April 2018 Lumber and Commodity Report

seedling SPRUCE


by Don Magruder, CEO of RoMac Building Supply

The RoMac 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 2×12 wide-width pine and a 4.5 percent drop in 2×6-16 spruce offset across-the-board modest increases in dimensional 2×4 spruce.  2×4 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 don.magruder@romaclumber.com.