Unidentified Analyst: Awesome. Thanks again. I’ll pass it back to the queue.
Operator: Thank you. The next question comes from Gregory [ph] Andreopoulos. Your line is open.
Unidentified Analyst: Good morning. Mr. Nunes, Mr. McHugh. I’m on the line for Andre this morning. Thank you for all the detail, and thank you for providing 2021 guidance this year. Just one question for me on the transaction market. So we’ve seen, from our perspective, deal flow pick up a little bit into year-end 2023 and now in the first quarter. So I’m curious, how would you characterize the quality of packages coming to market from your perspective, the competitive bidding process, bid-ask spreads and interest from nontraditional owners in January?
David Nunes: Sure. This is Dave. I’ll take that. If you think about last year, we had roughly $1.5 billion to $2 billion of timberland M&A activity. That was a fairly low level versus historic patterns. As we look out into this year, I think we’re in a mode where — the demand for timber continues to outpace the supply. We estimate that there’s roughly $3 billion to $4 billion of dry powder waiting to be deployed. A lot of that is on the TIMO side and particularly with separate account investors. There are also a number of TIMOs that have raised carbon-related or carbon-centric funds. And so we look to see those players playing a bigger role in the markets going forward. This tends to be a slow time of the year in general, but we have — we are aware of a couple of quality properties that are in the market in the U.S. South right now as well as one larger transaction in New Zealand.
There’s also a number of smaller packages in markets that are outside of our area. We’re seeing a lot of activity in Latin America right now as well. And so I’d say it’s kind of — the market is heating up. And as we kind of indicated in our prepared remarks, I think — this is a positive environment right now on the timber M&A space, and we’re anticipating to participate that in that with our asset disposition plan.
Unidentified Analyst: Thank you. In terms of drivers there, I mean, are you thinking Fed rate cut expectations, incremental capital into the space, carbon opportunities are all drivers? Or are there other factors you think are at play?
David Nunes: I mean, I think those are all in play. Keep in mind, I think as the timber asset class has matured, it’s also gained additional favor. It’s always been an asset class that has a low volatility. And so you see a lot of people wanting to add it to portfolios for that reason. So it’s — when you see periods of market disruption, you tend to see a flight to quality and timber tends to be a beneficiary of that. There’s been a lot of research around timber as an inflation hedge. So we see that. And I think increasingly, we’re seeing capital flow into the asset class as it relates to ESG-related matters, and we see that on both the asset level as well as the public equity level in terms of where our investors are coming into the stock and the reasons why they’re coming into the stock.
And I think all of that also applies to the timber M&A space. So it gets back to that idea that there’s more capital trying to get into the space right now than there is available properties.
Unidentified Analyst: Okay, thank you very much Mr. Nunes for the detail and congratulations.
Operator: [Operator Instructions] The next question comes from Michael Roxland. Your line is open.
Unidentified Analyst: Thank you Dave, Mark for taking my questions. This is Niko Pachino [ph] on for Mike. Congrats Dave on your retirement. I guess just first question around pulpwood. Thanks for the color on that. And you had mentioned prices may be looking more stable now. Just as it affects your harvest guidance? And maybe how you think about given the mill closures and line closures, your harvest rotations, harvest planning going forward?
Douglas Long: Sure. This is Doug. I’ll take this one. So yes, as noted in our prepared remarks, we’re encouraged about that pricing that by and large seems to have stabilized. And we’ve seen some positive signs on the containerboard side over the past few months as supply-demand dynamics are coming into balance after the destocking occurred over much of last year. Industry data is suggesting that U.S. containerboard operating rates have increased to 89% in Q4, which is above 81% in the prior year period. With no new major plants in our construction, it appears that containerboard capacity remains stable over that near-term and operating rates really should continue to improve on recovering demand as there’s a very strong relationship with population growth and containerboard demand, particularly in the food and beverage sector.
So we’re seeing some positive movement right now on capacity rates at the mills over there as well as market pulp prices have also stabilized since the correction early in 2023 and some grades such as southern [indiscernible] softwood kraft in the U.S. have restore pricing improvements there at the end of the year, and we’ve also seen some most operating rate improvements there. And kind of one of the last things we’ve also seen as a 10% increase in softwood chip exports in the U.S. over the first 3 quarters of 2023, and that was almost none going to China in Q2 and Q3. So this global growth in softwood fiber demand has been slowly growing and the global supply trends look favorable for the U.S. and New Zealand has made softwood plantations in South America are converting to eucalyptus.
