Convergence of the Fuel, Food and Fiber Markets: A Forest Sector
Perspective

Don Roberts, Managing Director of CIBC World Markets

Tuesday, June 05, 2007

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Over time we expect a convergence in the markets for fuel, food and fiber (including wood). The forces driving this convergence are concerned with environmental security (i.e. climate change), national security (i.e. dependency on the Middle East and Russia for fossil fuels), and economic security (i.e. rising real price of oil). The feedstock for the fuel, food and fiber markets will likely start being priced to reflect their “energy equivalents”. If this occurs, anticipated outcomes include: an increase in the opportunity cost of fiber used to make forest products, a rise in wood fiber prices and difficulty for the forest products industry to compete, and a continuation in the existing shift in land use patterns.