May 2017 Lumber and Commodity Report

dpc LumberTruck 590x443 83935700

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. 

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. .

April 2017 Lumber and Commodity Report

gImage LumberComesFrom vA

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!

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. .

February 2017 Lumber and Commodity Report

dpc HouseFramed 66304523web

If you have never experienced sticker shock in your life—prepare yourself. The Ro-Mac Lumber Wood Commodity Index for February 2017 soared an unimaginable $47.81 per thousand to $381.91, which is a whopping 14.3 percent increase. Nothing in the Index went down, and these numbers reflect raw costs from the wholesale level (they do not include freight).

This is what I feared in January when I wrote the following, after the markets drifted lower in mid-January:

“The year is set up for volatility and builders should pay close attention. Prices today will probably be far different in April. Builders should protect themselves with a price escalation clause in their contracts. Keep an eye on spruce quality as better grades may be harder to find. Good planning in January can ensure profits in May.”

The increases in the dimensional lumber portion of the Index rival some of the worst areas during the boom after Hurricane Katrina. The total dimensional lumber portion of the index was up 18.2 percent. In one month, 2x4 #2 Western Spruce jumped 22.4 percent for 2x4-16 and 30.4 percent for 2x4-10. Astoundingly, 2x6 spruce was no better as both 2x6-10 and 16 foot lengths jumped almost 30 percent. These increases make it impossible for anyone in the supply chain to honor prices. Plus some of the better spruce mills are off the market. Wide-with pine hovered in the 15 percent increase range. The fear of counter-vailing duties and a pickup in housing starts in the United States is creating a tough buying market.

The sheathing portion of the Index looked better, but it was still bad, adding 10.6% overall. OSB sheathings added $30 per thousand plus, or almost a $1 per sheet, while CDX pine increased from $30 per thousand for 15/32” CDX to $70 per thousand for 19/32” and $85 per thousand for 3/4” T&G. A $70 per thousand increase on 5/8” CDX is an additional $2 per sheet. These are brutal increases.

The market remains very active and little clarity on the trade policy has been established by the United States government. There is a lot of turmoil.

My hope is that a warmer winter up North is creating a premature spike in demand that will calm down as we go through April. This scenario has happened for several years. However, if demand and a large infrastructure spending bill is adopted in the United States, this year could be different.

Builders should protect themselves with a price escalation clause and keep in close contact with their suppliers. My fear is a lot of people are about to lose money on projects and many do not have the financial wherewithal to do this. Be very cautious in long-term bidding.

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. .

January 2017 Lumber and Commodity Report

Lumber 02-sized

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index for January 2017 drifted down slightly to $334.10 per thousand or six tenths of one percent. Spruce settled lower on average at $12 per thousand, while most pines were flat to single digit decreases.  Winter weather and a clear direction appears to be what this market really needs.

The dimensional lumber portion of the composite dropped 2.2 percent to $380.65 per thousand, with spruce looking for short-term buyers.  Most believe as spring draws closer that better weather and the effects of the expiration of the U.S.A.—Canada Softwood Lumber Agreement will drive pricing upward.  The only caveat is demand—it must continue to grow. 

In the sheathing portion of the Index, CDX gave back $5 to $10 per thousand, while OSB sheathing added $5.  The net impact is a seven tenths increase for sheathing in the Index, but it also signals that some traders are resistant to lowering the base.  This might be very close to the yearly bottom.

The year is set up for volatility and builders should pay close attention.  Prices today will probably be far different in April.  Builders should protect themselves with a price escalation clause in their contracts.  Keep an eye on spruce quality as better grades may be harder to find.  Good planning in January can ensure profits in May.

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.

Ro-Mac Newsletter Signup