December 2016 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – December 2016
by Don Magruder, CEO of RoMac Building Supply
The declines in last month’s Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) were reversed as builders and suppliers became optimistic for a brighter 2017 after the presidential election. The Index increased 4.3 percent to $336 per thousand, with all sectors pointing higher. Spruce products and wide-width dimensional were the strongest as mills are beginning to price in a possible duty on imported Canadian wood this spring.
The dimensional lumber portion of the Index increased 5.9 percent to $359 per thousand, with wide width pine leading the way with increases from 12.3 percent to 14.3 percent depending on length. 2×4 spruce dimensional was mixed, with demand determining the increase from 0.9 percent to 10.0 percent while spruce studs followed the lead. Overall, the tally ordered did matter in regards to pricing.
For the most part, the sheathing portion of the Index was up $10 per thousand, with CDX plywood jumping $5-$15 while OSB was consistent with the $10. The increase in sheathing prices is somewhat unexpected considering the time of year, weather, and unimpressive housing starts. Don’t know if this is just optimism for the future or a real trend.
With the election of the new administration, the housing and supply markets have been stirred up like a huge pot of New Orleans gumbo. Tariffs, trade disputes, and bluster could increase a lot of building material costs while increasing interest rates could cool down a growing housing market. Then there is the optimism many are feeling now—could this be the start of a new boom? My crystal ball is cracked—2017 could be a high risk and high reward market. My bet is that prices will be higher and very volatile so builders should be inserting a price escalation clause in their contracts now to prevent real problems five months from now.
Thank you for reading the Lumber and Commodity Report. It is my prayer that you and your family have a blessed and Merry Christmas.
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