Clarky's Comment - October 2010

The October NZFOA (New Zealand Forest Owners Association) and ForestWood 2010 Conferences in Wellington were again very well run and attended.

One highlight was the affirmation by three senior government ministers that the NZ Emissions Trading Scheme (ETS) is here to stay, regardless of what our trading partners do, or do not do. Although the scheme is likely to retain emitter obligations at current levels and the entry of agriculture may be deferred if our key trading partners do not put a price on carbon, the current scheme provides a base-load demand for carbon credits (NZUs). This should give forest owners confidence that there will be an on-going market for NZUs and encourage new tree planting investment.

Presentations by Gerry Van Leeuwan and Russ Taylor on both Russia and China wood markets were also a highlight. Key points on these presentations are covered in our Log Market section.

The favourable outlook for timber in global markets, principally driven by strong Asian demand, and the opportunity for improved cash-flow and return on capital afforded by the ETS, make a compelling case for investment in new tree planting.