Pete Stewart Presents at 2017 USIPA Conference

1. ©2017 Forest2Market, Inc.
PETER J. STEWART
OCTOBER 10, 2017
SECURE, SUSTAINABLE
WOOD FIBER FROM THE
US TO GLOBAL MARKETS

2. ©2017 Forest2Market, Inc.
FOREST2MARKET
INTRODUCTION
Forest2Market’s Mission
2
Empower participants in the global forest, wood products, paper products,
biochemical and bioenergy industries to make exponentially better decisions
through the strategic application of industry expertise and unique datasets.

3. ©2017 Forest2Market, Inc.
A HISTORY OF
POSITIVE CHANGE
3

4. ©2017 Forest2Market, Inc.
FOREST2MARKET
MARKET COVERAGE
4

5. ©2017 Forest2Market, Inc.
FOREST2MARKET
MARKET COVERAGE
5
US PNW & BC
EASTERN US
& CANADA
US SOUTH

6. ©2017 Forest2Market, Inc.
BETTER BUSINESS
MODEL
6
The only way to achieve a true measure and
understanding of the market is to collect transactional
data.
The foundation of all Forest2Market products and
services is our unique, current and proprietary database
of wood raw material transactions and the underlying
extensive data collection infrastructure that enables us to
collect millions of market transactions every year.
Forest2Market is a neutral third-party, independent in ownership and structure. While actively
involved in the industries we serve, we do not buy or sell timberland, timber, lumber or biomass.

7. ©2017 Forest2Market, Inc.
OUR PROMISE
7
QUALITY
• Results cannot be manipulated.
• Data is rigorously validated.
CONFIDENTIALITY
• Customer data is always secure.
• Data is collected, and results are disseminated, anonymously.
ACCURACY
• Result are volume weighted.
• Every transaction is counted.
COMPLIANCE
• All products are compliant with US and EU laws.
• We are a neutral and independent source of market information.

8. ©2017 Forest2Market, Inc.
AGENDA
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OVERVIEW OF US FORESTS
• Inventory changes
• Forest Certifications
DEMAND GROWS TREES
• More demand more trees
• Inputs necessary
GLOBAL FIBER COMPETITIVENESS
• Low cost fiber at what risk?
ECONOMIC SUSTAINABILITY
• Is timberland ownership profitable and therefore sustainable?

9. ©2017 Forest2Market, Inc.
INVENTORIES ARE
INCREASING ACROSS
THE UNITED STATES
9
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013 2014
CubicFeet(billions)
Annual Timberland Inventory by Region
South: +1.3% annually
PNW: +0.7% annually
North: +0.4% annually
Total: +1.0% annually

10. ©2017 Forest2Market, Inc.
10
OVERVIEW OF US FORESTS

11. ©2017 Forest2Market, Inc.
REMOVALS ARE
SMALL COMPARED TO
TOTAL INVENTORY
11
Percentages are removals
divided by inventory
Growth has outpaced
removals by 40% on average
since 2008 (GRR=1.40)
2.7% 2.5% 2.6% 2.6% 2.5% 2.5% 2.4%
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013 2014
CubicFeet(billions)
Removals Relative to Inventory – United States
Removals
Inventory

12. ©2017 Forest2Market, Inc.
PELLETS ARE A SMALL
PART OF THE MARKET
12
-
50
100
150
200
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Tonnes(Millions)
Total Pulp Total Paper Pellets
Image: NAFO.

13. ©2017 Forest2Market, Inc.
US FORESTS ARE
CERTIFIED TO PEFC &
FSC STANDARDS
13
PEFC (SFI) has wider acceptance FSC more limited

14. ©2017 Forest2Market, Inc.
WIDESPREAD ADOPTION
OF SUSTAINABILITY
CERTIFICATIONS
14
Widespread adoption but a fraction of the total timberland acres –
70% forest in private ownership – supply chain implications and the
importance of other certification systems

15. ©2017 Forest2Market, Inc.
WIDESPREAD ADOPTION
OF SUSTAINABILITY
CERTIFICATIONS
15
Metric Acres (millions)
Timberland 506.1
Total PEFC 80.7
-SFI 61.2
-ATFS 19.6
Total FSC 35.8
Both PEFC & FSC 20.7
Total Certified 95.8
% Certified 19%
95 million acres
certified out of 506
million or about
19%

16. ©2017 Forest2Market, Inc.
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DEMAND GROWS TRESSDEMAND GROWS TREES

17. ©2017 Forest2Market, Inc.
DEMAND DRIVES
PRODUCTIVITY
1. As demand for forest products has increased,
timberlands in the US South have become
increasingly productive.
2. Increased demand for wood has not depleted forests.
3. Landowners responded to greater demand by
investing in the future growth of their forests.
4. The evidence is clear: Increases in removals are associated
with more timberland acres, better growth and larger
inventories.
17

18. ©2017 Forest2Market, Inc.
DEMAND FOR FOREST
PRODUCTS HAS
INCREASED STEADILY
18
0
2
4
6
8
10
12
0
20
40
60
80
100
120 1961
1971
1981
1991
2001
2011
Removals(BCF)
ProductionIndex(2000=100)
US Forest Products Production
vs. US South Timberland Removals
Sawnwood Plywood / Particle Board Pulp Paper Total Removals

19. ©2017 Forest2Market, Inc.
BUT FORESTS HAVE
GROWN
19
0
200
0
125
250
375
1953
1963
1973
1983
1993
2003
2013
Acres(millions)
Inventory(BCF) Annual Timberland Acres and Inventory
New Inventory (Cumulative Surplus Growth) Baseline (1953) Inventory Timberland Acres
Acres +3%
Total Inventory +108%

20. ©2017 Forest2Market, Inc.
DEMAND
ENCOURAGED
PRODUCTIVITY
20
30
40
50
60
70
80
1953
1963
1973
1983
1993
2003
2013
Growth(CF/Acre)
Annual Timberland Growth per Acre
by Ownership Group
Private Public Total
0
2
4
6
8
1940 1950 1960 1970 1980 1990 2000 2010
CF/AcreatHarvest(1000s)
Seedling Establishment Decade
Contribution of Management Practices to Pine
Plantation Productivity
Natural Stand Planting Site Preparation
Fertilization Weed Control Tree Improvement
Clonal and Biotech

21. ©2017 Forest2Market, Inc.
RELATIONSHIPS ARE
STATISTICALLY
SIGNIFICANT
21
R² = 0.9026-
2
4
6
8
10
12
14
16
18
20
0.0 0.2 0.4 0.6 0.8 1.0
PrivateSoftwoodInventory
(BillionCF)
Private Softwood Removals
(Billion CF)
Private Softwood Removals vs. Inventory, 1968-2015
Pearson Correlations (p-values)
Softwood Removals
Softwood Acres
0.93056
(p<.0001)
Softwood Inventory
0.95007
(p<.0001)
Softwood Growth
0.91452
(p<.0001)

22. ©2017 Forest2Market, Inc.
PELLETS ARE A SMALL
PART OF THE MARKET
22
-
50
100
150
200
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Tonnes(Millions)
Total Pulp Total Paper Pellets
Image: NAFO.

23. ©2017 Forest2Market, Inc.
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GLOBAL COMPETITIVENESS

24. ©2017 Forest2Market, Inc.
GLOBAL CONIFER
PRICES
Brazil and US
South are lowest
cost fiber areas
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25. ©2017 Forest2Market, Inc.
GLOBAL HARDWOOD
& EUCALYPTUS
PRICES
Brazil and US
South lowest cost
(ex-fx)
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26. ©2017 Forest2Market, Inc.
GLOBAL SOFTWOOD
SAWTIMBER PRICING
US South is
competitive –
looks more like
developing
economies without
the risk
26

27. ©2017 Forest2Market, Inc.
27
TIMBER PROFITS ENSURE
SUSTAINABILITY

28. ©2017 Forest2Market, Inc.
COSTS OF PLANTING
AND RETURNS OVER
TIME
28
0%
1%
2%
3%
4%
5%
6%
7%
8%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
1997 2017 %IRR
$/Acre
Expenses Revenues IRR
32 Year Rotation 25 Year Rotation
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
YTD2017
USDpergreenshortton
Forest2Market US South Pine Stumpage Prices
Pine Sawtimber (14" DBH) Pine Pulpwood

29. ©2017 Forest2Market, Inc.
CONCLUSIONS
29
OVERVIEW OF US FORESTS
• Inventory growing
• Certifications adequate but limiting if too restrictive
DEMAND GROWS TREES
• More demand the better
• Market response is positive to increased fiber demand
GLOBAL FIBER COMPETITIVENESS
• Low cost and low risk
ECONOMIC SUSTAINABILITY
• Timberland ownership continues to be profitable

30. ©2017 Forest2Market, Inc.
CONTACT
30
Peter J. Stewart
President/CEO
+1.980.233.4010
pete.stewart@forest2market.com
Forest2Market
15720 Brixham Hill Ave Suite 550
Charlotte, NC 28277
USA