Lost amid the holiday shuffle was the release of the September numbers in the U.S. EIA’s Monthly Densified Biomass Fuel Report. Wood pellet producers and industry observers have come to rely on the picture painted by this report to better understand production, demand and standing inventory. September’s report makes it plain that producers of wood pellets for residential heating are running their facilities as hard as they’ve run them since reporting began in 2016. September saw manufacturers in the East post another 100,000-plus ton month, clearing that hurdle for the third month in a row. To put that into further perspective, consider that in 2018, the East logged just one 100,000-ton month (October). Production in the East has been strong all year, and the monthly average is hovering just under 100,000 tons. Comparatively, the East averaged just 65,000 tons per month as recently as 2017. At an average of $175 per ton, we’re talking about over $6 million in monthly revenues across the region that wasn’t there just two years ago. This is welcome news to the financial professionals in our industry. While the numbers aren’t as jarring in the West or South (the two other regions producers fall into in the report), they all point to record production across the country.

The only visible fly in the ointment right now is the uncomfortably low level of inventory the industry is experiencing. For the most part, producers haven’t been able to stockpile any finished product, and the ultra-low inventory levels we began the year with (just 55,000 tons in the entire country) haven’t improved greatly. That said, the “right” number is up for debate, but in conversations with many producers, it’s clear that large, multilocation wood pellet retailers would like to see an improved inventory position. So far, consumers have been insulated from any isolated shortages, and ultimately, it is their experience with which we need to concern ourselves. While it is counterintuitive for a participant in the home heating sector to welcome news of warm weather, the predicted record highs for the area (58 degrees forecast for Albany, New York, on Saturday) may well be just the breather that producers and retailers alike need to make their inventories last throughout the entire heating season. I shared this news yesterday with a Pacific Northwest producer who directed me to a forecast that included cold temperatures and plenty of snow.

Looking ahead to the October data (scheduled for a release next Thursday), I suspect we’ll see another 100,000-plus production month in the East, and another hit to the overall inventory position as of October undoubtedly saw retailers across the country taking everything producers could make while also drawing down on any standing inventory.

While the heating season is far from over, I’m happy to see the industry making and selling record numbers of pellets. These additional dollars will go a long way in setting producers up to invest in an early spring inventory buildup that, come March and April, could help mitigate some of the anxiousness about pellet availability we’re facing this heating season next year.