The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index for June dropped 2.0% as large declines in pine, especially wide-width, dragged most of the market down. Mills continue to struggle with balancing the long-term supply and demand equation in their favor because the housing market continues to be erratic. The trend for the year has been up but the earlier summer retreat has been a norm since the Great Recession. The question this year will be: Does hurricane season change the norm?
The dimensional portion of the Index dropped 0.7% to $353.14 per thousand as wide-width pine items were in full retreat, with declines of $70-$85 per thousand. Treated 2x4 pine gave back 7.0%, while 2x4 and 2x6 dimensional spruce was flat to up 1.6%. Stud pricing was a little stronger, with pricing averaging a 3.0% increase. No doubt it was a mixed bag over the last 30 days. Builders should keep a close eye on projects that are calling out specific types and sizes because the impact could be greater.
The sheathing portion of the Index declined 3.1% as both CDX and OSB sheathing retreated from last month’s levels. The unison decline of both items has not been typical and this could suggest a softness permeating the market. CDX pricing was down on average almost 4.0%, with OSB staying closer to 3.0%. This could all change suddenly if anywhere in the country a real hurricane threat materializes over the next few months. Builders would be wise to pad quotes and not use the lowest numbers for projects bid in the fall.
There is a lot of uncertainty in the market and the recent workers’ compensation ruling by the Florida Supreme Court will surely add to it. Lifting the cap on attorneys’ fees and expanding the days of disability for injured workers could result in rate increases of 17.1%, according the National Council on Compensation Insurance (NCCI). This is a huge increase that could really increase costs because it will affect building and supply at all levels. This compounding effect, along with increased opportunities for workers’ compensation abuse, could exacerbate an already bad labor market. Potentially, this is the greatest threat facing all builders this fall—adjust your bids and timetables.
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