Relation of pine chip-n-saw to sawtimber and pulpwood prices in the Southeastern United States: direction of influence
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Keywords
chip-n-saw, cointegration, pine pulpwood, pine sawtimber, The Law of One Price, Timber Mart-South
Abstract
Relationships among prices of pine sawtimber (PST), pine pulpwood (PP), and chip-n-saw (CNS) were examined for southeastern markets in the United States. The data were extracted from the Timber Mart-South database and included quarterly prices of pine products from 1979 to 2016 for markets in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Texas. The data were separated into two regions in each State. Both regions were used for Alabama, Florida, Georgia, Mississippi, and South Carolina, but only single regions were used for Arkansas, Louisiana, North Carolina, and Texas. The number of significant lags indicated by the Akaike information criterion varied between one and three for all markets, and those lags were used for further analysis. The Granger causality test using the Yamamoto–Toda method indicated significant predictability of PST by CNS in four regions, PST by PP in three regions, CNS by PST in three regions, CNS by PP by three regions, and PP by PST by two regions. The Granger causality test using a differencing method indicated significant predictability for two fewer regions than the Yamamoto-Toda method, with eight regions in common. Of all the regions, the highest number of significant causalities was in region 1 of Alabama and region 2 of Georgia; no causalities were significant in regions 1 of Arkansas and Louisiana. Based on the number of significant predictabilities, the strongest causality was for prediction of CNS by PST, and the weakest was for prediction of PP by CNS. The results help better understand price relationships among timber stumpage products, the degree of substitutability among them, and the importance of individual market characteristics.
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