MISSISSIPPI STATE -- Mississippi's forest industry dipped in 1999 after riding a wave of record highs in 11 of the last 12 years, but maintained its seventh year with a value in excess of a billion dollars.

Mississippi timber production has a 1999 estimated value of $1.33 billion, down almost 3 percent from 1998's all-time high of $1.36 billion. Despite the downturn, its value remains above 1997 levels. Forestry continues to hold the state's No. 2 spot in value, just behind poultry.

Dr. Bob Daniels, forestry specialist with Mississippi State University's Extension Service, said the volume of timber harvested in 1999 was just slightly above that harvested in 1998, but prices are lower.

"I wouldn't say that the year was awful. It looks now as if 1999 will be down almost 3 percent from 1998, but 1998 was another record high year," Daniels said. "The story in 1999 was that saw- timber markets were firm while pulpwood markets were weak."

Pine and hardwood pulpwood prices fell 12 percent from 1998, but total harvests have also been falling. Five years ago, pulpwood accounted for about one-third of the timber harvest value, but today it is about 24 percent of the total. Daniels attributed this to lingering affects of the Asian financial crisis and changes in global fiber supplies.

"The world paper industry currently is experiencing a surplus of paper-making capacity," Daniels said. "They've got too much production capacity for the world market demand, which has been lessened by the recession in Japan. Because of soft markets in pulp and paper around the world, the industry is responding by cutting back on production and closing some mills, mostly older ones."

Markets for pine and hardwood lumber were much more positive in 1999, mostly due to a 20-year high in housing starts. Most Mississippi lumber stays in Southern states where it is used for residential construction, repair or remodeling.

"That makes for a very good pine lumber market," Daniels said. "The negative side is that Asia, particularly Japan, has been in recession. Japan is ordinarily a strong market for Northwest United States and Canadian softwood lumber, but Japan has been buying much less lumber since their economic slump.

"The lumber that usually goes to Japan has remained in the United States. There's a lot of lumber around, so it has turned prices a little soft this year, but the demand has been strong," Daniels said.

Pine and hardwood sawlogs accounted for about 75 percent of Mississippi timber harvests' value in 1999. The solid wood products market offset a poor pulp and paper market and kept forestry's value steady.

Daniels said he expects the outlook for timber in 2000 to be good. Pine and hardwood lumber markets should remain steady with strong housing starts in 2000. The outlook for Mississippi pulpwood also looks a little better.

"Most paper production we have in Mississippi is either market pulp or liner board, and these two sectors of the paper industry are projected to have a better year in 2000," Daniels said.

Pine pulpwood markets should improve some, but hardwood pulpwood markets are expected to remain weak.