Common integrating factor in softwood log exports from the United States

Softwood logs comprise a large portion of forest product exports from the United States. Most of these exports have occurred between the Pacific Northwest region of the United States and several Asian countries. In this study, the extent and degree of market integration of softwood log exports from 1996 to 2018 are examined by co-integration analyses and permanent-transitory decomposition. Softwood log exports to Japan and South Korea appear to be in the same economic market and show a high degree of integration, while trade between the United States and China has evolved more independently. A detailed analysis is conducted on five prices related to Japan and South Korea with full-time coverage, and one common integrating factor is found and estimated. The price of export from the Columbia-Snake Customs District to Japan is identified as the driving force. Price responses to market shocks usually occur within four months. These findings have implications for government agencies and participants in the market of softwood log trade.