December 2016 Lumber and Commodity Report

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The declines in last month’s Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) were reversed as builders and suppliers became optimistic for a brighter 2017 after the presidential election.  The Index increased 4.3 percent to $336 per thousand, with all sectors pointing higher.  Spruce products and wide-width dimensional were the strongest as mills are beginning to price in a possible duty on imported Canadian wood this spring.

The dimensional lumber portion of the Index increased 5.9 percent to $359 per thousand, with wide width pine leading the way with increases from 12.3 percent to 14.3 percent depending on length.  2x4 spruce dimensional was mixed, with demand determining the increase from 0.9 percent to 10.0 percent while spruce studs followed the lead.  Overall, the tally ordered did matter in regards to pricing.

For the most part, the sheathing portion of the Index was up $10 per thousand, with CDX plywood jumping $5-$15 while OSB was consistent with the $10.  The increase in sheathing prices is somewhat unexpected considering the time of year, weather, and unimpressive housing starts.  Don’t know if this is just optimism for the future or a real trend.

With the election of the new administration, the housing and supply markets have been stirred up like a huge pot of New Orleans gumbo.  Tariffs, trade disputes, and bluster could increase a lot of building material costs while increasing interest rates could cool down a growing housing market.  Then there is the optimism many are feeling now—could this be the start of a new boom?  My crystal ball is cracked—2017 could be a high risk and high reward market.  My bet is that prices will be higher and very volatile so builders should be inserting a price escalation clause in their contracts now to prevent real problems five months from now.

Thank you for reading the Lumber and Commodity Report. It is my prayer that you and your family have a blessed and Merry Christmas.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

November 2016 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) decreased 4.1 percent, as the wood commodity markets tried to sort out demand, seasonal changes, and the new political direction in America.  Uncertainty at the beginning of winter does not bode well for pricing in the wood commodity markets.  So most should not expect a run in pricing. 

The dimensional portion of the Index dropped 4.2 percent or about $15 per thousand.  Spruce studs were off about 3.5 percent, with dimensional giving back on average 7.0 percent.  Wide width pine took the biggest hit by dropping 6.1 to 8.8 percent depending on length.  Narrow width pine treated was the only item in the Index to print up. 

The sheathing side of the Index was consistent, with OSB sheathing handing back $10 per thousand over the last 30 days while CDX Pine Plywood decreased $20-$30 per thousand.  CDX T&G added 3.9% or about $20 per thousand to offset declines from other sizes. There is no doubt about it, the direction of sheathings was down.

Unless enthusiasm can take the place of uncertainty, it is safe to say that wood commodities will probably be flat to down over the new few weeks between the holidays.  Many suppliers will probably lower inventory levels to build cash and this will make the markets more vulnerable to volatile markets.  If the economy and enthusiasm take hold after the first of the year, today’s bids could be too low.  Builders should be wary of holding today’s prices for next spring’s work. 

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

October 2016 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) increased 2.9 percent to $336.29 per thousand as the scare from Hurricane Matthew continues to subside.  Traders and manufacturers throughout the southeast coast of the United States understand that a worst case scenario for this hurricane was averted which could have thrown the supply chain in turmoil.  A 30-mile wobble to the east at the last moment saved Florida from catastrophic damage.  The hangover effect from the storm will linger for a few weeks, but expect the market to settle down as the holidays and winter season approach.

The dimensional lumber portion of the Index increased 1.7 percent as increased pricing on 2x4 spruce and pine added from 0.4 to 5.9 percent, depending on length.  As most suppliers know, these items are the most popular if major damage would have resulted from the storm.  Wide width pine was in full retreat, giving back $33 per thousand on 16 foot lengths.

As expected, the sheathing portion of the Index increased.  A week after the storm it remains up 4.0 percent by adding on average 40 cents per sheet.  OSB sheathing added $13 per thousand while CDX fluctuated between $10-$28 per thousand.  CDX T&G plywood took a $75 decline as most mills found it difficult to move that type of sheathing when roofs are primarily in jeopardy.  The general consensus is that the increases fueled by the storm will retreat.

The next big hurdle for the markets is the U.S. presidential election.  If the country can survive this ugly, bitter election without plunging into a recession, the economy should stay on par.  There is little doubt that political uncertainty in the market will keep demand subdued.  There really aren’t many factors to keep these last increases in force.  So builders should expect some moderation.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

September 2016 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) moved lower as tropical rains and a subdued housing market fell prey to the dog days of summer. Only one item in the Index increased in price (15/32 CDX +$3 per thousand), with all others succumbing to the market’s downward trend. Unless there is a spike in housing sales or a late season hurricane, there will be little to move this market upward.

The dimensional lumber portion of the Index dropped 4.3 percent to $347.75 as wide-width pine led the retreat, with drops from 6.7-9.6 percent. Dimensional spruce dropped on average $15 per thousand, with declines in stud pricing staying below $10. Narrow-width 2x4 pine was down 4.2 percent as mills looked for buyers. Typically, with all of the rain in many areas of the south, pine pricing would be somewhat firmer due to logging constraints. We have not seen that yet.

The sheathing portion of the Index dropped 1.4 percent or on average about $4 per thousand. The declines in OSB sheathing were a little more pronounced retreating on average about $6 per thousand. Thicker CDX T&G pine plywood posted a decline of almost $40 per thousand, which is fairly significant. Pricing indicates that the supply side is more in charge than demand.

Commodity prices increase on demand and the enthusiasm in the market — currently, both are waning. Expect to see other building supply areas increase in price as true labor and operational costs increase; however, commodities may be in for a late year struggle. The next few weeks should clearly show us how things will end up.

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

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