Sam Nuske, PF Olsen
Forest Insurance
Climate change or not, there has been a large amount of forest insurance claims internationally due to wind and fire.
This is causing a large number of forest insurers to pull out of the market, leaving the remaining insurance underwriters with a near-monopoly situation.
Terms in the insurance policies have worsened, and premiums have been hiked. In the current market it is no longer a given that forest insurance is a good investment.
Forest owners and managers are now looking at self-insurance, investing money into firebreaks, fire ponds, roadside pruning, and emergency funds. Particularly when forests are early-to-mid rotation and have little option of salvaging the logs in the case of an event.
Insurers may look to re-enter the market in due course which will improve competition, but in the meantime, people are having to think outside the box with protecting their crop.
Log Market update
Supply shortages and reasonable consumption of logs in China has seen an improvement in export log prices into January. This is expected to continue in February. The Chinese Lunar New Year celebrations will see a slow down in consumption, however log stock levels in China are comparatively low compared to recent years, which should minimise downward pressure on log pricing. Shipping costs are volatile and continue to be above average levels and will be an important factor to the NZ log prices in 2022.
Domestic log prices have eased off in the first quarter of January as mills seek price relief during the current lower export pricing. Timber demand outlook for 2022 remains strong and mills will be looking to continue high levels of timber output which will mean maintained demand for logs.
Emissions Trading Scheme update
The price of NZ Units is $75, up a further $7 from December.
