February 2019 Lumber and Commodity Report
LUMBER AND COMMODITY REPORT – February 2019
by Don Magruder, CEO of RoMac Building Supply
The price of business has picked up over the last 30 days. The RoMac Building Supply Wood Commodity Index (Index) since mid-January increased 14.6 percent to $347.04 per thousand. Dimensional spruce and wide-width pines had the biggest increases because of mill curtailments due to weakening demand, heavy snow and railcar issues in Canada, extended lead times, and heavy rains in the south, which limited logging of wider-width material. As the spring thaw begins in earnest over the next few weeks those issues should ease and then the commodity markets will have to rely on demand, which by all accounts is not starting out with a bang.
While the increase was significant over the last 30 days, when compared to the prices over the last 12 months, not so much.
Compared to last February, the Index is down 9.1 percent with lumber up 1.9 percent and sheathings (CDX plywood and OSB) down 18.2 percent.
This month’s prices compared to the market peak in June 2018 shows the Index is down a whopping 37.0 percent with lumber down 28.4 percent and sheathings off by 43.8 percent.
There appears to be little momentum to push these markets currently to those types of record levels.
For the month, the dimensional lumber portion of the composite was up 18.8 percent with wide-width pine adding 28.6 to 38.5 percent (or about $140 per thousand). Dimensional spruce was strong with many sizes increasing 30-plus percent. Studs were a little more subdued with increases in the low teens. No doubt, the market is looking for any reason to raise pricing above the recent depressed levels.
The sheathing portion of the Index increased 10.4 percent to $289.00 per thousand (or $27.12), which equates to about 87-cents per sheet. CDX pine plywood was up $15 per thousand on the thinner thickness to $35 on specialty 3/4-inch. OSB sheathing added $31 per thousand (or about on average 15.0 percent). While the increases were solid, these numbers are nowhere near last summer’s fear factor time.
This is the time of the year where runups occur in commodity prices—no surprises here. The reasons for the increases are not the best and mills would probably feel better if the demand portion of the equation was driving these increases instead of weather and curtailments. I am not confident this market will have pricing legs beyond the next six weeks.
Builders should price upcoming projects carefully and be mindful there will be volatility over the next couple of months. Unless demand takes off, expect pricing to flatten and moderate in late spring and early summer. Be careful in pricing long-term projects.
Don Magruder is the Chief Executive Officer of RoMac Building Supply 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.