New Zealand’s log exporters have come through the winter in better shape than at any point in the past four years, but the two things the industry was counting on to lift prices further have both started moving the wrong way.
The PF Olsen log price index, which tracks average returns at the wharf gate, rose $3 in July to $122 a cubic metre. That puts it $2 above its two year average and $3 above its five year average, a rare position for the middle of a New Zealand winter. Writing in the July report, which was carried by interest.co.nz on 1 August, Scott Downs said at wharf gate prices for export grades gained about $6 a cubic metre over the month after giving up ground in June. The larger exporters were selling A grade logs into China at around US$126 a cubic metre.
What makes this winter unusual is not the price so much as how little the market fell. Stand Forestry chief operating officer Marcus Musson set out the pattern in a quarterly outlook published on 17 July. In 2023 the winter trough sat 25 per cent below the market’s rolling twelve month average. In 2024 it was 10 per cent below, in 2025 it was 8 per cent below, and this year it bottomed out just 5 per cent below. Musson described the result as returns that are more predictable, not more palatable, a distinction that matters to forest owners who have watched four years of thin margins.
The stability is coming mostly from the demand side in China, which takes roughly 55 per cent of New Zealand’s forestry exports by value. Daily log offtake at Chinese ports has held at about 55,000 cubic metres, inventories of softwood logs have stayed flat at around 2.5 million cubic metres, and China’s manufacturing purchasing managers index sat at 50.3 in June, marginally on the expansion side of the line. Storms and flooding across southern China did not dent consumption. On the supply side, New Zealand has simply been sending less, partly because wind damage in the upper South Island and lower North Island is still working its way through harvest plans, and the PF Olsen report noted that lower log supply from New Zealand is providing additional support to the market.
India, the second market, has gone the other way. Prices for sawn radiata pine there slipped from 671 to 651 rupees per cubic foot through July, with monsoon delays and infrastructure damage at Kandla Port cutting how much timber sawmills could process. Unsold New Zealand logs were being offered at US$145 a cubic metre. In his July report published on 24 July, Laurie Forestry managing director Allan Laurie wrote that both China and India were “stable in sales prices with a reduction in shipping costs and a favourable US$/KIWI$ FOREX seeing prices at wharf NZ recovering back up to close to where they were in May”. He also warned about exporters shipping logs to India without sales contracts or letters of credit in place, a practice he said was clogging ports and would eventually drag prices down for everyone.
Both of the favourable factors Laurie identified have since reversed. Ocean freight has risen about US$8 a cubic metre in recent weeks as fuel markets respond to tensions in the Middle East. In mid July the expectation across the industry was that shipping would fall from the mid US$40s a cubic metre towards the high US$30s through August. Instead it has gone up, and the PF Olsen report warns the increase will put downward pressure on September at wharf gate prices.
The currency has moved the same way. In mid July the New Zealand dollar was sitting in the mid 56 US cent range, a seven month low and a genuine advantage for anyone selling in US dollars and paying costs in New Zealand dollars. It strengthened 3.6 per cent against the greenback across July and by the end of the month was trading near 58.8 US cents, the highest since early June, after the United States Federal Reserve left its policy rate unchanged on 31 July. Musson had told Wood Central on 19 July that August prices would be higher as freight, fuel and exchange rates moved in the industry’s favour, while adding that the year is only just past halfway and shocks can still come. Two of those three have now turned.
The domestic side is the quiet good news. Sawmill demand has outperformed what mills normally expect in winter, forward orders are building, and most processors added a 2 per cent fuel surcharge to sawn timber in July. Mill closures over the past two years have taken capacity out of the market, which has tightened supply and helped prices. Behind that sits a construction sector finally showing signs of life, with Stats NZ recording 39,737 new homes consented in the year to May 2026, a 19 per cent lift that ended three years of decline, although the figure is still about 25 per cent below the 2021 and 2022 peak.
The stakes are regional as much as national. Forestry is New Zealand’s sixth largest export earner and employs about 42,000 people, concentrated in Gisborne, Northland, the Bay of Plenty and the central North Island. Ministry for Primary Industries figures put forestry export revenue at roughly $6.3 billion for the year to 30 June 2026, with logs and poles alone accounting for 54 per cent of that, or about $3.4 billion. A few dollars a cubic metre is the difference between a crew working and a crew standing down.
Contractors know how quickly that maths turns. Back in March, when shipping rates jumped from about US$33 a cubic metre to around US$45 in the space of a month and diesel added roughly a quarter to operating costs, Forest Management Group director Glenn Moir told RNZ that the industry could not sustain it and called the combination a perfect storm. Prices recovered from that episode. Whether they hold through spring now depends less on Chinese building sites than on what happens to fuel and the dollar over the next six weeks.
Do you work in forestry or in a town that depends on it? Tell us what you are seeing on the ground in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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