From volume to money: price, recovery and contract clauses

A measured volume becomes money through a price, and the price only means something against the recovery the mill achieves. This lesson links log volume to cost per cubic metre of sawn timber, shows how a small log price change can turn a margin negative, and lists the clauses a log supply contract should fix.

Log cost per cubic metre sawn

The portal's economics and yield articles give the first-order relation: log cost per m3 sawn = log price / recovery, with recovery as a fraction (recovery R = V_sawn / V_log, and the conversion factor CF = 1 / R).

Worked example (illustrative numbers). A delivered log price of 100 per m3 and recovery of 50% give 100 / 0.50 = 200 per m3 of sawn timber. A rise of 5 in the log price gives 105 / 0.50 = 210: the cost rises by 10, twice the log increase. At 52% recovery the same 100 log price costs 192.3 per m3 sawn; at 45% it costs 222.2 (own calculations). Recovery is itself a cost driver.

Now connect this to measurement. A mill that pays on an overstated volume pays more per true cubic metre. In the lesson 1 example, a caliper reading 1 cm high on 24 cm logs overstated volume by 8.51%, so an invented price of 85 per metered m3 is really 85 x 1.0851 = 92.2 per true m3 (own calculation). Measurement bias acts like a price rise that nobody announced.

The margin squeeze in numbers

The economics article uses an invented mill: 100,000 m3 of logs a year, recovery 50% (50,000 m3 sawn), sawn price 260 and residue revenue 24 per m3 sawn, variable cost 229 including logs at 200, fixed cost 53. Contribution is 284 - 229 = 55 per m3 and the result is 2 per m3, or 100,000 a year. After a log price rise of 5, contribution falls to 45, fixed cost per m3 stays 53, and the result is a loss of 8 per m3, or 400,000 a year. Break-even volume rises from 2,650,000 / 55 = 48,182 m3 to 2,650,000 / 45 = 58,889 m3, or 94.2% of the 62,500 m3 capacity. A 5% change in the log price turned a small profit into a large loss.

Real price levels, with dates

Prices in the portal's market article give scale, not a benchmark. Swedish spruce sawlogs in southern Sweden cost over SEK 1,400/m3 by the second quarter of 2025, more than double 2019 (Fastmarkets, Europe). Delivered spruce sawfalling (44-50 x 150 mm) was 310-325 euro/m3 in Germany in November 2025. High log cost against weak lumber prices is the core of the profitability problem the market article describes. Sawlog, stumpage and sawn prices sit at different points in the chain, so never mix them.

Where is yield counted?

Recovery from the yard gate is higher than from the standing tree. In the Romanian silver fir study (Brandstetter et al. 2020, Europe, eight stems), crosscutting lost 11%, sawlog grading 7% and debarking 6%, leaving 76% of stem volume as debarked sawlogs. A 20 m3 stem gives 15.2 m3 of sawlog. At 53% recovery (the Finnish spruce simulation level) that is 8.06 m3 sawn, 40.3% of the stem (own calculation). The sample is small and no sawing took place, but it shows that "yield" depends on where the baseline starts.

Contract clauses

The log supply article lists what a purchase contract should fix:

• The measurement rule and its version, place of measurement and cost split.
• The grading standard, who grades and the seller's right to witness.
• Allowances, rounding and the tolerance on volume.
• Delivery period and storage responsibility.
• Force majeure and the documents needed for traceability.

Price formation varies. A Lasy Panstwowe presentation of 17 September 2024 (Poland, Europe) proposed 2025 rules with offer sales and auction channels split 75/25 (70/30 in 2024), a permitted volume deviation of minus 10% and plus 5%, and an offer score weighting price at 75% (80% in 2024). It was a proposal; the final text was not checked. The structure matters more than the details: one channel for supply security, one for price discovery.

Key points

• Log cost per m3 sawn is log price divided by recovery: 100 / 0.50 = 200; a log price rise of 5 adds 10 at 50% recovery.
• A measurement bias works like an unannounced price rise: 8.51% overstated volume turns 85 into 92.2 per true m3 (own calculation, invented price).
• In the illustrative mill a 5 rise in log price cut contribution from 55 to 45 and lifted break-even utilisation from 77.1% to 94.2%.
• Volume yield and value yield can diverge (value yield = revenue per m3 of log); state which one a figure is.
• Agree where yield is counted: the Romanian fir example gave 76% sawlogs from the stem and 40.3% sawn after 53% recovery (own calculation).
• A log contract should fix rule and version, place, grading, allowances, tolerance, storage and traceability.