Latest consumption forecasts by ABARES suggest the different softwood grades for which forecasts are being supplied are headed in quite different directions over the next year. Meanwhile, looking back at the first year’s forecasts, some of the quarterly forecasts are proving to be closer to the actuals than others.
A summary of the forecasts (as at September 2017) is shown in the table below. All of the volumes are cubic metres (m3).
| Grade | June Qtr’17 (Actual) | Sep Qtr’17 f | Dec Qtr’17 f | Mar Qtr’18 f | June Qtr’18 f | QoQ % Change |
| Treated Structural | 193,673 | 199,530 | 194,600 | 193,748 | 201,383 | +4.6% |
| Untreated Structural (<120mm) | 173,122 | 179,327 |
159,477 | 150,764 | 161,113 | -6.3% |
| Untreated Structural (>120mm) | ||||||
| Landscape | 35,949 | 43,641 | 48,030 | 38,669 | 40,467 | +13.2% |
The chart below takes the above data and indexes it to show the relative forecast growth of the four grades, through to JQ’18. The chart shows that two grades are forecast to experience growth over the current financial year. Treated Structural is forecast to grow 4.0% and Landscape grades by 12.6%. The untreated structural grades are forecast to decline, with Untreated Structural <120 mm set to decline 6.9% and the >120 mm equivalent to decline a sharp 20.9%.
FWPA’s analysis of the performance of the forecasts over the year they have been in operation yields different results, based on the grades for which forecasts are calculated. This is to be expected – these are mathematical forecasts using consistent methodologies – not strict business level projections based on efforts to control future sales events.
For the interest of readers, the June Quarter ‘spreads’ between the forecasts and the recorded actuals are included in the table below.
| Grade | Forecast m3 | Actual m3 | % Variation Actual to Forecast |
| Treated Structural | 193,724 | 193,673 | 0.0% |
| Untreated Pine <120 mm | 194,140 | 173,122 | -12.1% |
| Untreated Pine >120 mm | 13,111 | 16,077 | 23.0% |
| Landscape | 33,624 | 35,949 | 6.5% |
There is no specific utility in assessing forecasts in this manner, at least so early in their life. If there is a conclusion that can be drawn, it is that forecasts for larger volume grades are likely to be less impacted by single events – such as fulfilment of a large order or two over a quarter. An extra 1,000 m3 for a smaller volume grade could represent 10% of its quarterly consumption, whereas for a larger volume grade, the same 1,000 m3 may represent just 0.5% of its normal consumption.
Details of the forecasts are provided below, noting that the coloured arrays associated with each quarter’s forecasts are the ‘95% confidence intervals’. These show the normal range of variation that can be expected for the forecasts.
Treated Structural – Aggregated
For the June 2017 quarter onwards, the H2-F series that was previously forecasted has been replaced by the sum of the two structural treated pine series (>120mm and <120mm). Sales data up to May 2017 show that H2-F sales have been comprising an increasing share of aggregate treated pine sales. In recent quarters, the share has been close to 100%, so the same model structure that was used to forecast H2-F has been used to forecast aggregated treated pine.
Actual sales of aggregate treated structural pine in the June 2017 quarter (193,673 m3) were marginally lower (only 51 m3) than the April 2017 forecast for H2-F (193,724 m3) provided last quarter. ABARES notes that the actual sales for the June 2017 quarter fell well within the 95% prediction intervals for all previous forecasts.
Looking forward, the updated forecasts for the September 2017 quarter onwards are consistent with those provided previously. Sales are forecast to increase in the September 2017 quarter by 3.0% to 199,530 m3, followed by a decrease in the December 2017 quarter of 2.5% to 194,600 m3. Sales are predicted to fall further in the March 2017 quarter by 0.4% to 193,748 m3, before increasing by 3.9% in the June 2018 quarter to 201,383 m3.
Structural less than 120mm
Actual sales of structural pine greater than 120mm in the June 2017 quarter (173,122 m3) were weaker than expected, falling below the April 2017 forecast for the June 2017 quarter (194,140 m3) by 11% or 21,018 m3. ABARES notes that the actual sales for the June 2017 quarter fell outside the 95% prediction intervals presented in April 2017 but were inside the prediction intervals for all previous forecasts provided.
Looking forward, the updated forecasts for the June 2017 quarter have been revised slightly downwards from the previous forecast, with sales forecast to increase by 3.6% to 179,327 m3 in the September 2017 quarter before falling by 11.1% in the December 2017 quarter to 159,477 m3. Sales are forecast to decline further in the March 2018 quarter to 150,764 m3 before recovering in the June 2018 quarter to reach 161,113 m3.
Structural greater than 120mm
Actual sales of structural pine greater than 120mm in the June 2017 quarter (16,077 m3) exceeded the April 2017 forecast for the June 2017 quarter (13,111 m3) by 23% or 2,966 m3.
Looking forward, the forecasts for the September 2017 quarter have been revised upwards from the previous forecast with sales forecasts to fall in the September 2017 quarter by 11.0% to 14,316 m3 before falling further to 12,682 m3 in the December 2017 quarter and to 11,942 m3 in the March 2018 quarter. Sales are forecast recover in the June quarter of 2018, increasing by 6.4% to 12,712 m3.
Landscaping products
Actual sales of landscaping products in the June 2017 quarter (35,949 m3) were stronger than expected, exceeding the April 2017 forecast (34,386 m3) by 6.9% or 2,325 m3. However, actual sales for the June 2017 quarter fell within the 95% prediction intervals presented in all previous ABARES forecasts.
Looking forward, the updated forecasts for the September 2017 quarter onwards have been revised up from the previous forecast. Sales forecast to increase in the September and December quarters of 2017 quarter by 21% and 10.1% , respectively, to 43,641 m3 and 48,030 m3 before falling to 38,669 m3 (19.5 per cent) in the March 2018 quarter. Sales are then forecast to recover in the June 2018 quarter to 40,467 m3, in line with the historic seasonal cycle.
