Of course the mills are going to try to screw the loggers when the price is dropping but the main reason pulp prices are dropping is because the economy is slowing down so less demand.
There is no shortage of toilet paper but a shortage in the type of people buy for at home use and too much of the stuff used for commercial that people used to use at work. This imbalance is expected to ease over time as the paper companies adjust.
I recall people talking about how the demand for the high quality paper that S.D. Warren Paper company used to make dropped when people stopped buying encyclopedias. More gradual shift however.