January 2021 Lumber and Commodity Report
WordPress database error: [Table 'romacl5_2019site.wp_ppress_meta_data' doesn't exist]
SELECT * FROM wp_ppress_meta_data WHERE meta_key = 'content_restrict_data'
The RoMac Building Supply Wood Commodity Index (Index) for January 2021 surged 17.1 percent or $126 per thousand as the markets remain overheated. In last month’s report I wrote, “Indications are the first quarter of 2021 could be a tough time for pricing and supply.” This initial report for 2021 suggests this will come true and given the timing of early January, the pricing does not bode well as winter fades and springs warms up. Builders should be adjusting quotes, bids, and overall pricing models, because there is little to show a correction of any significance is on the horizon.
The dimensional lumber of the Index increased 16.4 percent to $939 per thousand. Spruce studs depending on the width and length increased from 12.9 to 27.0 percent while dimensional 2×4 spruce was up an average 8 percent. 2×6 spruce was up even more to 11.5 percent. Price increases in spruce are strong, but when compared to pine price increases they seem moderate. 2×12 wide-width pine was up 67.7 to 78.0 percent while 2×4 pine added more than 60 percent to its cost. Rough lumber will affect truss pricing greatly as supply is tight and pricing is demanding premiums for specialty grades.
The sheathing section of the Index jumped 17.7 percent as CDX pine plywood led the way up. 15/32 and 19/32 CDX pine increased by more than 28 percent while OSB on average increased almost 14 percent. Once again heavy increases are troublesome for the dead of winter.
In normal years, mid-January is a quiet time for the wood commodity markets and the increases being seen now, do not bode well for February and March as demand strengthens on warmer weather. If Washington DC were to settle down and measures to ease the pandemic to take hold, the housing market could surge on pent up demand and cheap mortgage rates. For that reason, along with continuing COVID-19 manufacturing disruptions, prospects for a collapsing commodity appear slim. Builders should plan for higher prices and slowed build times and should consider that into forecasts and timelines. It may get worse before improving- good luck.
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. To contact Magruder, email him through our Contact Page.