April 2017 Lumber and Commodity Report

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by Don Magruder, CEO of RoMac Building Supply

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.  2×6-10 #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. 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 (romacfl.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 don.magruder@romaclumber.com