Forestry continues the upward trend
Land for forestry purposes continues to be in high demand and we are seeing a good level of sales activity, supported by strong commodity prices and upward pressure to carbon prices.
Carbon farmers are purchasing greenfield land throughout the country with most transactions occuring in the more remote localities.
Forestry companies are also in the market for greenfield land for dual carbon farming and timber production. These interests are generally purchasing closer to processing facilities or export sites and they are paying prices in excess of $16,000 per hectare for ground-based harvesting land in good localities.
There is less activity in the smaller and medium-sized block pre-1990 forestland segment. The activity in the pre-1990 forestland has been for larger portfolios that have been purchased inclusive of timber crop.
The at-wharf log prices have been solid with June prices being the highest since the mid-1990s. The July pricing was back slightly off that peak.
Supply chain issues are causing additional costs with a stubbornly high cost of shipping and wharf loading issues at some sites also adding demurrage costs.
The secondary carbon market has now exceeded $49 per NZU post the second government auction of carbon where the 4,750,000 NZU’s of carbon all sold at a price of $41.70. The next auction is set down for 1 September where a further 4,750,000 NZU’s will be offered.
Te Uri Rāku – New Zealand Forestry Service has signalled that processing time for registering land in the emissions trading scheme is in excess of six months. Those purchases wishing to register their land in the carbon accounting scheme or the averaging scheme and claim carbon back to 2018 will need to move quickly to complete registration.
We are of the opinion that the market will continue to strengthen with comparable carbon markets in Europe at a level commensurate of $NZ90 per NZU and continued solid log pricing.
There are also cash rich investment platforms and individuals looking for primary industry assets to invest in.