Alaska Softwood Market Price
Arbitrage
James A. Stevens and David J. Brooks
This study formally tests the hypothesis that markets for Alaska lumber and logs are
integrated with those of similar products from the U.S. Pacific Northwest and Canada.
The prices from these three supply regions are tested in a common demand market
(Japan). Cointegration tests are run on paired log and lumber data. Our results support
the conclusion that western hemlock (Tsuga heterophylla (Raf.) Sarg.) and Sitka
spruce (Picea sitchensis (Bong.) Carr.) logs from Alaska share an integrated market
with logs produced in the other two regions. Results are less clear for lumber. Given
this evidence that markets are at least imperfectly integrated, Alaska production and
exports of forest products will continue to be sensitive to international market conditions,
including competition from other North American producing regions.
Keywords: Arbitrage, markets, cointegration, Alaska, softwood, prices.
http://www.fs.fed.us/pnw/pubs/rp556.pdf
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