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The significant drop in the value of Sterling since the Brexit vote in the summer (a fall of 15% against the Euro between 23 June and 31 October 2016) is expected to be of material long term benefit to UK timberland owners. The UK imports circa 80% of its annual timber consumption and weakness in the currency will see the cost of imported timber rise, once deliveries for Q1 2017 start to arrive in UK ports. In turn, this will allow UK forest owners to increase the price of homegrown timber, thereby improving the returns generated by the asset class.

The price differential between similar grade homegrown UK timber and its imported competition, currently circa 20-25%, will rise. This in turn is expected to lead to increased demand from UK processors for standing timber as they seek to exploit the price differential by increasing market share. This provides strong upside potential for UK timberland owners, potential which has yet to be reflected in UK timberland...

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