American oak prices

There’s been a fair bit of press around the shortage of American Oak, and how this is driving up the price of American Oak barrels. But as always, there are several contributing factors. So why are prices going up, what’s driving this, and is there any good news?

The supply and demand dynamics certainly play a significant role. There has been a shortage of American Oak logs recently, and some sawmills have moved towards faster drying wood. Combine this with labour shortages in the forests, sawmills, trucking industry, and at the ports, along with increased fuel prices, and it has simply cost more money to get less product American Oak to market.

At the same time, there has been an increased demand for stave-quality oak from American wineries and whiskey distilleries. American bourbon is required by law to be filled into virgin American Oak casks, and there is more whiskey being made in the US of A than ever before. Additionally, international markets for virgin American Oak have skyrocketed. Even in unlikely places like here in Australia, we are bringing over these 200L virgin American Oak barrels in vast numbers. Australian’s drink more bourbon per capita than any other nation (are we that bogan?) and there are distilleries in Australia currently maturing corn spirit to capitalise on this.

What is the good news? Well, while oak that is suitable for barrel production can be yielded from only 4% of the fallen tree, oak suitable for chips can be drawn from a much larger section of the tree. So, while oak prices for barrels have gone up by eye-watering amounts (in my previous role, I had 30% increases month on month), oak for chips will likely rise by a more moderate amount. And with our ability to utilise solar power to toast our staves, our American Oak stave prices will not go up at all.

So, will there be a shift from American Oak barrels to American Oak stave inserts here in Australia?