February 2018 Lumber and Commodity Report

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by Don Magruder, CEO of RoMac Building Supply

The RoMac 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.  2×12 #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 don.magruder@romaclumber.com.