1. Dan Meyer Northern Editor September 6, 2006 Trends in Global Markets for North American Hardwoods

2. Overview Macro Trends Europe Sleep-Inducing Graphs Key Opportunities Market Summary Asia Canada/Mexico Others to Watch?

3. U.S. Lumber Exports $1,059/MBF $1,108 $1,137 $1,160 $1,180

4. U.S. Lumber Exports

5. EU Mfg. on the Move…Again

6. EU

8. Spain

9. Italy

10. UK Germany

11. Annual Look

12. Markets to Avoid

13. Medium and Growing in EU

15. Small But Growing in EU

16. Rapid growth since joining EU Tariff reductions, free trade stance, investment in mfg. sectors, wage rates among lowest on continent— make it a low- cost mfg. center for Europe. Key European Opportunities: Poland

17. Increased lumber shipments to Germany ending up in Poland. Sizeable furniture industry and rapidly growing flooring industry— both heavily export oriented. Polish wood furniture exports up 24% in 2005 to U.S.$1.44 billion. Key European Opportunities: Poland

18. Poland’s mfg. competitiveness similar to Spain and Portugal’s positions at initial EU formation. Poland’s industrial production growing at 10% annually. N.A. lumber exports will increase significantly. Key European Opportunities: Poland

19. EU membership discussions opened in Oct 2005 Key European Opportunities: Turkey

20. Market potential similar to Poland’s; but won’t be realized as quickly. Wood household furniture exports surged 54% in 2004 to $136 mil. EU admission likely; maybe as soon as 2007. Key European Opportunities: Turkey

21. Turkey’s geographic location at the crossroads of European, Asian and African trade routes. Attractive location from which to source lumber and mfr. products for export to all three continents. Key European Opportunities: Turkey

22. European Winners

23. European Losers

24. N.A. lumber demand slid south; now shifting east. We’ll see more lumber shipped to Poland via Germany. Turkey shows Poland-like promise. European Summary

25. Exports to France, Belgium will decline further. Short-term outlook for many other EU-15 countries is good, but long- term pressures will limit sustained market strength. European Summary

26. ASIA

27. China

31. Other Asian Markets

32. Key Asian Opportunities: Vietnam

35. Asian Winners

36. Asian Winners (excluding China)

37. Asian Losers

38. Asian Summary China 8x larger than next largest Asian market. Price will remain buyers’ main concern Fickle Some say too difficult to deal with

39. Asian Summary Japan will show steady economic improvement, and increased consumer spending and business investment. Direct lumber shipments won’t improve

40. Asian Summary Taiwan is fading Modest growth in Hickory, Alder Thailand is stagnant Walnut up in 2006 Korea is flat Some promise for increased Ash

41. Asian Summary Vietnam is market to watch Yellow Poplar Cherry Ash White Oak

42. North America

43. Canada

46. Mexico

48. North American Winners

49. Key North American Losers

50. North American Summary Growth Potential for 2006

51. Difficult business climate will continue to plague Canada. We expect additional CDN furniture and flooring plants to exit market. Total lumber export volumes to Canada will fall. North American Summary

52. Much of the manufacturing business that Mexico lost to China circa 2001 has been regained. Mexico’s comparative proximity advantage working well with U.S.’s JIT demands. Mexican domestic demand rising North American Summary

53. Sales to Mexican distributors and flooring mfrs. will grow, as will the diversity of species. North American Summary

54. United Arab Emirates – Now India – Later Other Markets to Watch?

55. United Arab Emirates 6 Months Ago

56. United Arab Emirates Today

57. United Arab Emirates 6 Months Ago

58. United Arab Emirates Today

59. United Arab Emirates

60. It’s a great time to get into export markets Demand exceeding supply for #1 and #2 Com White Oak #1 and #2 Com Poplar #1 and #2 Com Red Oak Export markets are more volatile, lots of shifting Parting Thoughts

61. U.S. exporters competing around the world with world suppliers Scandavian flooring mfrs. replacing N.A. Cherry with S.A. Jatoba Surging Russian Oak use in China Eastern European Oak edging into Western European markets, hasn’t yet capped N.A. White Oak prices Not just a Rubberwood world anymore Parting Thoughts

62. “Hardwoods from all regions of the world are now available everywhere, making it less likely that one species will go crazy in demand or price before another one knocks it down.” We may never again see runs like we’ve seen with Alder and White Oak Parting Thoughts

63. U.S. hardwood lumber exports will increase 5% in volume in 2006. Shipments will be more heavily concentrated among larger exporters. Export markets are increasingly important to domestic manufacturers.

64. Data Resources www.fas.usda.gov/ustrade/ In the “Export” section, click “FAS”

65. Dan Meyer dan@hardwoodreview.com Thank You All data from USDA Foreign Agricultural Service