January 2015 Lumber & Commodity Report
LUMBER AND COMMODITY REPORT – January 2015
by Don Magruder, CEO of RoMac Building Supply
The Home Builders Association and Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) in January squeezed out a 0.1 percent increase to $321.12 per thousand, as most increases were offset by declines. Demand is not driving price, and the recent decline in fuel and the commodity markets have many manufacturers concerned about the future strength of wood commodities. A struggling world economy and uncertain Chinese export futures are keeping a lid on pricing.
The dimensional lumber portion of the Index dropped 1.1 percent to $370.62 per thousand, as spruce products moved downward on average about 3.0 percent. The declines in spruce products were offset by a firmer pine lumber market with the general trend in the lower to middle single digits. Availability of very specific sizes and species seem to be the only thing moving the market.
The sheathing portion of the Index increased 1.3 percent on a reversal of trends. In the last 30 days, since mid-December, the price of CDX pine plywood dropped about $7 per thousand while OSB sheathing increased almost $9. For months, CDX had increased pricing while OSB struggled to find a floor. I am not real sure if this is a new trend or a post-holiday season burp.
At this point, my crystal ball is completely broken and experts are so varied on the future. One predicts a record year while others are predicting Armageddon. Here is what I do know. Business is about on par thus far with 2014, and if there was going to be a boom, then the banking and real estate industries should be hiring a lot of people. My sources tell me that everything is flat. So, I think it is fair to say right now, expect more of the same with moderate volatility as lumber decks fall short on specific items.
I would be careful about long-term bids this time of the year, because we still have to deal with the historic trend of a winter thaw and tornadoes in the South.
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