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Greenwood Management independent wood price report

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This is a segment of an independent report regarding the price of energy timber in Barreiras, Bahia, Brazil. Greenwood Management have substantial forestry investment projects in this region.

Published in: Economy & Finance
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Greenwood Management independent wood price report

  1. 1. Wood Price Actual transaction prices are not published and the buyers are reluctant to share information. The primary buyers for eucalyptus in Western Bahia are the soybean crushing plants operated by Cargill and Bunge and the fertilizer manufacturer Galvani. The price fluctuates depending on availability, the amount of native wood available in the region and the time of year. During harvest season and during periods of high rainfall, the price of wood often goes up. Most of the eucalyptus wood in the region is marketed for energy purposes with the most recent bid price offered by Galvani set at R$78.65 m³ for plantation grown wood delivered to the factory gate. The price to cut and transport the trees up to 160 km is on average about R$15 per cubic meter. Historically, the price of wood has grown linearly from R$20.02 in 2002 until today´s price of R$78.65 increasing an average value of about R$8.37 per year as shown in the following graph. Average Price of Wood in Western Bahia R$ 65,00 R$ 57,50 R$ 50,00 R$/m3 R$ 42,50 R$ 35,00 R$ 27,50 R$ 20,00 2002 2003 2004 2005 2006 2007 2008 2009
  2. 2. If we extropolate for the next seven years using the historical average price increase, the future value of wood in 2017 will reach R$137.24 per m³. The historical values are actual figures reported by Bunge. When contracting a wood purchase agreement, the project developers will need to consider their main competitors; Bunge, Cargill and Galvani. These companies typically forward contract their eucalyptus wood purchases and most of the eucalyptus grown in the region is under contract to Bunge, the largest consumer of the three. Table: Price cubic meters of standing timber Purpose Energy Source: Cargill and Bunge. Class diameter Price (R$/m³) at factory gate 5 a 15,9 78,00

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