From the Director’s Desk: How'd the September Predictions Shake Out? Federal Advocacy Webpage Updated, and Happy Holidays!
How'd the September Predictions Shake out?
The last issue of Pellet Wire was published on the same date that the EIA released the September data update of their Monthly Densified Biomass Report. For fun, I offered some educated guesses about what the data might reveal. With the data now in hand, we can check in on those predictions and analyze rather than speculate.
Let’s look at my sales prediction:
What I said:
“Historically, September sales have eclipsed 200,000 tons. The monthly average is 210,000 tons and sales have failed to reach 200,000 tons just twice (2016 and 2021). July and August sales this year have failed to achieve their historic averages and I’ll split the difference and predict that September sales will eclipse 200,000 tons but fall short of the 210,000 ton average for the month. Let’s make it 205,000 tons.”
What actually happened:
Total U.S. sales came in at a disappointing 192,339, the third consecutive month that fell short of 2022’s monthly sales total. Perhaps I should have looked more closely at July and August sales. I noted that 2023 numbers were off the long-term averages, but July missed badly (113,792 tons against an average of 148,000 tons). Perhaps I thought the low numbers in July suggested that pellet consumers were delaying a summer/fall stock up and some of those sales would show up in September. That didn’t happen. This September’s sales numbers were about 10% off the monthly average. Year-to-date sales of 1,242,943 tons are still slightly ahead of last year’s pace (1,186,239 tons) but only nominally.
Let’s look at the production prediction:
What I said:
“Producers in the West have been producing at about 110% of last year’s numbers through the summer and I suspect that September will reveal they maintained that same output. In the East producers closed August with more inventory on the ground (155,101 tons) than the same time the year prior. I think a slight modulation in production will show up there balancing out the increased production I suspect we will see in the West. I predict 105,000 tons in the East, 44,000 tons in the West (a high-water mark for the year), and 20,000 tons in the South for a total of 169,000 tons.”
What actually happened:
This prediction shook out far better than the sales prediction. The only real “miss” was the prediction for premium pellet production in the South. I don’t have my arms around the data from the South region yet. I think the August total of 22,349 had me feeling bullish about production prospects in the region when production simply returned to familiar territory for the year (four months have been in the 17,000-ton range this year. The production totals for the West and East were spot on (East – 105,433 tons, West – 44,747 tons). Through September, production in the West is up 10% for the year. Apart from a retreat from full throttle in March and April, producers in the West have been producing well ahead of the average pace since May.
Where does this leave inventory positions?
How quickly things can change concerning inventory levels. In perhaps the biggest inventory turnaround in the report’s history, the West’s inventory levels have gone from “alarmingly low” to “more than we had last year” in the span of four months. In June, producers in the West had just 39,000 tons of pellets on the ground compared to nearly 92,000 tons the previous June. The number certainly raised eyebrows. At the end of September with 64,883 tons of inventory, the region had 12,000 more tons on the ground this year than last. We’ll have to keep an eye on the region’s inventory number in next month’s data (October) to see if the ‘surplus’ is maintained. Last year, the West closed out October with 44,994 tons of inventory. It sounds like an opportunity for another prediction, and why not? I’ll bet producers in the West returned to 2022 inventory levels (44,994 tons) by moving 20,000 tons of inventory during this past October.
Federal Advocacy Page Updated on PFI website
This fall the PFI spent considerable time and effort preparing for and executing the 2023 fly-in. This provided the organization an opportunity to refresh the federal advocacy page of the PFI website and even include a new photograph.
The updated page can be found on the PFI website.
Happy Holidays!
The holidays, Christmas in my house, have always been my favorite time of the year. Growing up my parents often hosted holiday parties and as a result December always had a festive feel. I’m hopeful that you all have holiday parties to attend (or host) and a chance to reconnect with friends and family.
