The RoMac Building Supply Wood Commodity Index (Index) quietly eased into 2019 with little or no fanfare with an unimpressive 0.1 percent change in price to $302.47 per thousand. Mills are curtailing production and producers are searching for buyers, which is a huge change from just six months ago. The big numbers matter and these markets need housing demand to bolster.
The lumber portion of the Index dropped 0.3 percent as drops in stud pricing and treated pine offset the gains in dimensional spruce. 2x4-92 5/8 studs were down 6.8 percent while 2x4-16 treated gave back 7.0 percent. 2x12 pine added on average $25 per thousand while dimensional spruce averaged an increase of $10 per thousand over last month. Increases were inconsistent based on demand and availability of widths and lengths.
The sheathing portion of the Index could only manage a measly $5 per thousand increase in OSB with pine plywood staying flat in price. Unimpressive demand along with ample supply were too much for those wanting to raise pricing. Rumblings of large spring buys of imported plywood could keep a lid on pricing.
Two factors could keep pricing down. First, if winter finally settles in with cold, snowy weather across the country pricing will be slow to rebound. Second, a lot of European spruce was purchased in the last half of 2018, which is just making its way to the United States. Some have suggested it is a wall of lumber—not sure if it is that dramatic. If there is a lot of European spruce heading to the United States, mills in North America will have to do more curtailments and shutdowns to hold pricing.
Because the economy appears to be a little softer than in the spring 2018, expect talk of tariffs to be muted and hopefully the spring selling season will be normal. Although low prices are good, in one sense low pricing in lumber indicates the housing market is weak. A little firmness in pricing could be a good sign.
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida (romacfl.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
The RoMac Building Supply Wood Commodity Index (Index) for December 2018 continued to decline, as the collapse in OSB pricing persisted despite some strengthening in lumber. The Index dropped 2.6 percent to $302.47 per thousand—overall, the market is still trying to find an upward direction. With cold temperatures, snow, and rain, finding higher prices may be too challenging.
The dimensional lumber portion of the Index increased 3.0 percent to $348.31—yes, increase. Spruce studs showed some strength by adding $7-$55 per thousand, depending on the cut. This tells me pricing is being driven by on-time delivery and availability. 2x4 dimensional spruce was up 5.4%-10.2% for short lengths but dropped on some of the longer sizes by as much as 9.4%. These are mixed messages for sure. Pine lumber was similar with 2x12 wide pine adding 3.4%-8.2% while 2x4 treated pine gave back 7.3%. Overall, it is a specific supply-by-size issue and availability pushing these numbers.
The sheathing portion of the Index is much clearer. CDX pine plywood was flat to $5 adjusted in either direction while OSB sheathing retreated 10.7%-16.7% on continued over-demand. Obviously, the manufacturers did not come close to their break-even production numbers to not be announcing curtailments. This is the problem when new mills are introduced and the housing market declines.
Mills and manufacturers are itching for reasons to get these prices up—they are too low. Winter weather won’t help, nor will competitors intensifying their efforts to improve sales. Although short-term prices may moderate, expect manufacturers to develop a strategy through curtailments to find the numbers they need and want. For this reason, builders should be slow to quote current pricing numbers for spring jobs—it could end up being costly.
Have a Merry Christmas and be sure to enjoy every minute of the holiday season!
Don Magruder is the Chief Executive Officer of RoMac Building Supply in Central Florida (romacfl.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
The RoMac Building Supply Wood Commodity Index (Index) for November 2018 continued to decline as the Index dropped 10.7 percent to $310.59 per thousand. The declines were similar in both dimensional lumber and sheathings, which varied in length and thickness. This indicates a lot of hand-to-mouth buying as suppliers try to reduce inventories of higher priced materials.
The dimensional lumber portion of the Index dropped 9.5 percent to $348.31 per thousand, including stud items catching up with the prior month’s drops with declines of $33 to $82. Dimensional 2x4 spruce retreated less than $15 with longer lengths of 18’ and 20’ capitulating plus $25. Overall, the demand equation continued to force pricing down.
The sheathing portion of the Index was heavily skewed downward by CDX pine plywood, which gave back about 16 percent (or plus $75). OSB sheathing, which took heavier drops the prior month, only gave back on average $23. CDX was slower to react to the declines.
Wood commodities have given back all increases for the year and the numbers are nearing recessionary numbers. That should concern everyone in the construction industry. Declining commodity markets are the best indicators of housing and construction demand, because the markets are typically fueled by buying, not projections. With winter quickly approaching the northern areas of the country, little improvement in demand is expected.
Mill curtailments have begun. If these prices continue, expect curtailments and layoffs to increase. Although short-term spikes in specific sizes and species of commodity wood products can be expected, the overall trend does not look encouraging. Builders should be slow to drop pricing and bid spring projects at current numbers. In three months, curtailments and increased demand could have the markets spiking upward again. The word of the day is “caution,” beware of these market prices now.
Don Magruder is the Chief Executive Officer of RoMac Building Supply 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
The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for October 2018 cratered 16.4 percent to $347.73 as the hurricane bounce from the prior month quickly deflated. This may be wood commodity history in that CDX pine and OSB sheathing prices declined on the heels of Hurricane Florence, between the threat and devastation of Hurricane Michael. This is stunning and probably speaks volumes to the overall deterioration of the commercial and residential construction markets.
Rising costs, labor costs, tariff issues, and rising interest rates may be causing more damage to the construction industry. Builders should look at real demand and job growth. No doubt—something is amiss in the construction markets.
The dimensional wood portion of the Index declined 15.6 percent as dimensional spruce retreated $80-$115 per thousand or 20 percent plus. Spruce studs were less affected but still had significant declines in the mid-teens. Indications are that there is a lot of wood heading this way without enough buyers. The European Spruce brokers may be hit the hardest.
Normally the threat of a major Category 4 hurricane, not to mention it actually hitting, would artificially pump up the wood sheathing markets. On the contrary, Hurricanes Florence and Michael failed to move the needle. Since mid-September, OSB pricing is down $75 per thousand (21.6-24.2%) and CDX pine plywood is down $30-$55 per thousand. This is something we’ve never seen before—since this Index began almost 30 years ago.
These huge declines in the wood commodity markets could be indicative of the overall health of the construction markets—this should concern commercial and residential builders. If these hurricanes could not move the pricing meter, there is little that could happen between now and year-end that could do so, except for a huge construction boom, and there appears little chance of that.
Expect pricing to settle more and hover in a range much lower than the first of the year. Although this report is good news for pricing, it could be bad news for overall demand for the winter—everyone should be careful.
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
Page 1 of 18