EDITORIAL

The amazing price run up

"Are you kidding?" "It can't be that much." "That's $100 over liast week.' "Gasp!" "Gulp.n These sentiments, selected expletives and otler general expressions of astonishment have been g;reeting the aurazing across-the-board increases in wood prices in recent, weeks. As we go to press, the big question is whether these price increases will fall back, stay at high levels or simply go higher.

Not many people think prices will fall back to their starting point, thus becoming just another spike on the price charts. While forecasting future price directions is iffy at best, most of the people we've surveyed feel a major price retreat is unlikely, given the supply driven natue of the current market. Plus, business is improving in many, though not all, areas of the country, increasing demand.

-The consensus among seers is that the bill for all the lockups of timber has come due. No longer is the deletion of millions of acres of timberlands ftom the nation's wood fiber supply seen as a free ride. Payment for that ride is just [eginning, nany feel. The economics are very cleac less supply meians higher pnces fu what remains.

Should these new price levels hol( their effects will ripple dramatically. New bomes will cost several t[ousands of dollars more, pricing some out of their dream home. Suppliers will need far more money to finance inveniories; small companies may be over their qedit limit wi6 just drc or two cils of lumber. Tbe cost of insrning invento ries will rise. Wood products may lose certain ma*ets o substimte materials. Just-in-time buying nay inqease dranatically. And th€se are just a few oftbe ripples expected.

Many in the industry feel wood products bave been too cheap, with pricas failing to keep pace with inllation. Because of a lack of historical precedent in today's market the job of divining price direction fu those who buy and sell beomes even murtier. Best advice: hang loose.