December 2012 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – December 2012
by Don Magruder, CEO of RoMac Building Supply
Usually, just before Christmas, a hush falls over the wood commodity markets as dealers and traders focus more on Santa Claus and cookies than sticks of lumber. This year, on the contrary, there is no Christmas rest as the wood commodity markets remain extremely active. The Home Builders Association Wood Commodity Index (Index) for December has risen 2.2% to $379.24 per thousand, primarily on the strength of spruce dimensional. Lumber futures point to continued price increases in products throughout 2013.
The lumber portion of the Index increased 6.3% to $393.79 per thousand with 2×4 spruce dimensional pricing rising 5%-10%, depending on the specific length. 2×6 spruce increased more dramatically with plus 15% jumps in pricing over the last 30 days. Wide width short pine gave back 10% in pricing while the other lengths crawled forward in price less than 2.5%.
In the plywood portion of the Index, the market was basically flat from 30 days ago. OSB sheathings gave back $5 per thousand while T&G CDX enjoyed a 3.5% increase. The result for the sheathing portion of the Index was a minimal loss of 0.8%, which is basically flat. The big news is OSB and CDX sheathings did not give back all of their gains from last month’s super storm Hurricane Sandy. That says a lot about this market, especially given the time of the year.
After January 1, 2013, the floodgates of price increases are going to open wide, and everything from metal to roofing shingles is going up. The biggest and the ugliest is the 30% increase in drywall pricing. Earlier in the year, we were skeptical if this large of an increase again this year would stick, but Hurricane Sandy may have just applied the glue.
Builders and remodelers should be very careful on long-term quotes and bids; but, most importantly, price protection clauses are a must. Failing to stay on top of price increases could really cost building companies a lot of cash in 2013. Be smart–know what is going on in pricing.
Finally, thank you for reading the Lumber and Commodity Report. I would like wish everyone a Blessed and Merry Christmas and a Happy and Prosperous New Year!
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 firstname.lastname@example.org.