April 2017 Lumber and Commodity Report

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The pricing roller coaster is in full operation this spring and for most builders the ride is rough.  Over the first three months of the year, the wood markets have been up high, down some, and up high again.  A warmer winter, trade fears, and an uncertain housing market have made the wood markets volatile and unforgiving to those who try to figure them out.  The only thing certain thus far is the uncertainty. The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) jumped $35.37 per thousand to $410.85, or increased 9.4 percent.  Both portions of the Index, dimensional lumber and panels, increased in price and lumber by far was the biggest mover.

The dimensional lumber portion of the Index jumped a whopping 15.5 percent as spruce prices surged $57 to $83 per thousand.  2x6-10 #2 spruce was up 20.5 percent and the market continues to show strength.  Canadian spruce importers are spooked by the pending decision on the Canada-United States Softwood Lumber Agreement and most believe it will over-penalize shipments from Canada.  This issue must get resolved to ease the markets.

The panel portion of the Wood Index increased 4.6 percent to $380.98 per thousand, with CDX pine plywood mixed.  Thinner panels were flat to down while 3/4” T&G added $17 per thousand.  OSB sheathing was up on average $25 per thousand as those manufacturers have done a much better job with managing supply and demand. OSB sheathing prices are a solid $100 per thousand more per sheet than this same time last year, or about $3.50 per sheet.  That is significant.

Housing demand and the Canada-United States Softwood Lumber Agreement are the primary focus of the market.  While housing reports have been good, the news continues to be spotty in areas.  As spring gives way to summer, the markets will need some undergirding to maintain the pricing supports at this level.  Builders should be cautious on long-term bids and protect themselves.  As the last 30 days have demonstrated, we are all on a wild pricing ride—hang on!

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. .

February 2017 Lumber and Commodity Report

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If you have never experienced sticker shock in your life—prepare yourself. The Ro-Mac Lumber Wood Commodity Index for February 2017 soared an unimaginable $47.81 per thousand to $381.91, which is a whopping 14.3 percent increase. Nothing in the Index went down, and these numbers reflect raw costs from the wholesale level (they do not include freight).

This is what I feared in January when I wrote the following, after the markets drifted lower in mid-January:

“The year is set up for volatility and builders should pay close attention. Prices today will probably be far different in April. Builders should protect themselves with a price escalation clause in their contracts. Keep an eye on spruce quality as better grades may be harder to find. Good planning in January can ensure profits in May.”

The increases in the dimensional lumber portion of the Index rival some of the worst areas during the boom after Hurricane Katrina. The total dimensional lumber portion of the index was up 18.2 percent. In one month, 2x4 #2 Western Spruce jumped 22.4 percent for 2x4-16 and 30.4 percent for 2x4-10. Astoundingly, 2x6 spruce was no better as both 2x6-10 and 16 foot lengths jumped almost 30 percent. These increases make it impossible for anyone in the supply chain to honor prices. Plus some of the better spruce mills are off the market. Wide-with pine hovered in the 15 percent increase range. The fear of counter-vailing duties and a pickup in housing starts in the United States is creating a tough buying market.

The sheathing portion of the Index looked better, but it was still bad, adding 10.6% overall. OSB sheathings added $30 per thousand plus, or almost a $1 per sheet, while CDX pine increased from $30 per thousand for 15/32” CDX to $70 per thousand for 19/32” and $85 per thousand for 3/4” T&G. A $70 per thousand increase on 5/8” CDX is an additional $2 per sheet. These are brutal increases.

The market remains very active and little clarity on the trade policy has been established by the United States government. There is a lot of turmoil.

My hope is that a warmer winter up North is creating a premature spike in demand that will calm down as we go through April. This scenario has happened for several years. However, if demand and a large infrastructure spending bill is adopted in the United States, this year could be different.

Builders should protect themselves with a price escalation clause and keep in close contact with their suppliers. My fear is a lot of people are about to lose money on projects and many do not have the financial wherewithal to do this. Be very cautious in long-term bidding.

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. .

January 2017 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index for January 2017 drifted down slightly to $334.10 per thousand or six tenths of one percent. Spruce settled lower on average at $12 per thousand, while most pines were flat to single digit decreases.  Winter weather and a clear direction appears to be what this market really needs.

The dimensional lumber portion of the composite dropped 2.2 percent to $380.65 per thousand, with spruce looking for short-term buyers.  Most believe as spring draws closer that better weather and the effects of the expiration of the U.S.A.—Canada Softwood Lumber Agreement will drive pricing upward.  The only caveat is demand—it must continue to grow. 

In the sheathing portion of the Index, CDX gave back $5 to $10 per thousand, while OSB sheathing added $5.  The net impact is a seven tenths increase for sheathing in the Index, but it also signals that some traders are resistant to lowering the base.  This might be very close to the yearly bottom.

The year is set up for volatility and builders should pay close attention.  Prices today will probably be far different in April.  Builders should protect themselves with a price escalation clause in their contracts.  Keep an eye on spruce quality as better grades may be harder to find.  Good planning in January can ensure profits in May.

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.

December 2016 Lumber and Commodity Report

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The declines in last month’s Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) were reversed as builders and suppliers became optimistic for a brighter 2017 after the presidential election.  The Index increased 4.3 percent to $336 per thousand, with all sectors pointing higher.  Spruce products and wide-width dimensional were the strongest as mills are beginning to price in a possible duty on imported Canadian wood this spring.

The dimensional lumber portion of the Index increased 5.9 percent to $359 per thousand, with wide width pine leading the way with increases from 12.3 percent to 14.3 percent depending on length.  2x4 spruce dimensional was mixed, with demand determining the increase from 0.9 percent to 10.0 percent while spruce studs followed the lead.  Overall, the tally ordered did matter in regards to pricing.

For the most part, the sheathing portion of the Index was up $10 per thousand, with CDX plywood jumping $5-$15 while OSB was consistent with the $10.  The increase in sheathing prices is somewhat unexpected considering the time of year, weather, and unimpressive housing starts.  Don’t know if this is just optimism for the future or a real trend.

With the election of the new administration, the housing and supply markets have been stirred up like a huge pot of New Orleans gumbo.  Tariffs, trade disputes, and bluster could increase a lot of building material costs while increasing interest rates could cool down a growing housing market.  Then there is the optimism many are feeling now—could this be the start of a new boom?  My crystal ball is cracked—2017 could be a high risk and high reward market.  My bet is that prices will be higher and very volatile so builders should be inserting a price escalation clause in their contracts now to prevent real problems five months from now.

Thank you for reading the Lumber and Commodity Report. It is my prayer that you and your family have a blessed and Merry Christmas.

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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