Can I treat standing timber as real property for a IRC 1031 exchange for more real property?

It's going to depend on your state. Best to consult a lawyer with Sec. 1031 experience.

EXCHANGES OF TIMBER RIGHTS

This type of transaction should be qualified on a case-by-case basis. Some states do not even observe a timber deed. In times when the value of timber is high, owners of timberland become popular. The calls from timber brokers and representatives of major companies become constant. Can the owner of the timber transfer it through an IRC 搂1031 tax deferred exchange without transferring the land? Probably. There are a number of cases in the Carolinas, which describe timber rights as an interest in real property. Before proceeding, the owner should talk with counsel. Some attorneys disagree that timber rights can be exchanged if the land does not accompany the timber.

The closing must transfer the timber rights as an interest in real property. This means that there must be a timber deed given, not a contract and bill of sale. There can be no cutting contract in existence as that turns the timber into personal property which will not be like-kind to real property and, even worse, also makes it property held primarily for sale which is therefore ineligible under IRC 搂1031.

Some formalities are required:

There must be a deed of the timber rights;
Only the timber, which has not been severed, can be exchanged for real property (although severed timber which is not held for sale can certainly be exchanged for other timber.).
The timber rights cannot be held for sale but must be investment property.

This type of exchange needs to be carefully studied on a case-by-case basis.

(http://www.rexonline.com/resources.php)

Here's another source:
Can I exchange timber or water rights?
If timber rights have been held for a year or more, they can be exchanged for other timber rights. If the trees have not
been removed from the property, they may be considered real property and exchangeable for other investment
property. Each state handles timber rights differently. However, as a general guideline, if you acquired the timber
rights via a deed as opposed to an assignment or bill of sale; they are probably considered real property. Similarly,
state law determines whether or not water rights are real property. If the property was also used for investment
purposes, the water rights could be exchangeable. Be sure to consult an attorney who specializes in timber or water
rights, in your state, before entering into an exchange of this kind.

(http://manleyandcompany.com/asp/files/22...