European Forestry Pulse #104 🌲

Hello,

The most-shared forestry number this month is bright red. Finnish forests returned minus 13.2% over the past year. It looks like an asset class in trouble.

It isn't. The fresher number in the same report already turned positive. Let me show you.

Here's what's moving European forestry this week:

Indufor published its Forest Investment Return Index for May. The headline is red. Finnish private forests returned −13.2% over the past 12 months. That sits close to April (−13.0%) and March (−13.2%).

The five-year figure cooled too. Over the 2021–2026 holding period, forests returned 5.5% per year. A year ago, that same five-year number was 10.2%.

At first glance, this looks like an asset class in trouble. It isn't. Here's why.

The −13.2% is a rear-view mirror. It measures the last 12 months against the year before. And that year held the timber price correction we tracked all spring.

Now look at the fresher number. The 2026 year-to-date return turned positive in May. It reached +2.3%, up from +0.8% in April. The reason is simple. Wood prices climbed again through spring. Sawlog and pulpwood both rose.

So the trailing number reflects old pain. The year-to-date number reflects a turn. Two different stories sit in one release.

The five-year drop tells a similar tale. Returns did not break. They normalised. That 10.2% figure was lifted by an exceptional run in 2021–2022. As that window rolls forward, the average settles toward its long-run level. A real asset returning 5.5% a year is not a collapse. It is a reset.

If forests were a bad bet, big money would leave. It is not leaving. It is repositioning.

Last week, Gresham House completed its Molpus deal (EFP #101). That created the world's third-largest timberland manager. This week, Campbell Global named a new Head of Global Acquisitions. Campbell Global is J.P. Morgan's timberland arm. You do not hire someone to buy forests when you plan to sell them.

Finnish forests make up about 20% of the EU's timber market. So this index is a useful gauge far beyond Finland.

If you own forest: Do not price your land off a rear-view number. The spring wood-price turn matters more for your next sale.

If you hold forest in a fund: The five-year reset is normalisation, not alarm. But your exposure depends on country, species, and market mix. Want to know what it means for your allocation? See below.

If you are waiting to buy: Institutional buyers are moving now. The window where returns look "bad" on paper is often the window smart capital uses. Sources: Indufor Oy / STT Info — Finland: Forest Investment Return at −13.2% over twelve months and 5.5% over five years (May 2026) | Indufor Group

Latvia's state forest company just bought 5,800 hectares from Swedish owners. The price was €26 million — about €4,500 per hectare. The land sits in the Ludza region, near the eastern border.

LVM — Latvijas Valsts meži — runs the deal. The government approved it on 30 June. About 4,800 hectares are productive forest. The mix is mostly spruce, birch, and pine.

Why it matters: A state forest manager is expanding, not shrinking. Capital is staying in Baltic forests — and moving into public hands.

The takeaway: The Baltic timber base keeps attracting buyers. Watch who is buying. Right now, it is the state. Source: LSM — Latvia buys back forest from Swedish owners for 26 million euros

Finnish forest-machine maker Ponsse is investing while the market is soft. Construction has started on its Vieremä factory extension. The investment is worth about €10 million. The work expands its welding facilities.

There is a second move too. Ponsse is setting up a "Refactory" in Iisalmi. It will rebuild used machines to extend their life. The EU LIFE programme helps fund it.

Why it matters: Equipment makers are the early warning system for the sector. Ponsse spending big is a bet on recovery.

The takeaway: When a harvester maker builds new capacity mid-slump, it sees demand ahead. That is a quiet confidence signal. Source: Forest Machine Magazine — Construction starts on Ponsse's Vieremä factory

VAROPreem has bought Sunpine outright. The deal closed on 9 July. Sunpine runs the world's largest crude tall oil biorefinery. It sits in Piteå, in northern Sweden.

Crude tall oil is a leftover from the pulp industry. Sunpine turns it into feedstock for renewable diesel and jet fuel. The Piteå plant processes about 400,000 tonnes a year.

Three owners sold their stakes: Sveaskog, Södra, and chemicals firm Lawter Europe. Sveaskog and Södra are both forest-sector players. VAROPreem — a merger of VARO Energy and Preem — now owns 100%.

Why it matters: A forest by-product is now a strategic energy asset. Whoever controls the residue controls part of the biofuel chain.

The takeaway: Sawmill and pulp residues keep gaining value. If you sell low-grade wood or by-products, that market is deepening. Source: Biofuels International — VAROPreem completes Sunpine acquisition

Europe's 2026 fire season started early. By 8 July, fires had burned 155,569 hectares across the EU. That figure comes from EFFIS, the EU's satellite fire monitor.

Here is the perspective. That total is below the same point in 2025 — the worst year on record. Fire-related CO₂ is also below the long-term average. But fire danger is rated "very extreme" this week across France, Spain, northern Italy, and the Alpine arc.

Why it matters: The early start is both a warning and an opening. Danger is highest now across France, Spain, and the Alpine arc into northern Italy. Managers further east get time to prepare before the risk climbs.

The takeaway: Review your fire plans, access routes, and salvage logistics this week — not in August. Preparation is the cheapest insurance you will buy this year. Source: EFFIS / EU Joint Research Centre — Current wildfire situation in Europe

Benchmark your own forest against the Indufor number.

Ten minutes. You will know whether your forest beat the Nordic benchmark — and why.

The next time someone asks why you cut trees, you'll have thirty seconds to answer.

Right now — what do you say?

If the answer isn't ready, the Playbook is.

The Indufor index measures forest returns. This book teaches you to read what drives them.

I wrote the Forest-Investment Dictionary with Danish forest economist Anders Tærø Nielsen. It has 151 pages, 11 chapters, 14 printable tools, and 3 calculators. Investors learn to read a forest. Foresters learn to read a term sheet.

When returns wobble, the people who understand why make the better calls. The price is €99. Get yours below.

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Until Tomorrow!

Wish you all the best: Peter

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