1. TIMBER MARKET CONDITIONS Forest Landowners Association August 24, 2010 Ian A. Munn (With thanks to James Henderson) Department of Forestry Mississippi State University

2. Current Conditions

8. The Mississippi Timber Economy and the Great Recession National recession – Negative impact on MS’s economy Indirect impact on forestry Housing Market Collapse – residential construction down turn directly impacts forestry and the forest products industry

9. DECLINE IN HOME CONSTRUCTION Housing starts down 79.5% from early 2006 levels.

10. MS Pine Stumpage 41.54% Decline in ST

11. Mississippi Timber Harvest Value (1992-2009) 2009 Harvest of forest products value fell bellow $1 billion for first time in 16 years.  delivered value down by 19.9%  $864.9 Million in 2009;  $1.08 Billion in 2008

14. Major Timber Product as Percentage of Total Harvest Value (2005 - 2009)

15. Lumber Market Indicators Source: Random Lengths July 9, 2010

16. Panel Market Indicators Source: Random Lengths July 9, 2010

21. Pending Home Sales Drop? Expiration of home buyer tax credit (April 30 th ) – Tax credit stabilized home prices Recovery in housing depends on private sector job creation in the second half of 2010 – Little to no growth in employment Source: National Association of Realtors

22. US Total Private Employment Source: Bureau of Labor Statistics

23. Source: U.S.F.S. Forest Products Laboratory

24. U.S. Economic Outlook: August 2010 Source: National Association of Realtors

25. Real GDP:US Economy

26. Unemployment: US

27. Housing Starts: US

28. Source: USDA Forest Service, Forest Inventory and Analysis Mapmaker

29. Lower Stumpage Prices Supply 1 Price Quantity P1P1 Q1Q1 Demand Increased Supplies of Sawtimber

30. Supply 1 Price Quantity P1P1 Q1Q1 Demand Supply Increased Supplies of Sawtimber

31. Supply 1 Price Quantity P1P1 P2P2 Q1Q1 Q2Q2 Demand Supply Increased Supplies of Sawtimber

32. Time to Sell? Definitely Not! – Developing new product markets – Increasing demand for non-timber uses – Traditional timber markets will improve – Underlying land values still holding – Unlike most other financial assets, timberland has Use Values

35. Forest Management Pays In 2009 for example: Timberland returned 14% S&P 500 returned 9.4% Timberland is the only asset class that “grows”

36. www.MSUCares.com

38. Questions?