April 2015 Lumber & Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) continues to point negative in mid-April 2015, as the housing market has yet to bolster demand.  Weather is no longer a viable reason for subdued demand.  With nearly one-third of the year in the books, housing forecasters had better start revising their pre-year forecasts down.

Many contend, and I agree, that the wood commodity market is the canary in the coal mine when gauging the housing market.  If you also believe that, then it is time to be concerned.   Over the last 30 days, the Index dropped $9.11 per thousand (or 3.0%) with declines in the vast majority of the items.

In the lumber portion of the Index, wide pine products were the only items to increase in price, with increases ranging from 6.9 to 11.8 percent.  This appears to be more of a supply issue with logs (due to rainy weather) than a push from demand. Spruce dimensional lumber gave back $20 plus per thousand with studs retreating in the $10 plus range.  Considering the thin inventories in the supply chain, there is reason for concern.

The plywood segment of the Index dropped 2.0 percent to $275.11, as OSB sheathing retreated on average around 1.0 percent with CDX pine plywood falling on average 3.0 percent.  CDX pine plywood has not participated in the last few months in the pricing retreat, and these price drops may be a great indicator of the health of the housing market in the Southeast.

It is really hard to figure—are these price declines minor blips or significant trends?  Warm spring weather and low interest rates should spur the housing market, provided buyers can obtain financing and navigate through the paperwork minefield.  If builders do not see a robust pickup in business in the next month, it appears this year could be a repeat of a disappointing 2014.

Keep in mind, inventories in the supply chain are woefully low due to the spotty demand, and a sudden increase in starts could create some price volatility.  Be very careful on long-term quotes.  The indication right now is for more of the same with price deflation spreading to other areas like drywall and roofing.  It really depends on housing demand.

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. .

March 2015 Lumber & Commodity Report

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In last month’s column, I expressed concerns about the declines in the wood commodity markets noting that these markets were the best indicator as to the health and direction of the housing industry.  I pointed out that by mid-March the spring selling season, or Christmas, should be in full swing for the markets.

Well, Santa hasn’t come yet.  In fact, it is beginning to look as if this scoundrel is on vacation.  The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) dropped 4.0 percent, or $12.60 per thousand, to $302.82 on a full retreat in the spruce markets.  Many in the industry still open with a weather report when discussing why the housing market continues to remain subdued.  Most fail to realize that in the three biggest states in the union the weather has been fine this winter.

The dimensional lumber portion of the Index over the last 30 days dropped 8.5 percent to $332.28 per thousand.  The search by mills for buyers pushed pricing lower as expectations for both imports and exports have not materialized for the year.  The demand side of the equation is the dominant denominator.

The sheathing side of the Index increased 0.3 percent to $280.81 per thousand.  Tighter manufacturing availability pushed CDX pine plywood pricing up 3.1 percent on 5/8-inch.  Single-digit increases occurred in the other thicknesses.  OSB sheathing pricing drifted flat-to-lower as availability remained plentiful.  The spread between pine plywood and OSB sheathing is over $300 per thousand, and it is reaching a point wherein some builders may reconsider the use of OSB products.

The time is now to have a run on pricing.  If in the next two weeks, or 30 days, pricing does not catch steam, builders should be real concerned about this year’s housing market.  With that said, do not use the prices you have today to quote a project in mid-summer.  If the winter weather has been the main deterrent to housing, then prices will rise quickly over the next 30 days.  Let’s see if Santa Claus finally arrives for the housing market—we should know quickly. 

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 2015 Lumber & Commodity Report

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Just imagine you work in a department store, and a couple of weeks before Christmas sales were slow because no one was buying.  This is a fairly accurate description of the current wood commodity market.  With two weeks, or so, until the main spring selling season the markets are eerily muted with few signs of a hot spring selling season. 

The Home Builders Association and Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) in mid-February declined 1.8 percent to $315.42 per thousand on lower than expected exports to China, a lackluster U.S. housing market, and the winter weather.

The declines were basically across the spectrum on the Index.  The lumber dimensional portion of the Index declined 2.0 percent to $363.04, as mills searched for buyers.  The housing market is underachieving and reports from distributors is business is very spotty.  Spruce studs gave up the most at nearly a 6 percent decline, with pine dimensional giving back on average $10 per thousand.

The sheathing portion of the Index dropped 1.5 percent primarily on the weakness in OSB sheathing, which gave back 5 percent on average.  Over-supply continues to plague OSB sheathings, and a sluggish market is not helping mills manage that problem any easier.  15/32 CDX pine plywood was up $15 per thousand while thicker panels were up $5 to down just a little.  CDX pine plywood continues to remain the driver in the sheathing market.

Concern by all in the construction industry should be increasing, as the markets indicate housing is not starting 2015 with the bang so many expected.  In less than 30 days, the country should be in the midst of the spring building and selling season.  Unless these markets heat up quickly, it may turn out to be a disappointment.  Rarely, do you see these markets decline between January and February.

Let’s hope Christmas begins for building in the next couple of weeks.  Keep in mind, if the markets crank up then today’s pricing will go up, especially in light of this month’s decrease.  Be very careful bidding items in mid-February for shipment in April or May.  All builders should have a price escalation clause included in their contracts. 

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 2015 Lumber & Commodity Report

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The Home Builders Association and Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) in January squeezed out a 0.1 percent increase to $321.12 per thousand, as most increases were offset by declines.  Demand is not driving price, and the recent decline in fuel and the commodity markets have many manufacturers concerned about the future strength of wood commodities.  A struggling world economy and uncertain Chinese export futures are keeping a lid on pricing.

The dimensional lumber portion of the Index dropped 1.1 percent to $370.62 per thousand, as spruce products moved downward on average about 3.0 percent.  The declines in spruce products were offset by a firmer pine lumber market with the general trend in the lower to middle single digits.  Availability of very specific sizes and species seem to be the only thing moving the market. 

The sheathing portion of the Index increased 1.3 percent on a reversal of trends.  In the last 30 days, since mid-December, the price of CDX pine plywood dropped about $7 per thousand while OSB sheathing increased almost $9.  For months, CDX had increased pricing while OSB struggled to find a floor.  I am not real sure if this is a new trend or a post-holiday season burp.

At this point, my crystal ball is completely broken and experts are so varied on the future.  One predicts a record year while others are predicting Armageddon.  Here is what I do know.  Business is about on par thus far with 2014, and if there was going to be a boom, then the banking and real estate industries should be hiring a lot of people.  My sources tell me that everything is flat.  So, I think it is fair to say right now, expect more of the same with moderate volatility as lumber decks fall short on specific items. 

I would be careful about long-term bids this time of the year, because we still have to deal with the historic trend of a winter thaw and tornadoes in the South. 

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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