August 2015 Lumber & Commodity Report

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The wood commodity markets have been brutal for traders over the last 30 days, as most items are in full retreat. The downward spiral in these commodity markets mirrors the current deflationary tone of all commodities throughout the world. Sagging demand and economies in turmoil are leading to falling demand in commodities. It remains to be seen if these sentiments are starting to really depress a very shaky housing recovery in the United States. The extent of the declines indicate housing is cooling.

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index in August dropped a whopping 5.0% with none of the items in the Index adding in price. The tone is down, and it appears enthusiasm by most in the construction industry is subsiding. Initial reports of a housing slowdown in South Florida could be no more than a late summer wobble, but others fear it is the first signs of something worse.

The dimensional lumber portion of the Index dropped 7.8% as many manufacturers struggled to find a bottom. Stud pricing was down from $8 to $49 per thousand (depending on the size) with dimensional spruce dropping $20 plus in general. Heavy retreats in pine lumber swept through most sizes with many declines greater than $30 per thousand. Nothing in lumber escaped the downward pressure.

Sheathing dropped in pricing over the last 30 days, but that portion of the Index only retreated 2.4% or about 20 cents per sheet on average. CDX pine gave back on average about $10 per thousand with OSB sheathing finding a level about $5 per thousand lower. In the last week of the period there has been a rally in sheathings, but the amount of the rally was not much and not for long. For it to be a real reversal, market analysts need to see some weeks strung together. I suspect many plywood mills are secretly wishing for a little hurricane action to bolster pricing through the fall and winter.

Unless there is a hurricane threat or sudden economic reversal, there is little impetus for rising prices. Prices are low and could go even lower. Consider that since August 2014 (one year ago) based on this Index dimensional lumber pricing is down 22.6% and sheathing pricing is down 13.2%. Overall, the Ro-Mac Lumber Wood Commodity Index is down 18.0%. There is little doubt if housing were strong that these prices would be much stronger.

Builders, don’t base everything on lower prices, as a big hurricane in the next 30 days could change the equation real quick.

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. .

July 2015 Lumber & Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) dropped 0.6 percent, or $1.71 per thousand, over the last 30 days as sheathing prices sagged. The decline in wood sheathing pricing could be the best indicator of sluggish housing demand, because if housing starts were taking off as many have anticipated this market should be up. There appears to be pricing angst in the market.

The lumber portion of the Index increased 3.2 percent to $343.43 per thousand as most spruce items enjoyed solid, single-digit increases. Wide-width pine increases added the most, varying from 5.0 percent to 11.5 percent, depending on length. The struggles in worldwide commodities, especially the China market, could reverse the trends in the next month or two considering the country’s heavy dependence on exports by the Canadians.

The sheathing side of the Index dropped 4.0 percent as prices for both CDX pine plywood and OSB Sheathing sagged on demand. CDX pricing was off the most with declines, on average, of $27 per thousand while OSB averaged down about $5 per thousand. If hurricane season does not stiffen sheathing prices, expect prices to remain flat-to-down.

Declining oil and world commodity prices could keep pricing down, which may be good in the short-term for builders, but represents a troubling economic sign in the long-term. What happens in the next 60 days will probably determine the direction for the next six months, because using the winter season as an excuse for lower pricing will come back into play. Be cautious on short-term projects, and be sure to check pricing closely—volatility could come into play.

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. .

June 2015 Lumber & Commodity Report

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A much stronger spruce market pushed the Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) higher in June, as dimensional lumber significantly outpaced sheathing products. The full retreat of lumber since the beginning of the year abated, as pent-up demand from many of the country’s northern regions seemed to take hold. The question bodes for many in the industry, “Is this a trend or just a blip?”

The lumber portion of the Index increased 10.4% (or $31.50 per thousand) with most products going higher, except for narrow width pines. Stud prices increased plus $30 per thousand with 2x6-92 5/8 increasing the least. 2x4 dimensional spruce lumber increased 7.7%-23.4%, depending on specific lengths, with similar increases in 2x6 spruce. Wide width 2x12 yellow pine added 4.6%-11.1%, and the price increases narrowed in conjunction with the widths.

The sheathing portion of the Index was mixed, as prices increased on average 1.5% (or $4 per thousand). CDX pine plywood was mixed, as 1/2 CDX gave back 1.8% with 5/8 CDX staying flat, and the thicker 3/4 T&G panel added 2.4%. OSB sheathing added $6-$9 per thousand (or about 4%) on average, as increased demand gave those producers hope for better times. The non-carryover of lumber prices to the sheathing market suggests that the price increases may be more of a blip than ushering in a trend.

Builders, the commodity markets and the American economy all need one thing—consistent growth. The continuous, nauseating monthly ups-and-downs of economic numbers have most people spooked to take any long-term action. There is little confidence the most recent market activity will sustain itself. Plus, forecasts for hurricane season are projected to be less than average. Without increased housing activity, or bad weather issues, expect the gains in commodity prices to evaporate by summer’s end.

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 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. .

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