2003 to 2016, this study estimates the demand and supply models of the softwood CNS stumpage market in Louisiana. The two-stage least squares (2SLS) results reveal that own price elasticity of demand (PED) is price elastic, and the cross-price elasticity (XED)with sawtimber approaches unit elasticity. On the supply side, CNS is price inelastic in supply (PES), but more responsive to own price changesthan sawtimber quantity supplied. Further, severance tax increases are found to decrease the supply of CNS, indicating that suppliers are responsive to severance tax incidence. As the first empirical estimation of CNS, the findings should be of interest to those involved in the analysis of Southeastern stumpage markets.

Although the hardwood timber market is an important segment of the forest industry in the United States, little attention has been paid to modeling hardwood stumpage and lumber markets. Based on the annual data series from 1955 to 2014, we estimate simultaneous demand and supply models of the hardwood sawtimber stumpage market in Louisiana. A permanent structural break in 1993 is detected in the hardwood sawtimber stumpage market, and the modified cointegration test and structural vector error correction approach are used to estimate the demand for and supply of hardwood sawtimber stumpage. The results show that own-price elasticity values in both the demand and the supply equations are inelastic in the long run. Hardwood and softwood sawtimber are found to be substitutes. Moreover, the softwood timber market always leads in the feedback adjustment process and can help predict the hardwood timber price in Louisiana.