September 2013 Lumber and Commodity Report

September 2013 Lumber and Commodity Report

Your Home Builders Association Wood Commodity Index (Index) for September 2013 decreased 1.6% to $315.39 primarily on across-the-board declines in sheathings. Pricing has become spotty in dimensional lumber as availability of specific species and sizes appear to be the main driver.

The lumber portion of the Index increased 4.1% on the strength of dimensional spruce. Spruce pricing ranged from a 0.7% decline in 2x4-8 spruce to a 9.3% increase in 2x6-16 spruce. There are some market analysts who believe demand is improving in China, which could fuel a round of heavy buying. The real problem for price support in lumber continues to be inconsistent trends in housing permits.

A good barometer of overall market demand is the sheathing market, which continues to falter. Over the last 30 days, CDX pricing slid $28-$50 per thousand while OSB sheathing moderated its declines in the $10-$20 per-thousand range. Overall, the sheathing portion of the Index was off 6.9%.

It appears the market is poised to continue its uneven cost advancers and decliners. There aren’t any significant winds pushing the market on a certain path. This could be very frustrating for builders who get caught by higher cost on one particular size or species. This would be a good time for builders to explore options and different species to offset uneven price spikes. For example, if 2x6-16 spruce is up 9.3% maybe a different length could save you 5.0%. Habits generally cost more in uneven markets.

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, visit his contact page.

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