Assisi Markets and Timber Valuation


The major pieces of an Assisi Market are Products, Sorts and Grades. Together they are used to model the valuation of different types of log volumes. Products define the dollar value of logs. Sorts reflect destinations such as domestic or foreign. Grades reflect physical log qualities such as sawlog, peeler or pulpwood. The three pieces work together by assigning log quality (Grades), market quality (Sorts) and market value (Products) to logs to create a method of valuation that is both flexible and understandable.

Markets

An Assisi Market contains unique sets of Products, Sorts and Grades. When a market is applied to a timber inventory, a unique set of log sizes and values is the result. Markets can be created for each potential buyer, yield projections and long term plans or for consistent volume and value records used internally to an organization.

Markets are created using the Market Editor...


Markets for Buyers

Markets for individual mills or buyers have products and dollar values unique to each. Potential sales evaluations can be done by creating markets for each potential buyer then running your inventory against each of the markets in turn.

Markets for Forecasting

Markets can be made with product definitions that are used by yield optimizers. These typically don't have dollar values attached, but do have categories of yield types to be optimized for long term forest plans.

Markets for Internal Records

Markets with unique definitions can be made for record keeping. Forestry organizations often have their own historical list of grades or products that are only used internally. These may not reflect current market conditions or long term plans, but are an important means of consistently tracking performance over time.

Products

Products attach dollar values to different types of logs...


Products have Monetary Value

A product includes a dollar value a buyer is willing to pay for a unit of volume of that product. As markets change, dollar values can change and sometimes the types of products as well.

Products are Combinations of Sorts and Grades

Typically, a combination of sort and grade define each product. For example, a buyer may quote a price for logs of Japan export quality and grade 2S and a different price for China export quality and grade 3S. Each of these combinations becomes a distinct product within a market.

Size and Quality of Products are Expressed in Sort and Grade Criteria

Although products have min and max diameter criteria, most of the size and quality criteria for products are specified by the sorts and grades associated with a product. The primary purpose of a product is to assign a dollar value to log volume. Sorts and grades on the other hand are used to specify the size and quality that products must have.

Sorts

While Products reflect dollar values set by potential buyers, Sorts reflect qualities set by the market.


Sorts are Similar to Grades, but Defined by Markets

Sorts are similar to grades in that both sorts and grades have criteria based on dimensions and qualities. Grades however, reflect standard scaling practices while sorts reflect current market conditions. Or put another way, grades reflect qualities of logs using standards that do not change over time, while sorts reflect qualities that change as market values change.

Grades

While Sorts reflect the qualities markets assign to logs, Grades reflect qualities defined by historical scaling practices.


Grades are Defined by Grading Bureau Practice

Grades are defined by organizations known as grading bureaus. The criteria defined by the bureaus is independent of current market conditions and largely stay the same over time. Bureau grades have standardized the scaling practice so that logs can be graded consistently across different scaling entities and markets.

Qualities

Sorts and Grades often have criteria for traits that are not easily quantifiable such as surface defects. These are called Qualities in Assisi.


Qualities are Called In the Field on Sections or Logs

Qualities are called in the field on either sections or logs. Sections are lengths of trees within which logs are made. A section can have a length, defect and quality. The logs are given the quality of the section they are within. Sections make possible grading in the field while using market definitions to optimize log lengths.

Qualities Enable Field Called Foreign or Domestic Markets for Sections of Trees

Grades and sorts can have a min required quality along with the usual size and defect criteria. If a log is given a quality of at least the minimum, or falls within a section with the minimum, the log is a candidate for that grade. By using qualities that reflect foreign and domestic markets, qualities become an easy method for determining in the field, which sections of a tree is a candidate for foreign or domestic markets. For example, if “E” was called on the first 54 foot section and “D” on the remainder up to merch, logs created in the first section would be candidates for export while the remainder of the tree be restricted to domestic markets.

Market Optimization

Finally, markets can be used to optimize volume for the highest value products first. I have been describing how log dimensions determine products, sorts and grades. But, Assisi can reverse this process and use product, sort and grade definitions to determine log dimension. By ordering the products with higher value above those with lower value, Assisi will attempt to create logs of higher value products before logs of lower value products. The process uses the same set of product, sort and grade definitions, but this time as a guide to how to segment trees into logs.

I hope this gives you a little insight into the possibilities of timber valuation with Assisi products. The process may sound complex, but as with many things in Assisi, we make it understandable and easy to explore!

Thanks for reading,

Rich

#Markets #Valuation #Products

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