April 2018 Lumber and Commodity Report

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April 2018 Lumber and Commodity Report

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for April only increased 1.0 percent to $486.84 per thousand, which is a marked improvement compared to increases of 11.1 percent and 5.5 percent over the last two months.  The decrease in the rate of inflation in the wood commodity markets is significant and may indicate the markets are topping out or the housing demand equation is faltering. My belief is that both scenarios could be influencing the market.

Winter continues to hang on and record snowfall in April in the Midwest bolsters the excuse makers for housing demand that the spring building season has not kicked off for our peers up North.  While spring has not been the warmest, there has been plenty of warmup across the nation and the weather has not been to a point of shutting down willing production.

The dimensional portion of the Index increased a measly 0.4 percent to $535.38 per thousand as 3.2 to 5.2 percent declines in 2x12 wide-width pine and a 4.5 percent drop in 2x6-16 spruce offset across-the-board modest increases in dimensional 2x4 spruce.  2x4 spruce increased 2.0 to 8.7 percent depending on the popularity of the length. Spruce studs were mostly flat to up slightly for the wider widths. There is little debate that pricing momentum in the wood dimensional markets has slowed.

The wood sheathing portion of the Index increased 1.5 percent to $450.58 per thousand on the strength of OSB sheathing.  Over the last 30 days, OSB sheathing added $23 per thousand, or 74 cents per sheet, which is about 6.0 percent more on average depending on thickness.  CDX pine retreated in price $35 per thousand, or $1.12 per sheet, but the weight of sales in favor of OSB kept the Index up. Typically, CDX is the market leader in sheathing with OSB following suit.  It will be interesting to see if OSB sheathing will sustain its move in the opposite direction.

The theory of depressed lumber sales in the northern region is about to really be tested as late spring and early summer are upon the nation.  I contend that while the weather has not been ideal over the last month, it hasn’t been shut-down weather either. If warmer weather does prop up wood demand, expect pricing to increase.  Otherwise, pricing will probably remain flat to down depending on the production. Keep in perspective the markets are high and that should keep movement narrow.

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 2018 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for March increased a strong 5.5 percent to $482.12 per thousand and that is on top of the 11.1 percent increase from the prior month.  Inflation in the wood commodity markets has been unabated since December and that is even with a very cold and snowy winter in the Midwest and northeast. Increased costs in manufacturing and labor as well as the specter of higher tariffs have fueled these increases as housing demand while solid is not booming.

 

Since last month, the dimensional lumber portion of the Index has increased 4.3 percent to $533.42 per thousand.  Depending on the width and length, price increases varied from 1.9 to 7.8 percent in spruce. Wide width pine added 4 to 7 percent while treated 2x4 pine jumped 8.2 percent.  2x6 spruce was the only item in the Index to decline and it dropped 1.8 percent or $10 per thousand. Since mid-December, the dimensional portion of the Index has increased a whopping 18.1 percent.

 

The sheathing portion of the Wood Commodity Index has shown no letup in price increases.  Over the last 30 days, the sheathing is up 6.7 percent to $443.80 per thousand. The average sheet of OSB and CDX just over the last month has increased 89 cents.  The average sheathing price increase for the first part of the year is nothing short of unbelievable, especially given the harsh winter weather. Prices for CDX and OSB have increased on average $95.95 per thousand or $2.97 per sheet, which is 26.5 percent.

 

The overall Wood Commodity Index is up 22.3 percent since mid-December and that is too much too fast.  Emotions about tariffs and supply issues are heightening, which appears to be the primary market movers because overall housing demand does not support these types of increases in this short period.  It is also indicative of a supply chain that remains in tatters since the Great Recession.

 

While wood pricing has settled over the last week or so, there are no indications that prices are going to drop suddenly, especially as the northern areas thaw.  These problems could persist to early summer and builders should prepare by implementing a price protection clause in their agreements and updating prices on long-term projects.  No builder can cover these types of increases and remain in business.


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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February 2018 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for February increased a whopping 11.1 percent to $456.83 per thousand as wood prices rose in all species and sizes.  It is unclear if this runup in price is a precursor to much higher springtime pricing driven by demand or it is a reaction to trade, trucking and labor concerns.  This increase added to the 4.4 percent increase from the prior month suggests the market may be getting ahead of itself.

 

The dimensional lumber portion of the Index increased 7.4 percent adding on average $36 per thousand.  2x12 #2 pine incurred brutal increases of $78 to $83 per thousand while spruce dimensional ranged from $32 to $43.  This week, the spike in lumber prices seemed to lose some steam and it is way too early to determine if this is the first sign of stabilization or just a breather before the next run.  

 

The wood sheathing portion of the Index increased 14.7 percent to $416.08 as the average price of both CDX and OSB added $53.42 per thousand or $1.71 per sheet.  Those are heavy increases for this time of year and the markets will be hard pressed to continue this pace without some help from the weather.  Plus, sheathing prices are not exactly priced at the low-end of the market.  

 

Too much, too fast may be the best description of the market.  However, builders can afford to speculate—so you must assume the prices will stick and go higher if you are bidding projects for later in the spring.  Housing starts in the next month or so will really determine how much strength is buried in these markets.  Stay close on prices and know what you are bidding in the future.


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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January 2018 Lumber and Commodity Report

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The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for mid-January increased 4.4 percent to $411.25 per thousand, and this reverses two months of nearly 10 percent decreases.  This may be the first flashpoint of a year with significant inflation in the supply chain if housing grows as some predict. The Trump administration’s position on Canadian lumber bolstered the most recent increase in commodity pricing as final duties of 20 percent plus were slapped on two Canadian producers for anti-dumping and countervailing duties.     

The dimensional lumber portion of the Index increased 5.4% to $451.29 per thousand as Canadian spruce increased in all widths and lengths.  Dimensional 2x4 spruce was up $10 to $50 while stud pricing held back only adding $2 to $12 per thousand.  2x4 pine lumber was up 4.6 percent while wide-width pine was flat to a plus 2.5 percent increase.  Overall, the direction of the dimensional wood market was up.

The upward direction is the same motion for the sheathing portion of the Index.  CDX plywood added $30 per thousand (or almost $1 per sheet) while OSB sheathing only added $5 per thousand.  Freight issues on all commodity prices are pushing up numbers as mills must struggle to find trucks and pay more to have loads hauled.  Don’t expect the trucking issue to resolve itself this year.

Pricing going up the first couple of weeks in January amid a major cold snap is not a good sign.  If housing demand continues to improve as does the weather, expect sharp price increases in the next few weeks.  Builders should anticipate higher pricing on jobs being costed for March and April as suppliers will probably struggle to hold any pricing.  

Expect higher prices and anticipate them now.

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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