The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) increased 2.3 percent to $404.56 in a market which is best described as mixed. Strong increases in OSB propelled the Index into positive territory as most species of wood products jockeyed for direction. It appears this month’s increases are far from cemented into the marketplace and it appears the base is more like shifting sand. The uncertain environment in business, building, and the U.S.A.—Canada Softwood Lumber Agreement is leaving mills and traders scrambling.
The lumber portion of the Index dropped 0.5 percent to $435.84 per thousand. 2x6 spruce, 2x4-12 spruce, and 2x4-16 treated pine kept the declines to a minimal as the overall market was bearish. A proposed settlement of the Softwood Lumber Agreement, which restricts imports instead of imposing huge duties, could crater the markets. Long-term gaps in supply would probably be made up by European and Russian spruce as American producers probably could not handle the load. This could be a recipe for future shortages if housing were to return to historic levels.
The sheathing part of the Index enjoyed a 4.8 percent increase fueled on a $23 per thousand increase in OSB. This 74-cent increase in OSB propped the market up as CDX was mixed from $15 down to $10 up, depending on thickness. If the country makes it through hurricane season unscathed, the sheathing markets probably cannot sustain this level without increased housing activity.
If you can predict the future, you probably can predict the commodity markets. If conditions settle and there is no hurricane season, expect pricing to remain in a tight range to down. If uncertainty gets worse and confidence retreats, expect pricing to go down. Builders should hedge their bets with a Price Adjustment Clause in their contracts and updated bids. Hold on—the rollercoaster is still moving.
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
The Ro-Mac Lumber & Supply, Inc Wood Commodity Index (Index) is firmly strapped in the pricing rollercoaster as it dropped 9.1 percent last month while increasing 7.5 percent this month. The continued upheaval on the U.S.A—Canada Softwood Lumber Agreement along with duties and tariffs are causing whiplash among buyers and builders. Rumors of an agreement with reduced levels of importing and lower tariffs have buyers in a tailspin. Throw an uncertain housing demand into the equation and no one knows where pricing will ultimately end up.
The dimensional lumber portion of the Index increased 8.4 percent to $438.10 per thousand. SPF led the way upward with strong moves. 2x4-92 5/8 studs were up 9.2 percent (or $42 per thousand). That translates into more than 22-cents per piece. 2x4 dimensional spruce was up $35 to $50 per thousand while 2x6 SPF soared by the plus $70 per thousand range. There is little doubt it—the tariffs, duties, rumors, and heightened wildfire season are impacting SPF pricing.
Oddly, pine dimensional pricing is in retreat. 2x12 pine was down 4.4 to 11.0 percent while 2x4 pine gave back 9.6 percent. This decline in pine may be a truer indicator of the markets.
The sheathing portion of the Index increased 6.8 percent, with OSB sheathing leading the way with across-the-board $24 per thousand increases. A 77-cents per sheet increase in OSB sheathing is somewhat sizable. CDX pine increased in price, but it was not consistent across the board. 15/32” added $25 while 19/32” increased $15 and 3/4 T&G dropped by $15. The most important takeaway is that the sheathing market gained somewhat. However, it is still below levels hit in the spring.
Commodity pricing is causing inflation in housing. Since last year, there have been large price increases in the following items:
OSB Sheathing went up 24.5 percent on average.
These are real increases, which are hard to digest by many builders and subcontractors. The real question is—are these increases and the impending tariffs going to price the housing market out of reach for many buyers? My real concern is that it will.
Over the last 30 days, the Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) drifted downward as pricing may have bumped its high point. The Index dropped in total 1.5 percent or $6.32 per thousand. The initial countervailing duties on Canadian lumber seem to have been baked into the pricing. Even with the threat of new tariffs at the end of June, the market is just not motivated to go higher. As the cost of housing increases and interest rates edge up, the housing market could be losing buyers.
The dimensional lumber portion of the Wood Commodity Index dropped 3.0 percent to $437.23 per thousand as spruce retreated from the shock of the duties. Spruce stud pricing remained firmer with 2x4-92 5/8 studs adding $2-$5 per thousand. Specialty studs were somewhat mixed on species requirements. 2x4 dimensional spruce declined in longer lengths on average $25 per thousand. Shorter lengths were down $12.
The sheathing side of the Index was nearly flat only dropping 0.2 percent or about $1 per thousand. CDX pine pricing drifted down $5-$10 per thousand while OSB sheathing added only $2. Overall, the market seems to be trying to hold onto gains. The test will be if OSB mills can hold onto pricing throughout the summer. Thus far this year, the mills have been successful in balancing the demand and pricing equation in their favor.
Last month, I described the wood commodity markets as being on a roller coaster. Way up and then way down. There was a slight decline this month, and the challenge is to see if this is just a bump before another wild ride. My bet right now is that the markets need a month or so to digest the last five months to see if the demand portion of the equation will support another run. Builders should be careful in long-term pricing but not afraid to bid projects.
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!
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