January 2018 Lumber and Commodity Report

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by Don Magruder, CEO of RoMac Building Supply

The Ro-Mac Lumber & Supply, Inc. Wood Commodity Index (Index) for mid-January increased 4.4 percent to $411.25 per thousand, and this reverses two months of nearly 10 percent decreases.  This may be the first flashpoint of a year with significant inflation in the supply chain if housing grows as some predict. The Trump administration’s position on Canadian lumber bolstered the most recent increase in commodity pricing as final duties of 20 percent plus were slapped on two Canadian producers for anti-dumping and countervailing duties.

The dimensional lumber portion of the Index increased 5.4% to $451.29 per thousand as Canadian spruce increased in all widths and lengths.  Dimensional 2×4 spruce was up $10 to $50 while stud pricing held back only adding $2 to $12 per thousand.  2×4 pine lumber was up 4.6 percent while wide-width pine was flat to a plus 2.5 percent increase.  Overall, the direction of the dimensional wood market was up.

The upward direction is the same motion for the sheathing portion of the Index.  CDX plywood added $30 per thousand (or almost $1 per sheet) while OSB sheathing only added $5 per thousand.  Freight issues on all commodity prices are pushing up numbers as mills must struggle to find trucks and pay more to have loads hauled.  Don’t expect the trucking issue to resolve itself this year.

Pricing going up the first couple of weeks in January amid a major cold snap is not a good sign.  If housing demand continues to improve as does the weather, expect sharp price increases in the next few weeks.  Builders should anticipate higher pricing on jobs being costed for March and April as suppliers will probably struggle to hold any pricing.

Expect higher prices and anticipate them now.

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.