If we simply state that “Guanandi” can be sold at US$ 1,500.00/cubic meter, as we have learned from some brochures and from the Internet, it does not mean that much.
Who delivers it? Where? At what processing phase? Is this the price for the producer or for the end consumer? Is it a certified wood? Price quotations change constantly on the market and a price taking is a picture of that specific moment. Because we are dealing with a long term investment in this proposal, it is necessary to explain both the conditions under which such price was obtained and the premises upon which the sale price was calculated.
Therefore, you will find bellow some remarks on the price quotation done for establishing the current price we used (PriceUS$ = US$ 890.00/m3):
No matter how close one planted area is to another, we will find different prices. In this feasibility study, we are taking into consideration the prices in São Paulo – SP - Brazil and surrounding area.
The freight cost to get to a consumer cluster influences price composition. Our project site is located 170 miles far from São Paulo. In order to get from there, we take a paved two-lane highway for the first 152 miles. Then, we move on through an also paved but one-lane road for 16 miles, and we finally drive on a dirt road for the last 2 miles. We are expecting the above mentioned roads conditions, which are already good, to be better at cut time. We therefore assume that the wood is going to be delivered in the consumer cluster.
The price of wood suffers changes along the year. Climate conditions and international trade factors cause changes in price quotation.
Due to both the long term aspect of this undertaking, and the fact that this wood is one of the most frequently quoted commodities on the international market, we use the dollar currency in our final results presentation. Note that, should the rate change significantly, there will always be the choice of the best market to sell the product to (São Paulo or overseas).
According to Ivaldo P. Jankowsky: “The wood of recently cut trees presents a high rate of humidity that is likely to reduce by itself slowly as logs await for the initial unfolding. After unfolding, humidity keeps on decreasing at either a lower or faster rate because of vegetal species, environment conditions, size of pieces and used pile up system. The final processing however will only be performed when humidity level is bellow 30%”. Dry wood is here considered with its humidity level close to that of equilibrium (EH).
The processing to which the wood underwent adds value and influences price in that roundish wood is cheaper and the laminated or beneficiated one is more expensive. We will use the price of board cut wood. This level of processing is done in common sawmills.
We are planting today the wood to be used within several years and price will be suffering considerable changes along this period. Presuming some real yearly valuation seems to be cautious considering what has already been said and verified. Nevertheless, for feasibility evaluation purposes today’s value would be enough.
Prices of other woods:
Even though we have proved in our research that there are just alternatives and not substitute when we talk about woods, we searched for prices of other types of wood under the same conditions for comparative purposes, as follows:
- US$ 1,690.00/m3 for Mahogany (inexistent supply due to cut prohibition).
- US$ 950.00/m3 for Teak.
- US$ 281.00/m3 for Eucalyptus.
ESALQ’s (Escola Superior de Agricultura “Luiz de Queiroz” - a well-known college of agriculture in São Paulo State, located in the city of Piracicaba) report: ESALQ has been making a monthly report on wood price quotations available on the Internet. The price of “Guanandi” does not appear on the list but we are able to position it by comparison. We certainly believe that this report will be a guideline in following price evolution along the necessary years for the trees to grow. This is a businesslike report and the industry surely recognizes its value.