January 2016 Lumber & Commodity Report

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by Don Magruder, CEO of RoMac Building Supply

As 2016 begins, not much has changed in the commodity markets over the last 30 days—uncertainty abounds. The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for Central Florida in January declined 0.8 percent to $287.83 per thousand. To be fair, this time of year is historically not the most active. However, generally the precursor of a good year is positive movement in the commodity markets.

The dimensional lumber portion of the Index was off 0.7 percent, with mixed pricing, as half of the Index increased and the other half declined. Only wide-width 2×12 pine showed any real increase. The hit-and-miss nature of increases indicates that suppliers are buying inventory only as it is needed.

The sheathing portion of the Index dropped 0.9 percent to $279.03 per thousand, with only one item adding cost—5/8 CDX pine was up $7 per thousand. The rest of the items in the Index were flat to down $3 per thousand, plus. For most of 2015, OSB and CDX headed in opposite directions, and none are in tune with one another. Both OSB sheathing and CDX pine plywood appear to have settled down significantly in their price fluctuations. This could indicate both are at price levels, which buyers consider to be fair market.

Housing market uncertainty, stock market uncertainty, interest rate uncertainty, political uncertainty, and oil price uncertainty are creating havoc on all of the world commodity markets.  The only thing that is for certain, until the uncertainty is removed from these markets, expect pricing to remain erratic while staying in a general flat-to-down range.  Price fluctuations will be driven more by on-hand availability and mills willing to cut deals instead of some general market momentum or trend.

One thing I do know for certain—if this uncertainty is not alleviated soon by our political leaders, expect this year’s housing sales to be worse than last 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 don.magruder@romaclumber.com