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. .

August 2016 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for July 2016 took back its decrease from June by adding 3.3 percent or $10.80 per thousand. The increases in cost were not across the board, which indicates a weakness is possibly permeating the commodity markets. It remains to be seen if the markets can withstand the dog days of summer.

The dimensional lumber portion of the Index increased 0.4 percent as modest increases in spruce dimensional lumber were offset by larger drops in pine. Spruce stud pricing increased $8 to $13 per thousand, depending on the size, while dimensional 2x4 spruce added on average $5 per thousand. 2x6 spruce was down from $3 to $9 per thousand. The spread in 2x4 and 2x6 spruce indicates a market struggling to hold onto pricing.

The sheathing portion of the Index is split. CDX pine plywood increased $30 per thousand for 5/8” and 1/2” sizes while OSB sheathing was flat. This appears to be more of an individual species demand market instead of an overall housing demand increase market. Over the next 30-45 days, hurricane season could really dictate the direction of the sheathing market.

The biggest factor facing all businesses, especially those in the construction industry, is the proposed huge increase in workers’ compensation insurance now scheduled to possibly happen on October 1, 2016. The National Council on Compensation Insurance (NCCI) has recommended a 19.6% increase effective immediately for all policy holders to offset increased costs, which is a result of two Florida Supreme Court decisions and a new Senate bill of healthcare changes. These increases must still be approved by the state, but workers’ compensation insurance is priced from experience models. It appears that unless the laws are modified, the real cost of insurance is about to soar.

This huge increase in insurance will affect every person and company in the construction supply chain. Builders should start bidding projects based on higher labor costs. A land-falling United States hurricane could play havoc on the supply chain. This along with increases in insurance costs could cost builders a lot of money if they do not prepare properly. A price escalation clause is a must right now as builders should be very cautious heading into the fall—there are simply too many uncertainties.

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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