From the Director's Desk: Will November Deliver?
In this opening stanza for November, it feels like the unseasonably mild temperatures that dominated October are ending. At the time of writing, temperatures are expected to plummet by the end of the week in the Upper Midwest (snowfall predicted in northern Minnesota), hang on in the Northeast (forecasted high in Portland, Maine of 63 on Friday) and be more seasonal in the Pacific Northwest (47 forecasted for Seattle on Friday).
The Heating Degree Days that have started to accumulate this month will dictate the rate at which consumers burn wood pellets and determine the month’s sales fortunes and whether they hew closer to the monthly average (220,167), the high-water mark for the month (243,502 in 2016) or the lackluster November of the past two years (190,000 and 194,000 in 2020 and 2021 respectively).
November Averages (2016 – 2021) and monthly record (in parentheses)
Sales 220,167 tons (243,502)
Production 139,331 tons (178,976)
Inventory Use 36,711 tons (77,572)
When looking at the inventory depletion rate for November, the month’s unpredictable nature really shows up. While most Novembers see producers reaching into inventory to stay apace with inbound orders, it isn’t a certainty. Last year producers actually added 22,000 tons of inventory during the month. That is a bit of an outlier and the average depletion for the 2016-2021 time period is 36,711 tons. The largest inventory depletion to occur in November came back in 2016 when producers moved over 77,000 tons of inventory.
Also at play in November, overseas wood pellet demand and sales is being felt all across the pellet manufacturing segment in North America. While the data currently available via the EIA’s monthly reporting is current only through July, the impact of foreign demand is difficult to gauge or discern. While production has surpassed monthly averages since March, they haven’t eclipsed the totals for the year prior. Through July wood pellet production comes in at 944,000 tons about 60,000 tons off last year’s total through July. In what has become a theme regarding data observations lately, the last time the industry logged less than 1 million tons of production through July was 2018.
Pellet Fuels Index Stabilizes
Now in its fourth week of being live for the 2022-23 heating season, the PFI HDD Index has accumulated enough data to make some observations of value. While ALL locales in the Index are lagging long term averages, most cities on the Index have logged more Heating Degree Days through the early days of November than through the same time period last year the exception being the Pacific Northwest. Temperatures there have been mild, but forecasts for this week show a return to the mean.
—Tim Portz Executive Director
