June 2018 Lumber and Commodity Report

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June 2018 Lumber and Commodity Report

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for April only increased 1.0 percent to $486.84 per thousand, which is a marked improvement compared to increases of 11.1 percent and 5.5 percent over the last two months.  The decrease in the rate of inflation in the wood commodity markets is significant and may indicate the markets are topping out or the housing demand equation is faltering. My belief is that both scenarios could be influencing the market.

Winter continues to hang on and record snowfall in April in the Midwest bolsters the excuse makers for housing demand that the spring building season has not kicked off for our peers up North.  While spring has not been the warmest, there has been plenty of warmup across the nation and the weather has not been to a point of shutting down willing production.

The dimensional portion of the Index increased a measly 0.4 percent to $535.38 per thousand as 3.2 to 5.2 percent declines in 2x12 wide-width pine and a 4.5 percent drop in 2x6-16 spruce offset across-the-board modest increases in dimensional 2x4 spruce.  2x4 spruce increased 2.0 to 8.7 percent depending on the popularity of the length. Spruce studs were mostly flat to up slightly for the wider widths. There is little debate that pricing momentum in the wood dimensional markets has slowed.

The wood sheathing portion of the Index increased 1.5 percent to $450.58 per thousand on the strength of OSB sheathing.  Over the last 30 days, OSB sheathing added $23 per thousand, or 74 cents per sheet, which is about 6.0 percent more on average depending on thickness.  CDX pine retreated in price $35 per thousand, or $1.12 per sheet, but the weight of sales in favor of OSB kept the Index up. Typically, CDX is the market leader in sheathing with OSB following suit.  It will be interesting to see if OSB sheathing will sustain its move in the opposite direction.

The theory of depressed lumber sales in the northern region is about to really be tested as late spring and early summer are upon the nation.  I contend that while the weather has not been ideal over the last month, it hasn’t been shut-down weather either. If warmer weather does prop up wood demand, expect pricing to increase.  Otherwise, pricing will probably remain flat to down depending on the production. Keep in perspective the markets are high and that should keep movement narrow.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at to= This email address is being protected from spambots. You need JavaScript enabled to view it. " target="_blank" style="color: rgb(112, 143, 46); transition: color 0.1s ease-in;"> This email address is being protected from spambots. You need JavaScript enabled to view it. .

May 2018 Lumber and Commodity Report

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May 2018 Lumber and Commodity Report

Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for May came in surprisingly strong with a 7.7 percent increase or $37.34 per thousand. The one percent respite in April did not carry over into May and it appears the “Great Price Run” of 2018 continues. The warmer weather in the North coupled with relentless trade instability and trucking shortages are playing havoc on the wood commodity markets. Some traders are starting to worry about supply and on-time delivery.

The dimensional lumber portion of the Index increased a solid 9.8 percent with all lumber sizes and grades moving upward. Dimensional spruce jumped $65 to $82 per thousand while most studs added $40 plus. Tighter availability from Canada may force builders to move from select spruces to hemlock, and the price is reaching a point in which European wood may be more affordable and available. The supply-and-demand equation is out of whack and most of the problem is not driven by demand.

The sheathing portion of the Index was a little more stable; however, both OSB sheathing and CDX pine plywood added $25 to $35 per thousand—that is almost one dollar per sheet. Some OSB mills are off the market and most others are struggling to find trucks to move loads, especially into Florida. Higher prices and longer lead times are forcing more inventory on the ground, which in tandem is burning through cash flow.

Builders need to forecast needs with their suppliers and increase prices on projects, because the signs of pricing weakness have not entered the market. If the northern states continue revving up business there could be little break from a hurricane season, which appears to be active. In short, the pieces are in place for this run to continue.

One caveat will be crossing the affordability line for some projects. If costs continue to rise unabated, expect projects to be canceled. If this occurs that could slow down this run. A lot of “ifs” are in this forecast, because no one really knows what is going to happen. There are too many variables—demand, trucking, tariffs and supply. Hang on! It could get a little bumpy.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at This email address is being protected from spambots. You need JavaScript enabled to view it.

April 2018 Lumber and Commodity Report

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April 2018 Lumber and Commodity Report

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for April only increased 1.0 percent to $486.84 per thousand, which is a marked improvement compared to increases of 11.1 percent and 5.5 percent over the last two months.  The decrease in the rate of inflation in the wood commodity markets is significant and may indicate the markets are topping out or the housing demand equation is faltering. My belief is that both scenarios could be influencing the market.

Winter continues to hang on and record snowfall in April in the Midwest bolsters the excuse makers for housing demand that the spring building season has not kicked off for our peers up North.  While spring has not been the warmest, there has been plenty of warmup across the nation and the weather has not been to a point of shutting down willing production.

The dimensional portion of the Index increased a measly 0.4 percent to $535.38 per thousand as 3.2 to 5.2 percent declines in 2x12 wide-width pine and a 4.5 percent drop in 2x6-16 spruce offset across-the-board modest increases in dimensional 2x4 spruce.  2x4 spruce increased 2.0 to 8.7 percent depending on the popularity of the length. Spruce studs were mostly flat to up slightly for the wider widths. There is little debate that pricing momentum in the wood dimensional markets has slowed.

The wood sheathing portion of the Index increased 1.5 percent to $450.58 per thousand on the strength of OSB sheathing.  Over the last 30 days, OSB sheathing added $23 per thousand, or 74 cents per sheet, which is about 6.0 percent more on average depending on thickness.  CDX pine retreated in price $35 per thousand, or $1.12 per sheet, but the weight of sales in favor of OSB kept the Index up. Typically, CDX is the market leader in sheathing with OSB following suit.  It will be interesting to see if OSB sheathing will sustain its move in the opposite direction.

The theory of depressed lumber sales in the northern region is about to really be tested as late spring and early summer are upon the nation.  I contend that while the weather has not been ideal over the last month, it hasn’t been shut-down weather either. If warmer weather does prop up wood demand, expect pricing to increase.  Otherwise, pricing will probably remain flat to down depending on the production. Keep in perspective the markets are high and that should keep movement narrow.

Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at This email address is being protected from spambots. You need JavaScript enabled to view it. .

March 2018 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for March increased a strong 5.5 percent to $482.12 per thousand and that is on top of the 11.1 percent increase from the prior month.  Inflation in the wood commodity markets has been unabated since December and that is even with a very cold and snowy winter in the Midwest and northeast. Increased costs in manufacturing and labor as well as the specter of higher tariffs have fueled these increases as housing demand while solid is not booming.

 

Since last month, the dimensional lumber portion of the Index has increased 4.3 percent to $533.42 per thousand.  Depending on the width and length, price increases varied from 1.9 to 7.8 percent in spruce. Wide width pine added 4 to 7 percent while treated 2x4 pine jumped 8.2 percent.  2x6 spruce was the only item in the Index to decline and it dropped 1.8 percent or $10 per thousand. Since mid-December, the dimensional portion of the Index has increased a whopping 18.1 percent.

 

The sheathing portion of the Wood Commodity Index has shown no letup in price increases.  Over the last 30 days, the sheathing is up 6.7 percent to $443.80 per thousand. The average sheet of OSB and CDX just over the last month has increased 89 cents.  The average sheathing price increase for the first part of the year is nothing short of unbelievable, especially given the harsh winter weather. Prices for CDX and OSB have increased on average $95.95 per thousand or $2.97 per sheet, which is 26.5 percent.

 

The overall Wood Commodity Index is up 22.3 percent since mid-December and that is too much too fast.  Emotions about tariffs and supply issues are heightening, which appears to be the primary market movers because overall housing demand does not support these types of increases in this short period.  It is also indicative of a supply chain that remains in tatters since the Great Recession.

 

While wood pricing has settled over the last week or so, there are no indications that prices are going to drop suddenly, especially as the northern areas thaw.  These problems could persist to early summer and builders should prepare by implementing a price protection clause in their agreements and updating prices on long-term projects.  No builder can cover these types of increases and remain in business.


Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida (www.romaclumber.com), and he is a former President of the Southeast Mississippi Home Builders Association, and past Associate Vice President of the Home Builders Association of Lake County. To contact Magruder, email him at This email address is being protected from spambots. You need JavaScript enabled to view it.
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