Sense of optimism
In this potentially negative environment it is pleasing to report that my review of the national market scene has produced a quietly pervading sense of optimism. An optimism that has been fuelle by more recent declines in the US dollar exchange rath than anything else. One sawmiller spoken to in the last week has reported that he recently sent a small consignment of lumber into the Middle East at a reasonable price and then made NZ$2,000 in exchange rate gains in the transaction. Three months ago there would probably have been a loss.

Decline in framing prices
Both the North and South Islandshave reported small declines in large framing log prices. This seems to be the consequence of larger North Island mills responding to poor export prices by dumping big volumes of lumberat below sensible margins in both islands. The situation ex exacerbated by a general slow-downin the Australian building industry, along with their increasing shift to self-sustainability. A sawmiller has commented that he believes we will soon see a lot of Australian framing lumber appearing in New Zealand houses. The ultimate insult perhaps?

Teports on the state of the pruned market have been very mixed. The North Island has preeorted some minor price decreases with poor demand, whilst in the South Iland prined logs have been selling will with little change to prices since the last market report in May.

For most domestic grades we used to see generally better prices in the North Island. As is revealed in the log priceing table below, these price differencesare now minimal and probably the result of slightly different grade negotiations, rather than any real differences in price.

Still ugly for exports
The export scene has continued to remain ugly as was predicted. Declines over the last three months throughout both islandshave been in the order of NZ$6 to $12 per cubic metre, depending on the destination grade and timing. The wharf gate prices are influenced by the wharf and ship loading cost. Therefore regions with larger volume turnover report better prices. The worst KI price I found was $38.00 per cubic metre and the best was $46.00. For K grade, the worst price was $45.00 per cubic metre and the best was $52.00.

For most New Zealand farmers, the likely harvest, marketing and transport cost for these two grades will be in the order of $35.00 to $45.00 per cubic metre. Both KI and K grade reflect the poorer quality end of the tree, and whilts it tends to smoke screen reality, differentials can be applied to logging costs to ensure better royalties on lower grades. However it is hardly surprising that my advice ath the moment would be that if you hace the choice, not to harvest poorer quality woodlots