Lumber production last year was up 8 percent in the U.S. and 5 percent in Canada from 2011 output, according to a report in Wood Resource Quarterly, a publication that tracks sawlog and lumber prices.

With higher demand from the U.S. housing market, Canadian sawmills ramped up production during 2012 to meet the higher demand for lumber. This has been particularly true for sawmills in the Eastern provinces where production in the fourth quarter of 2012 was up 16 percent year-over-year, the report states.

The U.S. lumber price developments during 2012 and into early 2013 have been quite remarkable with the Random Length Lumber Price Index increasing by more than 60 percent from late 2011 to March 2013. This development has been drawing the attention from sawmills far away from the North American continent. With substantially higher prices and a predicted increase in the demand for lumber in 2013, many foreign companies hope to be able to increase shipments of lumber to the U.S. shores in the coming year.

The strong lumber market has pushed saw log prices upward throughout North America. Saw log prices have also inched up in Coastal British Columbia and Eastern Canada as a result of tighter log supply.

However, with the improved housing market in the U.S. and higher lumber prices, it can be expected that sawmills will increase the consumption of logs and that the Southern states will follow the rest of North America with upward trending log prices during 2013.