The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) dropped 0.6 percent, or $1.71 per thousand, over the last 30 days as sheathing prices sagged. The decline in wood sheathing pricing could be the best indicator of sluggish housing demand, because if housing starts were taking off as many have anticipated this market should be up. There appears to be pricing angst in the market.
The lumber portion of the Index increased 3.2 percent to $343.43 per thousand as most spruce items enjoyed solid, single-digit increases. Wide-width pine increases added the most, varying from 5.0 percent to 11.5 percent, depending on length. The struggles in worldwide commodities, especially the China market, could reverse the trends in the next month or two considering the country’s heavy dependence on exports by the Canadians.
The sheathing side of the Index dropped 4.0 percent as prices for both CDX pine plywood and OSB Sheathing sagged on demand. CDX pricing was off the most with declines, on average, of $27 per thousand while OSB averaged down about $5 per thousand. If hurricane season does not stiffen sheathing prices, expect prices to remain flat-to-down.
Declining oil and world commodity prices could keep pricing down, which may be good in the short-term for builders, but represents a troubling economic sign in the long-term. What happens in the next 60 days will probably determine the direction for the next six months, because using the winter season as an excuse for lower pricing will come back into play. Be cautious on short-term projects, and be sure to check pricing closely—volatility could come into play.
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